In the 21st century, the women share a new power statistics ruling almost every domains of life. Worldwide, different governments have given different reservations to motivate them to come at par with their men counterparts. Throughout history, women and nature have been closely linked. Also the idea of “mother earth” is common to many Indo-European cultures. Even in the current Bihar election (2010) where the NDA regime (JD-United and BJP) thwarted its opposition by an unprecedented margin, the women voters played an important role in affecting the political economics.
Moreover, the financial crisis has defined a new power shift from West to East. In industrialized economies, the availability of high quality forms of energy has greatly reduced the amount of time and effort that women must dedicate to housework. Nonetheless, there is substantial evidence that women are more sensitive to environmental matters.
Read more on Women nurturing sustainable development – remarks by Anna Maria Tarantola, Deputy Director General of the Bank of Italy. The paper explains the relationship between women and the environment in developing countries including The Industrial World: A green economy led by women.
Happy Reading!
- Amar Ranu
November 26, 2010
November 22, 2010
Macro-prudential policy: Asian Perspective
Macro-prudential policy has become a norm after the outbreak of global financial crisis. The international bodies such as IMF and the Financial Stability Board (FSB) stated clearly that implementing macro-prudential policy should be central banks’ responsibility. It is a new concept and counter cyclical.
Read more on the opening remarks at the High Level Seminar of “Macro-prudential policy: Asian Perspective”…
Happy reading!
- Amar Ranu
Read more on the opening remarks at the High Level Seminar of “Macro-prudential policy: Asian Perspective”…
Happy reading!
- Amar Ranu
November 18, 2010
Debt, Deleveraging, and the Liquidity Trap: A Fisher-Minsky-Koo Approach
The world had been overleveraging in pre-financial crisis. Post Lehman scathe, there has been talks of deleveraging and the liquidity including debt which seem like a trap again. Paul Krugman from Princeton University and Gauti B. Eggertsson (NeyYork Fed) talk about Debt, Deleveraging, and the Liquidity Trap: A Fisher-Minsky-Koo Approach.
The approach sheds considerable light both on current economic difficulties and on historical episodes, including Japan’s lost decade (now in its 18th year) and the Great Depression itself.
Read more…
The approach sheds considerable light both on current economic difficulties and on historical episodes, including Japan’s lost decade (now in its 18th year) and the Great Depression itself.
Read more…
November 10, 2010
Aiding the economy: What the Fed did and why
Aiding the economy: What the Fed did and why?
For a quite long time, all the economies have been struggling to keep pace or evolve after the worst financial crisis (last we had in 1930s). More monies were pumped into throughout the world amounting into trillion of dollars - US had QE-I followed by QE-II and various other measures by other countries too.
QE II may be a fait accompli but the Fed Governor justifies it citing the high unemployment rate and low inflation. Read his opinion Aiding the economy: Why the Fed did and why
Enjoy reading!
For a quite long time, all the economies have been struggling to keep pace or evolve after the worst financial crisis (last we had in 1930s). More monies were pumped into throughout the world amounting into trillion of dollars - US had QE-I followed by QE-II and various other measures by other countries too.
QE II may be a fait accompli but the Fed Governor justifies it citing the high unemployment rate and low inflation. Read his opinion Aiding the economy: Why the Fed did and why
Enjoy reading!
November 5, 2010
12th March – a reason to rejoice or lament
The 12th March has always been an unforgettable day in my life – not for the reasons I am born blissfully on this day to my proud parents to whom I cannot return my duties but it will always be remembered for the barbaric crime done on Indian soil. The reasons – avenge; a thirst to kill each other which the British rulers successfully imbibed into us. Yes, I am talking about the non-ending story of Hindu – Muslim dilemma where the chapter of Babri Masjid, Mumbai’s Serial Bomb Blasts, Gujarat riots and riots post Babri Masjid’s demolition were red lettered.
I always wonder – should I celebrate my most important in my life where every year I lose an important year or should I go ahead without remembering those who were either killed or wound permanently in the Mumbai’s serial blast of 12th March 1993, the Black Friday in Mumbai History. Recently I happened to read the book “Black Friday – The True Story of the Bombay Bomb Blasts” by S. Hussain Zaidi. Though it was out for public circulation in 2002, I happened to read it in recently. It was better than sure that the events had been an avenge to Babri Masjid’s demolition post which Muslims were butchered albeit Hindus were also killed. The book also described the involvement of Sanjay Dutt, the Bollywood star and the son of MP and another Bollywood veteran, Shri Sunil Dutt, who had nothing to do with Bomb Blast and had procured an AK 56 in curiosity to defend himself after he was threatened from pro-Hindu fundamentalists. I still wonder how he thought of defending himself after he was threatened from fundamentalists as he showed some good friendly gestures to Muslims’ communities after Bombay’s riots of Dec 1992 and Jan 1993.
