India accounts for one third of the world poor: World Bank-:

 India accounts for one-third ofthe world poor, people living on less than $1.25 (about Rs. 65) per day, a World Bank report on poverty has said. The report said that 1.2 billion people still living in extreme poverty across the world. "The State of the Poor: Where are the Poor and

Where are the Poorest," using data released in the latest World Development Indicators, shows that extreme poverty headcount rates have fallen in every developing region between 1981 and 2010 from half the citizens in the developing world to 21%. This despite a 59% increase in the developing world population.
However, a new analysis of extreme poverty released today by the World Bank shows that there are still 1.2 billion people living in extreme poverty, and despite recent impressive progress, Sub-Saharan Africa still accounts for more than one-third of the world's extreme poor.
"We have made remarkable progress in reducing the number of people living under $1.25 a day in the developing world, but the fact that there are still 1.2 billion people in extreme poverty is a stain on our collective conscience," said World Bank Group President Jim Yong Kim.
"This figure should serve as a rallying cry to the international community to take the fight against poverty to the next level. Our analysis and our advice can help guide the way toward ending extreme poverty by 2030, by showing where the poor live and where poverty is deepest," he said.
"We have made strides in cutting down poverty, but with nearly one-fifth of the world population still below the poverty line, not enough," said Kaushik Basu, World Bank Senior Vice President and Chief Economist.
"Directing investment towards the poor will require coordinated effort by the Bank, our country partners, and the international development community, and will, let's face it, entail sacrifice on the part of those who are fortunate enough to be better off," Basu said.
According to the report, after steadily increasing from 51% in 1981 to 58% in 1999, the extreme poverty rate fell 10 percentage points in Sub Saharan Africa between 1999 and 2010 and is now at 48%- an impressive 17% decline in one decade.
In Latin American Countries, after remaining stable at approximately 12% for the last two decades of the 20th century, extreme poverty was cut in half between 1999 and 2010 and is now at 6%.
However, despite its falling poverty rates, Sub-Saharan Africa is the only region in the world for which the number of poor individuals has risen steadily and dramatically between 1981 and 2010. There are more than twice as many extremely poor people living in SSA today (414 million) than there were three decades ago (205 million).
As a result, while the extreme poor in SSA represented only 11% of the world's total in 1981, they now account for more than a third of the world's extreme poor.
India contributes another third (up from 22% in 1981) and China comes next, contributing 13% (down from 43% in 1981).


ARUSI SINGH
PGDM 2ndSem

Protection from Price Demon The proposed inflation-indexed bonds will make life easier for investors. We look at the mechanics of these debt instruments and how they will benefit you.

 


The Budget has proposed introduction of bonds or National Savings Certificates whose returns will be linked to inflation. In these instruments, the principal rises with inflation, though it is still not clear whether these bonds will be linked to the consumer price index (CPI) or the more closely-watched wholesale price index (WPI). The interest, called coupon, is calculated on the adjusted (to inflation) principal. The coupon rate may or may not rise with the price index.

For example, if the annual coupon is 8 per cent and the principal is Rs 100, the investor will be paid Rs 8 a year. If the inflation index rises 10 per cent, the principal will become Rs 110. The coupon will remain 8 per cent, resulting in an interest payment of Rs 110 x 8 per cent = Rs 8.8.

Inflation-indexed bonds give returns that are more than the rate of inflation, ensuring that price rise does not erode the value of investors' savings.

The exact structure of these instruments will be announced later.

Vivek Gupta, research head, CapitalVia Global Research, says, "This is encouraging for investors as most of the times the returns which investment funds showcase are not discounted for inflation. So, for a common man, it becomes difficult to know the real returns."

WHY INVEST

These bonds can be used to diversify and stabilise the portfolio. This is because their principal rises with inflation. But when inflation falls, the principal does not go below the issue amount.

These bonds are redeemed at the inflation-adjusted principal or the amount for which they were issued. "These bonds will give more choice to savers, particularly those who are risk-averse and looking to get assured positive real returns. Like gold, these are a hedge against inflation and store of value. Investors who desire predictable real cash flow can include indexed bonds in their portfolio," says KP Jeewan, head, fixed income, Karvy Stock Broking.

SPACE IN THE PORTFOLIO

How much a person should invest in these bonds depends upon his expectations about inflation. "Ideally, the entire fixed income component of a risk-averse investor's portfolio can be deployed in these bonds if they are offering an attractive yield over inflation," says Jeewan.

Market experts say these bonds are ideal for all investors. They have been structured for all individuals and institutions, as their basic purpose is to protect investors from inflation by giving fixed and regular coupon payments.

While the main aim of the government is targeting people who invest in gold to hedge their portfolios from inflation, it will be difficult for inflation-indexed bonds to completely replace the demand for gold. This is because most investors accumulate gold for consumption. This need cannot be substituted.


ROHIT SINGH
PGDM 2nd sem.

