Latest Economic Update

INDIA

•  Government of India working seriously to keep the fiscal deficit of FY 12~13 at 5.3% of GDP.  ( Action  plan :-  asked  Ministry   for spending cap   in March quarter , reducing subsidy in Fuel , Divestment of  PSU shares  &  Re auction of telecom  spectrum ) 

•   As per Brokerage  firm Axis Capital report  Indian Economy  will get  Non Budget  stimulus  of  Appx  INR 70,000 Cr  in next  12~145 Months  .  (Election spending   of appx IINR  45,000 Cr  and  Direct  Cash Transfer  scheme  of  INR 27,000  Cr  ) .  As per report auto, media, telecom, consumer products, liquor and white goods to see an uptick in demand on account of the stimulus.

•  Even After four Month of allowing 51% FDI in Multi Brand Retail, not a single proposal is received by Government due to certain condition imposed by Govt.  ( condition :- 30%  local sourcing  from small scale sector and  back end  investment of USD 50 Million in  3 years  ) 

• Indian Manufacturing PMI slipped to 53.2 in January as against 54.7 in the Month of December indicating slowdown in Manufacturing.  Service   PMI moved to 12 Months high level of 57.5 in Jan 13. Service sector contribute 60% to Indian economy.

• Reserve bank of India will announce new guidelines shortly   for allowing new Private Banks in India. Presently   India  has   26 Govt Banks , 22  Private  Banks  and appx  40  Foreign  Banks  operating  .

INTERNATIONAL

•  Global risk  like  US Fiscal  cliff , Euro Zone  concern  & China Hard  landing  has  diminished  since last few  Month .  Each Country is now working     more on improving internal fundamentals. 

•  China service sector grew at the fastest rate in Jan 13 since last six Months. Non manufacturing PMI  climbed to  56.2 level 
•  No negative news in Europe. Rather  few positive  news  like improved  PMI and  better unemployment   data   helping  Euro  gain  against USD .
•  USA unemployment rate increased  marginally to 7.9%. GDP degrown by 0.1% in Dec 12 quarter (lowest since 2009).  QE (liquidity support) will continue for the time being   .

•  Dow Jones , the USA  equity  index has touched  14000 level  first time after  October  2007
•  Commodity prices are going up due to better Global Economic outlook. Crude  & Copper price touched four Month high.
•  US  Government  has  decided  to  sue the  leading  Rating  agency   ( S&P ) due to  improper rating

FOREX

• USD/INR  closed at 53.23  in Jan 13  against  55  in  Dec 12   .INR has depreciated by 7.64% YOY  (Jan’12 : 49.45 ) . Last   7 days  INR    appreciated  due  to  positive  mood  in the form of  RBI rate  cut and  FX inflow  for the  NTPC  equity offer .  This appreciation seems temporary in nature.

•  Korean Won closed at -1087 against USD. Has appreciated by 6.29%   since Jan 12. (1160).
•  EURO touched fourteen Months high of 1.37.  Came down to 1.35 levels due to Political concern in Italy and Spain.
• Year  to date  INR  ( 52.95 )  and Euro ( 1.37)  has  appreciated   most  and   JPY ( 93 ) and Korean Won ( 1090 )has  depreciated  most against  USD
•  China is making its currency more popular in Global Trade. In  year 2012 , 11 % of China  Trade  got settled in   RMB  and they target to take it to  15% in  2013