The book also describes the heroic efforts put by Mumbai Police and its network. Now I believe why it is named after Scotland Yard in its service and work-style. Its nexus with dons, bhais, bollywood stars and many unrecorded relations, also known as informants made it one of the strongest Bhai of aamchi Mumbai. Mr. Rakesh Maria, Deputy Commissioner of Police (Traffic) and the then in-charge of Bombay’s Bomb Blasts in 1993 and now the Joint Commissioner of Police and also investigated the recent Mumbai’s Terror Attack of 2008 really deserve a pat. He handled both the cases in a very intuitive way.
While India leaves behind its story and Mumbai goes forward in its spirit, there are some people who try to erase their past memories but unable to do so.
I must think on – should I still go ahead in celebrating my birthday with a big bang where I extinguish my candle or should I light a candle in the memory of those who were directly or indirectly killed or wound and their life are still a challenge for them. Let someone answer this million dollar question!
Hats-off to the spirit of Mumbai! I love it.
I always wonder – should I celebrate my most important in my life where every year I lose an important year or should I go ahead without remembering those who were either killed or wound permanently in the Mumbai’s serial blast of 12th March 1993, the Black Friday in Mumbai History. Recently I happened to read the book “Black Friday – The True Story of the Bombay Bomb Blasts” by S. Hussain Zaidi. Though it was out for public circulation in 2002, I happened to read it in recently. It was better than sure that the events had been an avenge to Babri Masjid’s demolition post which Muslims were butchered albeit Hindus were also killed. The book also described the involvement of Sanjay Dutt, the Bollywood star and the son of MP and another Bollywood veteran, Shri Sunil Dutt, who had nothing to do with Bomb Blast and had procured an AK 56 in curiosity to defend himself after he was threatened from pro-Hindu fundamentalists. I still wonder how he thought of defending himself after he was threatened from fundamentalists as he showed some good friendly gestures to Muslims’ communities after Bombay’s riots of Dec 1992 and Jan 1993.
The book also describes the heroic efforts put by Mumbai Police and its network. Now I believe why it is named after Scotland Yard in its service and work-style. Its nexus with dons, bhais, bollywood stars and many unrecorded relations, also known as informants made it one of the strongest Bhai of aamchi Mumbai. Mr. Rakesh Maria, Deputy Commissioner of Police (Traffic) and the then in-charge of Bombay’s Bomb Blasts in 1993 and now the Joint Commissioner of Police and also investigated the recent Mumbai’s Terror Attack of 2008 really deserve a pat. He handled both the cases in a very intuitive way.
While India leaves behind its story and Mumbai goes forward in its spirit, there are some people who try to erase their past memories but unable to do so.
I must think on – should I still go ahead in celebrating my birthday with a big bang where I extinguish my candle or should I light a candle in the memory of those who were directly or indirectly killed or wound and their life are still a challenge for them. Let someone answer this million dollar question!
Hats-off to the spirit of Mumbai! I love it.
November 2, 2010
Infrastructure Funds – poised to grow
A robust infrastructure; ask any individual he will define or relate it. Infrastructure has become a new catchphrase in India with more government allocations, both through policy reforms and increased spending. This has been well emphasized in Budget 2010 where a massive Rs. 1,73,000 crore or 46 per cent of total plan was allocated to infrastructure only. Infrastructure augments the growth of Indian economy and India’s economic growth has been attracting wide attention. The International Monetary Fund (IMF) has come out to state that Indian economy will grow at 9.7 per cent in FY 2010 and 8.4 per cent in FY 2011. The economy is on the fulcrum of an increasing growth curve; thus, economic prosperity is placing huge demands on infrastructure. It is attributed that India’s submissive infrastructure is the key reason for the country not achieving double digit GDP growth.
Though the Government of India has been addressing the infrastructure requirements, the pace of growth has been lacking.
Infrastructure – Has it performed well?
While Infrastructure has been defined differently from different Portfolio Managers, we have considered sectors such as Telecom, Consumer Goods, Utilities – Gas and Power, Real Estate, Petroleum and Gas, Engineering as basic components of Infrastructure (combining all the definitions as per different Offer Documents of Infrastructure Funds). Banks have also found a prominent place in major of the funds; so, we would also consider it.
