There’s a popular saying in these
parts which goes – “A Delayed Monsoon Is
A Denied Monsoon”
Things last year were so bad that
I had said that we were even prepared to accept a delayed monsoon. If the water
bearing clouds of the South West Monsoon fail then India has no choice but to
resort to importing food crops, vegetables and pulses. It’s a complicated
weather system and the monsoons are pretty much the lifeblood of India.
It’s still June .Figures from the Met department have shown that the going so far has been good .The monsoon’s
progress has been slow but it isn’t a big worry.Normally around the third week of June, the
monsoon reaches Central India. This year the rains have come to South India and
just 2 days back entered Central India.
There’s
a famous quote known as Merkin’s Maxim which states “When In Doubt, Predict That The
Trend Will Continue”. India’s Market Indices definitely seem to be
following this Maxim. During the past few trading sessions the Sensex has
breached the 17,000 level and the Nifty has also broken Five Thousand. While
they have fallen back into the sub 17k level and sub 5k level respectively. The
two psychological levels have become real factors. There is however a lot of
doubt floating around in the market, it seems to have become the most important
psychological determinant of trade in this particular range and period.Movement in the present range has become a two way street.
Have you ever perhaps wondered “How come the inflation rate has been negative
for so long but I’m still stuck paying so much for vegetables and Rice? Their
prices aren’t coming down because of inflation; instead they’re going up
everyday.”
If you have or want to know in any case
then here’s a simple explanation. There are two indices which deal with this
particular problem. Inflation on the whole is measured using the Wholesale
Price Index (WPI), while the price you pay for your vegetables depends
upon the CPI or the Consumer
Price Index.
So while the WPI has been negative for
over two months, the CPI as luck would have it has drastically increased, the
result is therefore that you end up paying a whole lot more for food items .
India’s inflation problem is over
for the next few months.Unfortunately it’s given birth to the problem of Deflation.
A situation in which there is a decline in the level of prices. Many will ask why this is a bad thing? Especially when
Indian business watchers have been shouting that the inflation level has been
too high. What could possibly be wrong if you get to pay less for a product
that cost a lot more in the previous months. You will pay less in the near
term thanks to deflation but if the same condition persists over time then many
will end up losing their jobs.
The New Year for the Indian
economy is an uncertain one. The highs that the markets reached a year ago have
inadvertently led to the lows that it finds itself in. The euphoria from the Bull
Run that lasted for four years has been wiped away in a matter of twelve months
and has given birth to a Bear Market not seen in over half a century. For the Finance
Department, getting the economy on track remains priority number one. In one
sense it’s a good thing that India has not crept into a recession but the fact
does remain that the magical growth rate of 9% will somehow not be that easy to
achieve.
It’s been one very small success
for the Indian Finance departments. The Finance Ministry in collaboration with
the Reserve Bank Of India and similar regulators has managed to curb India’s
inflationary streak. A problem which until a few months ago threatened to send
the economy into a totally unflattering new direction. India’s biggest fight
against inflation in over a decade seems to have been won thankfully, at least
for now.
If the Finance Minister is to be
believed then everything in the Indian banking sector is hunky dory. The banks
have enough cash and the RBI is doing a wonderful job. At least, that’s the
impression one would have got if he or she were present at a press conference
addressed by P.Chidambaram earlier today. Cynics have already pegged this
estimation as a deliberate lie that misguides people about our banking system
making out the case for Indian banks to be as bad as faced by banks in the US.
Both arguments are valid but on
this count it’d the
Finance Minister’s statements that have turned out to be more accurate.
Indian banks aren’t as comfortable as he says they are but they definitely have an ample supply of liquidity to power the Indian economic engine.
The movement of oil prices in the
world markets has brought about the setting in of some important changes. Free
markets like the United States or the Socialist ones like India have had to
accept the fact that the very structure of the world economy is changing. We
once viewed the 100 dollars per barrel of oil as an indication to push the
panic button but after everything that has happened in the past one year there
is an inclination to believe that this figure despite being regarded as ‘high’
is still a ‘realistic’ expression of the oil scenario.
Submitted by Financeman on June 28, 2008 - 1:17am.
India Inc seems to have gone into a hole. inflation is going up by the day. Inflation is crossing new highs and its a cause of alarm for the economy. Even the government has knelt to the fact that it is unable to control inflation.
That has spread panic among investors and that has triggered a stock market crash. The sensex has taken a beating and closed below 14K on the week ending 27/6.
Thats not the end of the story. The cost of essential commodities have gone up and the worst hit are the daily wage labourers who barely manage 2 meals a day.
There’s
a famous quote known as Merkin’s Maxim which states “When In Doubt, Predict That The
Trend Will Continue”. India’s Market Indices definitely seem to be
following this Maxim. During the past few trading sessions the Sensex has
breached the 17,000 level and the Nifty has also broken Five Thousand. While
they have fallen back into the sub 17k level and sub 5k level respectively. The
two psychological levels have become real factors. There is however a lot of
doubt floating around in the market, it seems to have become the most important
psychological determinant of trade in this particular range and period.Movement in the present range has become a two way street. 
India’s inflation problem is over
for the next few months.Unfortunately it’s given birth to the problem of Deflation.
A situation in which there is a decline in the level of prices. Many will ask why this is a bad thing? Especially when
Indian business watchers have been shouting that the inflation level has been
too high. What could possibly be wrong if you get to pay less for a product
that cost a lot more in the previous months. You will pay less in the near
term thanks to deflation but if the same condition persists over time then many
will end up losing their jobs. 
The New Year for the Indian
economy is an uncertain one. The highs that the markets reached a year ago have
inadvertently led to the lows that it finds itself in. The euphoria from the Bull
Run that lasted for four years has been wiped away in a matter of twelve months
and has given birth to a Bear Market not seen in over half a century. For the Finance
Department, getting the economy on track remains priority number one. In one
sense it’s a good thing that India has not crept into a recession but the fact
does remain that the magical growth rate of 9% will somehow not be that easy to
achieve. 
It’s been one very small success
for the Indian Finance departments. The Finance Ministry in collaboration with
the Reserve Bank Of India and similar regulators has managed to curb India’s
inflationary streak. A problem which until a few months ago threatened to send
the economy into a totally unflattering new direction. India’s biggest fight
against inflation in over a decade seems to have been won thankfully, at least
for now. 
If the Finance Minister is to be
believed then everything in the Indian banking sector is hunky dory. The banks
have enough cash and the RBI is doing a wonderful job. At least, that’s the
impression one would have got if he or she were present at a press conference
addressed by P.Chidambaram earlier today. Cynics have already pegged this
estimation as a deliberate lie that misguides people about our banking system
making out the case for Indian banks to be as bad as faced by banks in the US.
