infotonic

The world is changing, and changing fast. Countries from the west that dominated the global economic and financial system still do so though their dominance has reduced manifold. And when it comes to energy consumption - the driving force behind growth of economies - we have reached a very important inflection point. As per statistics released by BP, primary energy consumption in the non-OECD countries exceeded OECD consumption for the first time in 2008. OECD, or Organisation for Economic Co-operation and Development, is an international organisation of 30 countries like the US, Canada, European nations, Australia and Japan. And given the fact that these countries have seen significant slowdown in their growth rates over the past few years, the energy consumption picture was bound to change, and it did in 2008. In fact, the Asia-Pacific region accounted for 87% of the world's energy consumption growth during the year. While the Chinese consumption growth slowed for the fifth conse...

Worried over the rising import of steel products in India, the government has been mulling over increasing the import duty on steel products from the current level of 5%. Terming the duty to be ‘insufficient’, the steel industry has demanded it to be raised to 20% instead. India has become a preferred dumping destination for global steel mills due to two major factors, rise in domestic steel consumption and lower price of steel products in international markets (due to oversupply). Favouring the increase in import duties, the management of steel major, SAIL, recently gave its view stating that “If the government considers raising the protection level by raising the general import tariff, I suppose that would be welcome at this point."

India's fiscal position is weak. In simple words, it has been spending more than it receives by way of taxes and other collections. To fund this spending, the government has resorted to heavy borrowing by way of issuing bonds and populist measures like subsidies on fuel, amongst others. Despite a new government that was said to be bringing in reforms very aggressively, such populist measures are not proving that easy to do away with. If the government is to give further stimulus to the economy, it will have to borrow more, consequently not only further deteriorating its fiscal position, but also bringing in the risk of further upward pressure on interest rates which will in turn be bad for the general investment scenario in the economy. Highlighting this very predicament, credit rating agency Moody's has warned that India's fiscal position suggests caution, as the government is not in a position to offer sustained support to a weak economy. Further, most developed countries...

That Dr Doom aka Nouriel Roubini is not seeing any 'green shoots' (a metaphor used to describe initial signs of economic recovery) has been largely publicized in the media in the past few weeks. However, for the first time in many months, he has expressed his views on the Indian economy and its stock market and sadly, it does not make for a very good reading. Speaking to a leading business daily, Roubini was of the opinion that the Indian stock markets along with other emerging market equities may have run up too soon too fast and there is a potential asset bubble building here. Although he agrees that part of the reason the stocks have rallied is because of better fundamentals in these markets, he remains concerned about the easy-money situation which is pushing up asset prices sharply. Roubini also proffered his views on whether inflation because of money printing by most governments or deflation because of rising unemployment and lower consumer spending is staring us in the ...

Here's another reason why the global economic recovery may still be vulnerable after all. Money, the raw material that helps produce virtually all of the nation's goods and services is still in short supply in US, the world's largest economy. As per CNN, the 21 biggest recipient of the government's capital injection also known as TARP funding reduced their lending to American consumers and businesses by 7% in the month of April. While the banks argue that there aren't just enough people to lend to, the borrowers on the other hand argue that credit is indeed tough to come by. Whatever be the case, the one who is clearly suffering is the US economy, as slower lending and higher GDP growth do not necessarily go hand in hand.

As the day for announcing the Union Budget is approaching, there are speculations, expectations, apprehensions and hopes all around. In the pre-budget meeting with the party office-bearers, the union Finance Minister, Pranab Mukherjee was inundated with the party's wish-list as well. The demand was for an 'aam-aadmi' centric budget, focusing on four sectors – education, health, infrastructure, and agriculture. The specifics included increasing the minimum support price (MSP) for crops like sugarcane, giving income-tax reliefs to salaried class, extending benefits to senior citizens and soft-loans for minorities, increasing diesel-subsidy for farmers and fishermen. It is a welcome sign that infrastructure sector emerged as the first priority, but it is a little sad why nothing was discussed about reforms like disinvestments, amendments in SEZ bills, insurance bills and other finance sector reforms. Though, Finance Minster didn't disclose any specifics of the budget, look...

The saga continues…of warring brothers, and their confused stakeholders! I am referring to the continued rivalry between the two Ambani brothers – Anil and Mukesh. And a leading news daily (almost all papers have carried it) has rightly called the fight a 'tug-of-gas'! In simple terms, the latest battle is between the first brother asking for a higher-than-originally-agreed-upon price for the gas that he will sell to the other, and the second refuting to pay the higher amount. Now, the second brother (Anil) has got some reprieve as the Bombay High Court has asked the first brother (Mukesh) to sell gas at the originally agreed upon price, which is 44% lower than what he is asking for. This has caused a lot of uncertainty in India's nascent natural gas industry, and could potentially deliver a sharp blow to the fortunes of Mukesh-owned Reliance Industries (RIL). While RIL had gone to the court to uphold the government-approved price of US$ 4.2 per mbtu (Million British Therma...