Indian equity markets have delivered superb performance in the last quarter including CYTD , thanks to increased capital inflows and extended quantitative easing in developed countries which have forced cheap money to move into emerging markets including India too. India has emerged as the best performing market globally and is poised to be one of the earliest to scale its previous peak and create new highs. From peak of CY 2007-08, major sectoral movers are Auto, PSU-Banks, FMCG, Pharma and IT moving in the range of 39 to 71 per cent while the Engineering, Petroleum and Gas, Utilities, Telecom and Real Estate – which comprise predominantly Infrastructure have underperformed in the range of (-) 21 to (-) 72 per cent.
Does it say that the infrastructure story is over in India?
If we believe the 11th Five Year Plan (2007-2012), it calls for more than doubling the financial outlay for infrastructure. The investments will touch US $ 1.48 trillion by 2017. Some of the major developments in the past such as world class airports, flyovers, CWG Event which helped in creating world class sporting complexes (barring inappropriate use of funds) have proved to be the major boost to Infrastructure in the near future.
Similarly, we are on Capex boom (dhoom) driven by impending large investment in infrastructure and industrial activity. India is among leading global destinations for infrastructure and investment spending over the next decade. Sectors which have shown growth rates consistently over the last six quarters are Engineering, Banking, FMCG and IT. However, telecom continues to post its fifth consecutive quarter of earnings decline. We believe that the 2HFY11 will have changed growth pattern across sectors like Cement, Engineering, Real Estate, Infrastructure, Utilities reporting better earnings growth than they did in the past. Telecom will continue to post negative earnings growth for 2HFY11. As per MOSL estimates as given below, Engineering and Real Estate are poised to report better quarterly earnings growth in 2HFY11 at 31.8 per cent and 47.2 per cent against the 2Q10 estimates of 17.3 per cent and -1.5 per cent respectively. Infrastructure is also poised to grow at 37 per cent in 4Q10 against 2Q10 figures of 12.6 per cent; ditto with Utilities growing at 15.1 per cent against 8 per cent in 2Q10.
Also, the 2QFY11 earnings for MOSL universe (139 stocks) are more broad-based with 73 per cent of companies (v/s 70 per cent in June 2010) in a positive earnings growth trajectory and vice-versa.
Infrastructure Funds in India – Are they poised to grow?
Mutual Funds in India have been growing through rough patches but are poised to bounce back with a big-bang. The industry has several infrastructure funds to offer – as on Sept 30, there are 21 funds – it includes both open-ended and close-ended. Infrastructure Funds invest in stocks of companies which cover several sectors like petroleum and gas, utilities, real estate, engineering, FMCG etc. Unlike in other thematic funds, they are not restricted to a few sectors. On an average, they manage total assets of over Rs. 18,932 crore as on Sept 30, 2010.
From table 1, it can be seen that infrastructure funds have highest average allocation to Energy (24.64%) followed by Industrial Manufacturing (15.3%), Financial Services (14.92%), Construction (12.64%) and Metals (7.94%).
Performance – muted but poised to grow in future
Infrastructure Funds remained a mute spectator in the current Bull Run. In pre-crisis era, these funds had given a reasonable performance but it underperformed when compared to diversified fund category. As per table 2, it paralleled headline indices’ performance like Sensex and Nifty 50 in bull phase while it underperformed them in bear phase. However, in 5-year category, it outperformed all major categories except Bankex which gave an exception performance.
Among the largest infrastructure funds in terms of assets managed, ICICI Pru Infrastructure Fund, DSP BR TIGER Fund among others have outperformed major indices in 5-year category.
Conclusion
• Despite many hiccups including political unwillingness, infrastructure is sure to pick up in future which will augur well for various sectors like power, construction, engineering, energy, cement etc. It will also bode well for funds with these themes.
• Though riskier than diversified equity funds, investors with higher risk appetite can consider allocating 10-15 per cent of their portfolio to these funds.
• Investors must stick to good performing funds having less volatility and lesser concentration risk.
Source: MOSL
Nov 02 policy review eyed
Highlights:
• Amid tight systematic liquidity, the RBI announced a special second LAF, a liquidity window for scheduled commercial banks to borrow to the extent of up to 1.0 per cent of their Net Demand and Time Liabilities (NDTL) as on Oct 08 on all days during Oct 29-Nov 04, 2010. The RBI also announced a special 2-day repo auction under the LAF on Oct 30, 2010 which saw a total borrowing of Rs. 11,025 crore under LAF. The RBI also allowed waiver of penal interest, if any for any shortfall in maintenance of SLR on Oct 30-31, 2010 out of these special facilities.
• The buy-back programme as announced by the government did not draw good responses from the market – with bids worth Rs. 3,174 crore tendered against the notified amount of Rs. 12,000 crore. However, the total amount accepted for buy-back was Rs. 2,148 crore only.
