Cochin stock exchange

Financing Infrastructure in India: Macroeconomic Lessons and Emerging Market Case Studies IMF work Paper

2011-08-07T23:06:00.000-07:00

Driving infrastructure development, notably mobilizing financial resources for infrastructure projects, has been challenging in many countries. This study includes two parts: an empirical analysis of macroeconomic risks associated with infrastructure booms, and a case study of four emerging economies about their practice of funding infrastructure development. The study shows that (i) there is no empirical evidence that rapid infrastructure growth would undermine contemporary macroeconomic performance, implying that room is created to accommodate infrastructure booms without compromising fiscal and external sustainability; (ii) banks may play an important role in financing infrastructure, but caution is needed to avoid directed lending and regulatory forbearance that the authorities may use to promote financing; (iii) capital market development is important to accommodate the usually high financing needs, and encouraging private investors to move into infrastructure would require regulatory and institutional improvements; and (iv) public support, including credit guarantees, may help bolster investors’ confidence, but the authorities should carefully monitor and manage fiscal risks.

International Markets weekly highlights

2011-07-24T05:12:00.000-07:00

Weekly News Highlights,

· Germany’s ZEW index of economic sentiment slipped more than expected in July as Europe’s government debt crisis weighed on optimism despite the continuing strength of Europe’s largest economy.

· The Bank of England’s last meeting signaled policy makers are less pessimistic about the economy than some investors had anticipated, making further bond purchases unlikely.

· On a seasonally adjusted basis, the composite Purchasing Managers' Index (PMI) in Germany dropped to a score of 52.2 points in July, the lowest level in 24 months.

· The manufacturing PMI in the Euro-zone dropped to a reading of 50.4 points in July, following a reading of 52.0 points posted in June.

· The rate of new home construction in the United States exceeded analysts' expectations and rose in June by 14.6 percent to an annualized rate of 629,000 units.

· Japan's merchandise trade exports (YoY) improved to -1.6 percent in June from -10.6 percent, where the expectations estimate of -4.1 percent
IndiaThe All-India Consumer Price Index Numbers for Agricultural Laborers and Rural Laborers for June, 2011 increased by 6 and 5
points respectively to stand at 598 points for Agricultural Laborers and 597 points for Rural Laborers.

Cochin Stock Exchange (CSE):

2011-07-05T04:08:00.000-07:00

Cochin Stock Exchange (CSE) is counted among one of the premier Stock Exchanges in India. It was established in 1978 and had undergone tremendous transformation over the years. In 1978, it had only 5 companies listed and had only 14 members. Currently, it has 508 members and 240 listed ompanies.

Cochin Stock Exchange went for computerization of its offices in 1989. To keep pace with the market, it took various initiatives, one such initiative was trading dematerialised shares. It introduced the facility of computerised trading known as "Cochin Online Trading" (COLT) on March 17, 1997. It also became one of the promoters of the Interconnected Stock Exchange of India (ISE). The basic idea of ISE was to consolidate the smaller and fragmented markets which are less liquid into a national level integrated liquid market.

Goals of Cochin Stock Exchange

To provide investors a high level liquidity where the cost and time in the entry and exit from the market becomes the least.
To provide a high tech solutions and absolute transparency of all the operations, to the extent of possibilities.
To built an infrastructure for the capital market by turning it into a financial super market.
To spread equity cult and serve the investors of the region.
To provide professional stock broking and investment management function.
To impart capital market knowledge to all its intermediaries on a continuous basis.
To develop a winning team of professionals, be it as employees of the exchange to play a crucial role in shaping the future of the exchange and its associates

Cochin Stock Exchange Membership Profile

According to the norms of SEBI, Cochin Stock Exchange charges an initial deposit of Rs. 2 lakhs from its members. Each member has to contribute additional deposits based on the volume of trade. Along with this there is a monthly subscription fee of Rs. 200 and Rs. 500 for individual and corporate members respectively. The members can appoint assistants or sub-brokers based on the guidelines provided by SEBI.

Each member has to pay an annual amount of Rs. 5000 during the five years of membership to SEBI as advance payment on or before 1st October of each financial year. From the 6th to 10th year of membership, the total amount payable is Rs. 5000 being payable at the beginning of the 6th year, which is counted as payment of Rs. 1000 per annum. More to this, if the previous year's turnover is more than 1 crore, a 0.01% of the exceeding amount should be paid to SEBI.

Cochin Stock Exchange Investor Protection Cell CSE maintains a separate legal department which is headed by Manager-Legal. It advises the management about the merits and demerits of legal issues including the exchange. The department's major function is to bring to notice to members and the investing public about the different rules, regulations and directives of SEBI with regard to trading in the capital market by the brokers and sub-brokers.