Cold water has been poured yet another time on the government's plan of deregulating the oil sector and freeing up the oil prices. And this time around, there has been more than just one culprit. First is the fuel price itself. When the talk of de-regulation first started doing the rounds, oil prices were perched quite comfortably. However, with the same inching up and touching the government threshold mark of US$ 67 per barrel, politicians seemed to have developed cold feet. For they do not want to greet the public with a fuel price hike, which at the current crude oil price would have become imperative. Secondly, with elections staring in the face in one of the states and also with one of the government's biggest allies eyeing elections at its home state, price revision could prove counterproductive. The oil ministry however is unwilling to admit that its hands are tied and instead, giving out assurances that although the decontrol of oil prices is definitely on its agenda, i...

India's very own version of the electric car is likely to hit the roads in a few months. Ratan Tata, chairman of the Tata Group recently stated that Tata Motors will be ready with one by September this year. In addition to this, there has been news floating around the world's smallest car, the Tata Nano being launched in the United States within the next two years. Apart from this, it is also planning to launch the vehicle in Thailand and other markets in South East Asia. This will be a strategic move by the company as it plans to use Thailand as its manufacturing base to export its products to other countries. In India, the car is expected to hit the roads by July this year.

Nothing describes the word 'optimism' better than run up we have seen in the past three months. This has been the sentiment prevailing in emerging markets such as China, Brazil and India. As the IHT puts it 'Stock markets in developing countries are riding a wave of optimism.'In hopes that the global economy is recovering and that the developing nations worldwide are leading this recovery, markets have surged tremendously over the past few months. However, the gains recorded in India have been greater to those witnessed in Brazil and China. There have been various reasons for the same - UPA coming back to power, improving auto sales and growth in production levels of core sectors, amongst others. But things have not been so different in the other two countries as well. China has witnessed its industrial production levels rebound, while retail sales in Brazil have seen an increase in recent times. However, on comparing the indices valuations, the situation is a bit diffe...

If you want to become a proud owner of a Lamborghini or a Ferrari, please do not join the finance industry and instead become a farmer. No, this isn't a figment of our imagination but is a candid assessment of the world that we would live in 10 to 20 years from now and it has been made by one of the world's most successful and outspoken investors. The man in question is Jim Rogers. Speaking to India's leading business daily, the bow-tie sporting maverick opined that the world is shifting away from the financial types to producers of real goods and the transition could last for several years. Hence, ten years from now, it could be the farmers who will drive fancy cars while stock brokers will move around in tractors and taxis. Rogers also said that if the Indian government really gets serious about reforms this time around, then India would be the one of the biggest investment stories for the next twenty years or so. He was also worried about the fact that few of the develop...

Stocks from the banking sector have been major beneficiaries of optimism that has been seen since the second week of March. Or what would justify that while the Sensex has gained by a strong 67% since March 9th, the BSE-Bankex is up a whopping 109%. While investors have rooted for stocks from the sector expecting that an economic upturn will be beneficial for the sector, the fact that is not being given much thought is the potential increase in banks’ non-performing assets (NPA) over the next few quarters. At least, this is what the credit rating agency, CARE, believes, as it foresees the net NPAs of the Indian banking sector to triple from the current 1% of advances to 2.7-3% of advances by the end of FY11. As per the agency, given that delayed loan repayments are currently suppressed under the shadow of restructuring where banks are giving more time to companies to pay back their loans or are lowering interest rates to help companies pay back faster, they will emerge bad once the res...

When i was away to disneyland, the markets across asia shot up. In an interesting interview to Mint, Ruchir Sharma, the head of emerging markets at Morgan Stanley Investment Management, has said that what’s happening right now in the markets is nothing but a cyclical bull market within what is still a structurally a bear market. As far as India is concerned, he opines that Indian markets can exit this bear market regime a lot quicker than the developed world. "I think valuations have already moved now from being cheap in March or late October, to being sort of relatively fair to slightly expensive... If you are looking for a true new bull market... I think the base for that will be set by the middle of the next year," he said. And that’s when he feels that the bull market rules will come back into play, and the Sensex will once again be free to touch its highs of 21,000. HOWEVER noted investment gurus Jim Rogers and Marc Faber are of an opposite view when it comes to world ma...