• The benchmark bond seemed to lose its appetite after volume shifted to 8.13% G-Sec 2022 as the market expected that 7.80% G-Sec 2020 may not see any auctions further. However, comments from a Finance Ministry official who hinted that the 10-year bond will retain its benchmark status till fiscal year end led to a swift rally in it. Further, the RBI’s special liquidity window led to fall in yields. The 10-year benchmark paper closed at 8.11, down by 3 bps over the week.
• India’s primary articles’ inflation fell to 16.62 per cent in the week ended Oct 16 from 18.05 per cent in the last week while food articles’ inflation fell to a 50-week low of 13.75 per cent from 15.53 per cent a week before.
• Growth in India’s key infrastructure industries, which constitute 26 per cent of IIP figures fell to a 19-month low of 2.5 per cent in Sept compared to 3.9 per cent and 4.3 per cent in Aug and a year ago respectively.
View & Recommendations:
• The special liquidity window announced by RBI may ease the structural liquidity crisis. The RBI is looking to normalize policy rates given high inflation; however, it feared that the QE-II (Quantitative Easing 2 to be announced by Fed Reserve) may bring more capital inflows into the system which will force the RBI to contain the rupee appreciation. This may lead to inflation hike further.
• The market participants have expected a hike of 25 bps in policy rates to be announced by RBI on Nov 02. The market has already factored into the 25 bps hike in policy rates. So, yields might not move significantly if there is hike in policy rates. However, the government may decide to cancel the auction after which the government bonds may witness a rally.
Broader Perspectives:
Bond Front
The buy-back programme announced by RBI did not draw strong interests from market participants. Bids worth Rs. 3,174 crore were tendered against the notified amount of Rs. 12,000 crore. However, the total amount accepted for buy-back was Rs. 2,148 crore. The securities which are bought back are 8.75% G-Sec 2010, 12.32% G-Sec 2011 and 6.57% G-Sec 2011 for notified amount of Rs. 28.97 crore, Rs. 616.35 crore and Rs. 1,502.97 crore respectively. The inflation continued to remain in uncomfortable zone which may allow the central bank to use all its ammunitions, policy rate hikes being the most prominent one. The RBI policy will be announced just before the much awaited US Federal Reserve announcement regarding the much touted QE-II, or second round of quantitative easing. The probability goes high as the US jobless rate hovered around 10 per cent for a third month in October.
The benchmark yield kept on spiraling and touched its near months high of 8.18 per cent. Meanwhile, the borrowing limit in benchmark bond saw a shift in active trading to other yields. The 10-year benchmark paper closed at 8.11 per cent, down by 3 bps. The 8.13% G-Sec 2022 became the most actively traded securities during the last week.
The tight liquidity scenario, an example of structural liquidity deficit led to a hike in interbank call money markets which rose as high as 12 per cent. During the week, the banks borrowed a net amount of Rs. 4.80 lakh crore against the previous week of Rs. 3.17 lakh crore. The Repo and CBLO rate closed at 6.43 per cent and 7.96 per cent, an increase by 72 bps and 261 bps respectively.
The 1/10 year G-Sec spreads fell to 112 bps from 124 bps a week earlier. And the average G-Sec volume reported was Rs. 47,412 crore compared to Rs. 53,776 crore a week earlier.
Bond Supply
The market didn’t have any central government auctions scheduled for this week; however, the SDL (State Development Loans) auctions raised Rs. 8,601.8 crore as against the notified amount of Rs. 8,226.8 crore with the state of Tamil Nadu exercising the green show option to the tune of Rs. 375 crore.
Liquidity
The systematic liquidity remained in deficit mode which allowed RBI to open an additional liquidity window. The liquidity as measured by bids for reverse repo/repo in the LAF (Liquidity Adjustment Facility) auction of the RBI reported a net borrowing of Rs. 4,80,180 crore or daily average of Rs. 80,030 crore.
Corporate Bonds
The corporate bond yields saw a hike in the concluding week. The 10-year AAA bond ended at a yield of around 8.80 per cent compared to 8.76 per cent in the previous week. Credit spreads moved up with 5-year AAA spreads moving up by a basis point to 69 bps levels.
• Amid tight systematic liquidity, the RBI announced a special second LAF, a liquidity window for scheduled commercial banks to borrow to the extent of up to 1.0 per cent of their Net Demand and Time Liabilities (NDTL) as on Oct 08 on all days during Oct 29-Nov 04, 2010. The RBI also announced a special 2-day repo auction under the LAF on Oct 30, 2010 which saw a total borrowing of Rs. 11,025 crore under LAF. The RBI also allowed waiver of penal interest, if any for any shortfall in maintenance of SLR on Oct 30-31, 2010 out of these special facilities.
