Every day Indian Stock Market News Round up

There is lots of talk about Inflation nowadays. I think it has more focus now due to the coming general elections.Snippet of two reports highlight the urgency and important of this issue

1. With Reserve Bank of India (RBI) governor Yaga Venugopal Reddy describing the spurt in inflation to 6.68% as unacceptably high and economists predicting 8% soon, bankers and money Markets now expect swift, multi-pronged action by the central bank via a mix of key short-term rate hikes and a cash reserve ratio (CRR) increase.

Various players feel RBI may not even wait for its annual monetary and credit policy announcement slated for April 29. We expect RBI to announce some urgent measures very soon, maybe this week itself. RBI may go in for both a hike in CRR and a hike in the reverse repo rate to suck out liquidity, said a senior banker. A sharp increase to deal a body blow to inflation should not come as a surprise.

2. The extent of the government's concern about inflation was evident at the meeting of the Cabinet Committee on Prices, which started at 8 pm on Monday and went on past 12 midnight.

On the government's to-do list of short-term measures to deal with foodgrain shortage, is an eye on arhatiyas (agents) who act as fronts of corporate houses and hoard grain till prices rise.

3. As part of its inflation management strategy, the Government is pitching for a 10-20 per cent reduction in steel prices before the month end.

Senior officials of the Ministry of Commerce and Ministry of Steel on Tuesday met representatives of the Indian mining industry to explore ways of controlling spiralling steel prices.

And, there is good news from US Stock Markets. Surprisingly the huge write-downs from UBS and Deutsche Bank had positive impact on the US and European Markets.

Wall Street stocks rocketed on Tuesday as hopes mounted that stressed banks are starting to put housing-related investment losses behind them and come clean about outstanding mortgage loan write-offs.

Stocks gained after the US investment bank Lehman Brothers said it had raised fresh capital totalling four billion dollars and as Swiss banking giant UBS divulged fresh losses, but raised hopes it was getting a grip on its stricken balance sheet.

Subsequently, the US currency also rose which means happy times for Indian exporters. The reason given for the rise is

The US currency got a lift from a Wall Street stock rally spurred by renewed confidence in the banking sector that the financial crisis may be bottoming out, and a survey indicating manufacturing activity in the world's largest economy had unexpectedly strengthened.

Dealers said news of a successful cash raising exercise at US investment giant Lehman Brothers, which had been hit by rumours of problems in the wake of the US sub-prime, or high-risk, home loan crisis, cheered investors.

Mean while, Oil and Gold prices are declining

Gold fell in Asia underpinned by increased demand from jewellery makers after the precious metal declined in the past three days. Gold for immediate delivery gained $4.12, or 0.5% to $921 an ounce before trading at 917.06.

Bullion declined 3.9% in the past three trading days. Silver fell 0.6% to $17.1250 an ounce.

News that can cut down the costs of Telecom operators

In a move that would bring significant reduction in costs for rolling out telecom network, the Government has allowed operators to share all parts of the infrastructure except spectrum. This is expected to enable operators to save nearly 30 per cent of their costs which in turn will result in cheaper tariffs for consumers.

News that predict bad times for Indian Banks esp the Private Sector ones

1. Lower credit offtake, lower income from foreign exchange businesses, and capital market operations could hit bank profitability in the coming quarters, reckon analysts.

Indian banks, especially foreign banks and new private sector banks, have been aggressive in selling exotic foreign exchange derivatives.

For banks like HDFC Bank and ICICI Bank, income from foreign exchange revenues was estimated to be around 12% to 17% of the profit before tax (PBT).

2. It is not just the manufacturing sector which is worried these days. India’s banks, which have seen record loan growth during the last few years, now have a major challenge on hand this fiscal as an imminent slowdown threatens to hit loan growth while the prospects of another hike in interest rates (the after effect of monetary tightening to combat inflation) could well dent their bottomlines.

The stock market has been quick to read the signs with bank stocks being pummelled. Since January, the stock prices of banks have been on a southward course.

RK
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