S&P's revised India rating to drive investment: PMEAC
Global ratings major Standard & Poor's (S&P) has revised upward the ratings outlook for India to 'stable' from 'negative'. According to the Prime Minister's advisory panel the upward revision of the country's rating outlook to stable would foster investment inflows.
According to Prime Minster's Economic Advisory Council (PMEAC) Chairman, Dr C Rangarajan, the improvement in the outlook assigned by S&P will make the country a better investment destination.
He added that the improvement in S&P rating comes on the back of fiscal consolidation indicated in the budget, which will lead to substantial reduction in fiscal deficit for the next year.
The Planning Commission Deputy Chairman Mr Montek Singh Ahluwalia also commended the S&P ratings outlook.
Source: IBEF
___
I am not a very big fan of ratings. These are based on a lot of data and quite often do not take into account softer aspects about a country's economic structure.
Here is a paradox- Obviously, ratings are based on data. Change is a rating reflects change in the base data right? A new rating becomes redundant if-
1. The data is not reflective of the actual potential of an economy
2. The data numbers are not readily updated or available. In other words, there is a lag in the generation of data points
3. Data numbers, although available, are not completely accurate as the input data points are inaccurate or not available in a short period of time
Given that data does not reflect true potential of an economy(this is true for any and every rating) and most of these data points are not completely accurate in the short term (yes, I can confidently say that this is true in case of India. Remember the sugar production number controversy?), how relevant these ratings are in the short term?
Sunday, March 21, 2010
Personal update
Hey guys...I know I have not been regular with my blog writing. Have not been keeping that well + had lots of stuff at work.
But I promise to improve on my irregularity :)
But I promise to improve on my irregularity :)
Monday, January 25, 2010
Increasing foreign reserves...
Foreign exchange reserves rose $899 million to touch $285.1 billion during the week ended January 15, largely on account of revaluation of
non-dollar assets in reserves.
The latest figures released by the Reserve Bank of India (RBI) on Friday indicate that the total foreign exchange reserves comprising foreign currency assets, gold and special drawing rights (SDR — reserves currency with the International Monetary Fund) rose $853 million reflecting valuation gains in non-dollar assets. The value of SDR and the reserve capital with the IMF rose $36 million and $10 million, respectively, during the week.
Economictimes
__
Great news...right?
Now read this headline -
China Now Has Enough Cash Built Up To Buy 20% Of The S&P 500
Chinese foreign exchange reserves jumped 23.3% in 2009, hitting a mind-blowing $2.4 trillion notes 24/7 Wall St..
To put this into perspective, the S&P 500's total adjusted market cap is just $13.5 trillion according to the latest data sheet from Standard & Poor's. That means China's forex reserves could buy 18% of the S&P500.
Furthermore, if they were to keep growing at the current rate (even though they probably won't), within five years they could theoretically buy half of the S&P500. Now that could be some seriously massive fund flow, even if it isn't likely to happen or even possible.
Source:researchreloaded
non-dollar assets in reserves.
The latest figures released by the Reserve Bank of India (RBI) on Friday indicate that the total foreign exchange reserves comprising foreign currency assets, gold and special drawing rights (SDR — reserves currency with the International Monetary Fund) rose $853 million reflecting valuation gains in non-dollar assets. The value of SDR and the reserve capital with the IMF rose $36 million and $10 million, respectively, during the week.
Economictimes
__
Great news...right?
Now read this headline -
China Now Has Enough Cash Built Up To Buy 20% Of The S&P 500
Chinese foreign exchange reserves jumped 23.3% in 2009, hitting a mind-blowing $2.4 trillion notes 24/7 Wall St..
To put this into perspective, the S&P 500's total adjusted market cap is just $13.5 trillion according to the latest data sheet from Standard & Poor's. That means China's forex reserves could buy 18% of the S&P500.
Furthermore, if they were to keep growing at the current rate (even though they probably won't), within five years they could theoretically buy half of the S&P500. Now that could be some seriously massive fund flow, even if it isn't likely to happen or even possible.
Source:researchreloaded
Tuesday, January 19, 2010
Employment trends in India
Interesting article by Shankar Acharya (see below). Among a range of insights he also highlights the fact that the employment trends in India are difficult to capture due to unavailability of data- something I have time and again highlighted.
__
India: Where are the jobs?
By Shankar Acharya
This piece is the first in an occasional series on the Indian economy.
What’s happening to employment in India? We know that every year there are nearly 13m new entrants into the nation’s labour force. Are they getting half-way decent employment opportunities? What proportion of the labour force is unemployed? How widespread is under-employment? What sort of job security do workers enjoy? What are the trends in real wages? The truth is we don’t know, at least not for any year after financial year 2004/5, the last year for which the National Sample Survey 61st Round gives reasonably good employment information.
Those inclined to paint a rosy picture point to the unprecedented, rapid growth of total employment at 2.9 per cent a year between 1999/2000 and 2004/5 (according to NSS data), which was far higher than the 1 per cent per annum growth recorded from 1993/4 to 1999/2000.