• The buy-back programme as announced by the government did not draw good responses from the market – with bids worth Rs. 3,174 crore tendered against the notified amount of Rs. 12,000 crore. However, the total amount accepted for buy-back was Rs. 2,148 crore only.
• The benchmark bond seemed to lose its appetite after volume shifted to 8.13% G-Sec 2022 as the market expected that 7.80% G-Sec 2020 may not see any auctions further. However, comments from a Finance Ministry official who hinted that the 10-year bond will retain its benchmark status till fiscal year end led to a swift rally in it. Further, the RBI’s special liquidity window led to fall in yields. The 10-year benchmark paper closed at 8.11, down by 3 bps over the week.
• India’s primary articles’ inflation fell to 16.62 per cent in the week ended Oct 16 from 18.05 per cent in the last week while food articles’ inflation fell to a 50-week low of 13.75 per cent from 15.53 per cent a week before.
• Growth in India’s key infrastructure industries, which constitute 26 per cent of IIP figures fell to a 19-month low of 2.5 per cent in Sept compared to 3.9 per cent and 4.3 per cent in Aug and a year ago respectively.
View & Recommendations:
• The special liquidity window announced by RBI may ease the structural liquidity crisis. The RBI is looking to normalize policy rates given high inflation; however, it feared that the QE-II (Quantitative Easing 2 to be announced by Fed Reserve) may bring more capital inflows into the system which will force the RBI to contain the rupee appreciation. This may lead to inflation hike further.
• The market participants have expected a hike of 25 bps in policy rates to be announced by RBI on Nov 02. The market has already factored into the 25 bps hike in policy rates. So, yields might not move significantly if there is hike in policy rates. However, the government may decide to cancel the auction after which the government bonds may witness a rally.
Broader Perspectives:
Bond Front
The buy-back programme announced by RBI did not draw strong interests from market participants. Bids worth Rs. 3,174 crore were tendered against the notified amount of Rs. 12,000 crore. However, the total amount accepted for buy-back was Rs. 2,148 crore. The securities which are bought back are 8.75% G-Sec 2010, 12.32% G-Sec 2011 and 6.57% G-Sec 2011 for notified amount of Rs. 28.97 crore, Rs. 616.35 crore and Rs. 1,502.97 crore respectively. The inflation continued to remain in uncomfortable zone which may allow the central bank to use all its ammunitions, policy rate hikes being the most prominent one. The RBI policy will be announced just before the much awaited US Federal Reserve announcement regarding the much touted QE-II, or second round of quantitative easing. The probability goes high as the US jobless rate hovered around 10 per cent for a third month in October.
The benchmark yield kept on spiraling and touched its near months high of 8.18 per cent. Meanwhile, the borrowing limit in benchmark bond saw a shift in active trading to other yields. The 10-year benchmark paper closed at 8.11 per cent, down by 3 bps. The 8.13% G-Sec 2022 became the most actively traded securities during the last week.
The tight liquidity scenario, an example of structural liquidity deficit led to a hike in interbank call money markets which rose as high as 12 per cent. During the week, the banks borrowed a net amount of Rs. 4.80 lakh crore against the previous week of Rs. 3.17 lakh crore. The Repo and CBLO rate closed at 6.43 per cent and 7.96 per cent, an increase by 72 bps and 261 bps respectively.
The 1/10 year G-Sec spreads fell to 112 bps from 124 bps a week earlier. And the average G-Sec volume reported was Rs. 47,412 crore compared to Rs. 53,776 crore a week earlier.
Bond Supply
The market didn’t have any central government auctions scheduled for this week; however, the SDL (State Development Loans) auctions raised Rs. 8,601.8 crore as against the notified amount of Rs. 8,226.8 crore with the state of Tamil Nadu exercising the green show option to the tune of Rs. 375 crore.
Liquidity
The systematic liquidity remained in deficit mode which allowed RBI to open an additional liquidity window. The liquidity as measured by bids for reverse repo/repo in the LAF (Liquidity Adjustment Facility) auction of the RBI reported a net borrowing of Rs. 4,80,180 crore or daily average of Rs. 80,030 crore.
Corporate Bonds
The corporate bond yields saw a hike in the concluding week. The 10-year AAA bond ended at a yield of around 8.80 per cent compared to 8.76 per cent in the previous week. Credit spreads moved up with 5-year AAA spreads moving up by a basis point to 69 bps levels.
Source: MOSL
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