Sensex closes near 19,000, Nifty nears 5,800 on rate cut hopes

MUMBAI: After lying low for a day, the S&P BSE Sensex continued with its upward journey and surged over 250 points today as institutional investors lapped up rate sensitive stocks on hopes of an interest rate cut by the Reserve Bank of India at its next meet.

"After a series of bad news on politics, growth and interest rate outlook, India has seen some relief from falling commodity prices (especially gold and oil). The downtrend in commodities is clearly good for the economy and eases the tail risks on the twin deficit to some extent," said a Bank of America Merrill Lynch report.

A falling commodity price environment could trigger much faster RBI rate cuts than consensus is currently building in due to reasons such as lower inflation due to lower global commodity prices, twin deficit looking better and change in the RBI Governor in September, the report says.

The 30-share index ended at 18,986.34, up 255.18 points or 1.36 per cent. It touched a high of 19,058.80 and a low of 18,691.61 in trade today.

The Nifty closed at 5,774.75, up 86.05 points or 1.51 per cent. It touched a high of 5,794.35 and a low of 5,681.85 in trade today.

The BSE Midcap was 0.75 per cent higher, while the BSE Smallcap index was up 0.62 per cent.

Among the sectoral indices, the BSE Capital Goods Index was up 2.74 per cent, the BSE Bankex was 2.50 per cent higher, the BSE Auto Index moved up 2.25 per cent and the BSE Realty Index gained 1.61 per cent.

The rise was led by rate-sensitive stocks which surged after India's 10-year bond yields fell to 7.76 per cent, the lowest since July 28, 2010, after the government said exports had hit $300 billion for the fiscal year ended March.

The BSE IT Index was down 0.48 per cent and the BSE Metal Index was 0.13 per cent lower.

BhartiBSE 4.65 % AirtelBSE 4.65 % (4.65 per cent), Tata MotorsBSE 3.98 % (3.98 per cent), Larsen & Toubro (3.61 percent), HDFCBSE 3.34 % (3.34 per cent) and GAILBSE 3.20 % (3.11 per cent) were among the top Sensex gainers.

WiproBSE -1.68 % (1.68 per cent), TCSBSE -0.58 % (0.58 per cent), Sun PharmaBSE -0.04 % (0.27 per cent), Dr Reddy's Laboratories (0.02 per cent) were the only index losers.

The market breadth was positive on the BSE with 1,316 gainers against 1,050 losers


ABDUL WAHEED
PGDM 2nd SEM.
IIMT COLLEGE OF MANAGEMENT

India and China will drive global growth: Chidambaram  

 

 

Chidambaram, who is in the US to meet investors and sell India's growth story, acknowledged that there is "potential for tension" within the countries of the East as they compete for resources and markets.Finance minister P Chidambaram said India and China will drive global growth in the years to come with the growth rate in India projected to be upto 6.7% between 2013 and 2014. "Going forward, China and India will continue to be drivers of world growth, with China growing at 8-8.5% and India at 6.1-6.7% between 2013 and 2014," he said, while addressing students and faculty of Harvard University on 'The Rise of the East Implications for the Global Economy'.

 

 

ARUSI

PGDM 2ndSem

Analysts’ views on how to trade TCS ahead of Q4 results

NEW DELHI: The country's largest software company Tata Consultancy ServicesBSE -1.41 % (TCS) will report its quarterly results post market hours on Wednesday.

The IT major is likely to a report a net profit of Rs 3,611.7 crore for quarter ended March 2013 as against Rs 3,551.8 crore in the last quarter, says an ET Now poll.

Shares of the company off-late have been under pressure, down over 5 per cent so far in the month of April, which according to analysts is largely on profit booking as the stock has surged nearly 18 per cent in the same period.

"Tata Consultancy Service Ltd (TCS) has corrected almost 6.5% since last four trading sessions. The immediate crucial resistance of the stock is at Rs 1525 and a breach of this level is likely to take the stock higher to Rs 1550 and then Rs 1580," said Ranajit Kumar Saha, senior manager - Technical Research at MicrosecBSE -0.76 % Capital Ltd.

"We recommend initiating long positions in the stock only above Rs 1525," he added.

Most brokerage firms have a positive view on the stock and expect it to maintain its industry leading growth rate.

"TCS is likely to maintain its industry leading growth rate in this quarter as well, in our view," HSBC said in a note. It remains 'Overweight' on TCS, notwithstanding the premium valuations.

TCS is falling since the last few weeks. However the pace of fall is not as fast as in case of its peers from the IT sector.

"Currently the stock is finding support near daily lower Bollinger Band, which is expected to throw the stock up," said Gaurav S. Ratnaparkhi, Technical Analyst at Sharekhan Ltd.

"A minor degree bounce from current level would provide an opportunity to initiate fresh short position as the medium term trend for TCS is down," he added.

Ratnaparkhi is of the view that the strategy for TCS would be to sell on rise near Rs 1500 - 1525 with stoploss of Rs 1575 for targets of Rs 1400 - 1350.