...more
___
__
India: Where are the jobs?
By Shankar Acharya
This piece is the first in an occasional series on the Indian economy.
What’s happening to employment in India? We know that every year there are nearly 13m new entrants into the nation’s labour force. Are they getting half-way decent employment opportunities? What proportion of the labour force is unemployed? How widespread is under-employment? What sort of job security do workers enjoy? What are the trends in real wages? The truth is we don’t know, at least not for any year after financial year 2004/5, the last year for which the National Sample Survey 61st Round gives reasonably good employment information.
Those inclined to paint a rosy picture point to the unprecedented, rapid growth of total employment at 2.9 per cent a year between 1999/2000 and 2004/5 (according to NSS data), which was far higher than the 1 per cent per annum growth recorded from 1993/4 to 1999/2000.
...more
___
Saturday, December 5, 2009
Eight-year cycle: Sensex may hit 21,000 jackpot in 2011
Yes, this is the headline in Economic Times.
Here is a excerpt from the article-
If you are a retail investor looking to make money on Dalal Street, you may have a little over 12 months left to get your portfolio Volatile mkts: Do I invest now or exit?
Risk while investing in midcaps
Follow 20-20 rule for better returns right. The Indian stock market is in the midst of a consolidation phase that will set the tone for the next bull run which, according to chartists, is set to begin in the first half of 2011.
The technical analysis, based on a classical eight-year time cycle that the market has followed since 1984, projects the Bombay Stock Exchange (BSE) benchmark Sensex to break the 21,000 barrier by early 2011 and embark on a bigger bull run. “The current rally is an upward leg of the larger consolidation pattern,” said Anup Bagchi of ICICI Securities. “In 2010, the Sensex will fluctuate in the range of 12,500 and 21,000. The next major peak is expected in 2016.”
Source: EconomicTimes
__
21,000 seems like a quite bullish prediction to me. The question is that will the RBI let the FII inflow increase? There are two opposing forces driving RBIs decision making right now
1. Growth- In the past the RBI has been conservative in dealing with FII money. The sensex doubled in the last few months and now the RBI has become cautious. That is why it left the interest rates untouched last year
2. Inflation -Inflation is in double digits and increasing. Soon, RBI will have to mop up excess liquidity from the system.
Achieving the both the above mentioned objectives may not be possible.
Net-net, I think the RBI will try to tackle inflation first.
Here is a excerpt from the article-
If you are a retail investor looking to make money on Dalal Street, you may have a little over 12 months left to get your portfolio Volatile mkts: Do I invest now or exit?
Risk while investing in midcaps
Follow 20-20 rule for better returns right. The Indian stock market is in the midst of a consolidation phase that will set the tone for the next bull run which, according to chartists, is set to begin in the first half of 2011.
The technical analysis, based on a classical eight-year time cycle that the market has followed since 1984, projects the Bombay Stock Exchange (BSE) benchmark Sensex to break the 21,000 barrier by early 2011 and embark on a bigger bull run. “The current rally is an upward leg of the larger consolidation pattern,” said Anup Bagchi of ICICI Securities. “In 2010, the Sensex will fluctuate in the range of 12,500 and 21,000. The next major peak is expected in 2016.”
Source: EconomicTimes
__
21,000 seems like a quite bullish prediction to me. The question is that will the RBI let the FII inflow increase? There are two opposing forces driving RBIs decision making right now
1. Growth- In the past the RBI has been conservative in dealing with FII money. The sensex doubled in the last few months and now the RBI has become cautious. That is why it left the interest rates untouched last year
2. Inflation -Inflation is in double digits and increasing. Soon, RBI will have to mop up excess liquidity from the system.
Achieving the both the above mentioned objectives may not be possible.
Net-net, I think the RBI will try to tackle inflation first.
Tuesday, October 27, 2009
India concerned about Inflation
RBI moves to contain inflation without hurting growth
Aiming to tackle inflationary pressures, the Reserve Bank on Tuesday increased a key statutory deposit ratio for banks by one percentage point to 25 per cent but the move is not expected to push interest rates up.
Barring the hike in Statutory Liquidity Ratio, the deposits that commercial banks are to park in government securities, the central bank left other key policy rates and ratios unchanged. ( Watch )
Although the one percentage point hike in SLR could suck up over Rs 30,000 crore from the system, the average SLR of banks is already at 27.6 per cent.
More
Aiming to tackle inflationary pressures, the Reserve Bank on Tuesday increased a key statutory deposit ratio for banks by one percentage point to 25 per cent but the move is not expected to push interest rates up.
Barring the hike in Statutory Liquidity Ratio, the deposits that commercial banks are to park in government securities, the central bank left other key policy rates and ratios unchanged. ( Watch )
Although the one percentage point hike in SLR could suck up over Rs 30,000 crore from the system, the average SLR of banks is already at 27.6 per cent.
More
Subscribe to:
Posts (Atom)