ABDUL WAHEED
PGDM 2nd SEM.
IIMT COLLEGE OF MANAGEMENT

Investment pacts can't be subject to foreign jurisdictions:

 ChidambaramTORONTO: Finance minister P Chidambaram has made it clear that any bilateral investment protection agreement has to be subject to jurisdiction of domestic legal institutions and India will not allow it to be decided by foreign courts or tribunals.

"We cannot allow highest court of the land to be subjected to any foreign courts or tribunals," Chidambaram said during a question answer session at a breakfast meeting organised by the Canada-India Business Council (C-IBC) here on Monday.

"Will you allow the Supreme Court of Canada be subject to jurisdiction of any other court or tribunal?" Chidambaram asked the audience.

The minister was answering a question from Peter Sutherland, President and CEO of the Canada-India Business Council, who wanted to know the status of bilateral FIPPA treaty.

The minister said, "We have put Foreign Investment Promotion and Protection Agreement (FIPPA) on hold not only for Canada but other 83 countries too because of two major legal issues: namely right of a foreign investor to sue a sovereign State in a commercial dispute, and jurisdiction. All agreements are under review."

However, he assured the audience that both the Comprehensive Economic Partnership Agreement (CEPA) and FIPPA would become a realty soon.

Referring to Canadian Prime Minister Stephen Harper's visit to India in November last year, Chidambaram said that India and Canada have longstanding bilateral relations, built upon shared traditions of democracy, pluralism and strong interpersonal connections with an Indian diaspora of more than one million in Canada.

This expanding bilateral relationship received further momentum in the past three to four years and was supported by a wide range of agreements between the two countries.

During Harper's visit to India in November 2012, both countries committed to increase annual bilateral trade to USD 15 billion by 2015.

Referring to bilateral trade and investment between the countries, Chidambaram said that while imports and exports were roughly matched in both directions (with total trade approaching over USD 5 billion in 2012 as against USD 4 billion in 2010), the same was not true for bilateral direct investment.

Over 100 top executives of Canadian companies, Nirmal Verma, Indian High Commissioner to Canada; Stephen Beck, Canadian High Commissioner to India; and top officials of Finance Ministry and banking sector attended the meet.

Dispelling fear of foreign investors regarding current account deficit, the Minister said that India was not immune to global economic crisis.

India's economic growth was robust (9 per cent) between 2006 and 2008 and it would gain momentum in next two three years.

India would be seventh largest economy in two-three years and fifth largest economy by 2020, Chidambaram said.

Due to global financial overturns, India faced two major difficulties: namely fiscal deficit and inflation.

"We are committed to fiscal consolidation. Right now the fiscal deficit is 5.3 per cent (of GDP) and we want to reduce it by 0.6 per cent every year till it comes down to 3 per cent (by 2016-17). We have drawn the red line to implement our target," he said. 

 

ARUSI SINGH

PGDM 2ndSem

A rate cut by RBI in May is likely,but not a done deal

NEW DELHI: There is an 80 per cent probability that the Reserve Bank will cut repo rate by 0.25 per cent in its monetary policy review on May 3, but it is "not a done deal", leading global brokerage firm Nomura said in a research note today.

"With growth weak and WPI inflation lower, we believe that a cut is more likely than not, but it is not a done deal. We attach an 80 per cent probability that the RBI will cut the repo rate by 25 basis points (0.25 per cent) on May 3, followed by a long pause," Nomura said.

Declining price of vegetables pulled down inflation to over three-year low of 5.96 per cent in March, core inflation moderated to 3.5 per cent and food price inflation also eased to 8.2 per cent, which is likely to prompt the RBI to consider a rate cut in its annual monetary policy next month.

In addition, the recent fall in commodity prices, including gold, is a boon for the Indian economy and would help in keeping the WPI inflation in check and also help moderate oil and gold imports in the coming months.

"However, lower commodity prices cannot replace fundamental reforms," Nomura said and noted that "India faces structural problems on food price inflation and supply constraints, which cannot be addressed by lowering interest rates".

Considering the weak growth momentum, the tax revenues of the government is likely to disappoint, in addition to this if the government continues to spend ahead of elections, then irrespective of the trend in WPI inflation, as higher spending ahead of the elections will worsen the imbalances again.

"We think monetary policy decisions based on WPI inflation (ignoring elevated core CPI inflation and supply constraints) will be erroneous. Monetary and fiscal policy should move hand in glove," it said.

Nomura further noted that there is a 20 per cent chance that the RBI may leave rates unchanged, citing the 100 basis points (1 per cent) of rate cuts already delivered and prodding banks to first transmit the existing cuts to consumers.

RBI, in its mid-quarter monetary policy review on March 18, reduced the repo rate by 25 basis points from 7.75 to 7.50 per cent to help revive growth.

ABDUL WAHEED
PGDM 2nd SEM.
IIMT COLLEGE OF MANAGEMENT