The areas which are being looked after are:
Investor Grievance Service
Arbitration
Default
Cochin Stock Exchange Training Centre
The Institute educate members, investors and general public. It offers four essential modules. They are as follows: Capital Market
Derivatives
Depository
Mutual Funds
Cochin Stock Exchange Facilities A software called MULTEX is given to all brokers. The brokers can simultaneously access to BSE and NSE terminals. To analyse the market trends, the exchange has provided a software package known as Meta Stock and ERS. It has gained wide acceptance from members, investors and students from various institutes.

The exchange maintains a good library with over 2500 books, journals, business magazines and reports. Beside all these, it also maintains various committees for the betterment of the brokers, public and other associated with the exchange. An optical fiber connection has been laid down by Asianet Satellite Telecommunications to facilitate more trading options.

Cochin Stock Exchange Office
Cochin Stock Exchange Ltd.
36/1565,4th floor
Judges Avenue,Kaloor
Kochi-682017
India
Website: www.cochinstockexchange.com

Inflationary conditions out of my control: PM

2011-06-29T05:28:00.000-07:00

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NEW DELHI: Prime Minister Manmohan Singh Wednesday told editors that international economic and political conditions that were "out of his control" had led to high inflation in the country. He added that inflation should drop to six percent by March 2012.

"We asked him that as an economist, you are expected to perform well on the economic front - but in your tenure, inflation has gone up so high. He (prime minister) said that I agree and take the criticism," Kumar Ketkar, editor of Divya Marathi told reporters after the interaction at the prime minister's 7, Race Course Road residence.

The prime minister told the editors that there "are three factors which are out of his control - the international commodity prices, the Middle East crisis, the oil prices".

Manmohan Singh told the group that the government was trying to bring back inflation under control. "He said by March the inflation would be around six percent," Ketkar said.

India's food inflation had soared to a nearly 10-week high of 9.13 percent for the week ended June 11. The government also increased the price of diesel, cooking gas and kerosene last week

Dubai Internet City Registers Year-on-Year Growth in 2010 with 150 Companies Setting up Base at ICT Cluster

2011-01-30T04:36:00.000-08:00

Dubai-UAE: 30 January, 2011 – Dubai Internet City, part of TECOM Investments, today announced it has registered year-on-year growth in 2010 with 150 companies setting up base at the ICT cluster.In 2010, DIC also saw 48 of its business partners expanding their commercial operations and businesses in the region.

The growth witnessed by the ICT cluster is poised to increase further in 2011 with enterprise IT spending in Europe, the Middle East and Africa (EMEA) forecast to reach US$795.2 billion , a 1.3 percent increase from 2010, according to Gartner.

Malek Al Malek, Managing Director at Dubai Internet City and Dubai Outsource Zone, said: “The year 2010 proved positive for us on the back of an industry uptrend and saw many businesses emerging as winners. Additional investments in potential growth areas and operational expansion beyond the region were also witnessed. For DIC, this translates into more companies opening direct offices at the ICT park with most of the leading brands driving the region’s positive trend.

“The favourable year-on-year trend for the ICT cluster reflects the development in the region that continues to attract a large community of ICT professionals and specialists. We believe the new investments and influx of top level executives will continue in 2011 with multinational organisations across the globe regarding this region as the next growth area.”

Key sectors that saw new additions at Dubai Internet City in 2010 include telecommunications and networking, as well as software, Internet and multimedia. Cable and Wireless Europe, ADP Dealer Services Gulf, Pitney Bowes Software, China Communication Service, and Versata are among the top global brands that chose to base their operations at the ICT business park.

A significant number of companies from firststeps@DIC, a unique facility that allows businesses to lease short-term office space while exploring market opportunities, also expanded their presence into full-fledged operations. Currently, more than 25,000 ICT professionals are employed within DIC as part of technical teams and support staff.

Innovation, entrepreneurship and the evolving SME segment in the country were the other major focus areas for the ICT cluster in 2010. Supported by DIC, events such as DemoCamp Dubai with the first series of 2011 due in April, ArabNet Forum, TIE (The Indus Entrepreneurs), and SME Advisor Awards 2010 spotlighted the three areas in the country and the region at large.

Malek said: “Technology is key driver of growth and contributes significantly to the economy of the country, reflecting the entire region’s position as a fertile ground for small businesses. Though big businesses are the mainstay of the economy, smaller, nimbler organisations continue to expand their role as major growth enablers.

“As the region’s key technology cluster, Dubai Internet City remains integral to facilitating the growth of SMEs by creating and offering the necessary infrastructure and technical capabilities to grow from a grassroots level.”

At the forefront of the region's ICT industry, Dubai Internet City remains committed to supporting emerging technology trends in the region and continues to play an instrumental role in developing the industry while contributing to Dubai's drive towards creating a knowledge-based economy

Dubai Stock Exchange: The Dubai Government expects to generate Dh29.9 bi...

2011-01-12T22:42:00.000-08:00

Dubai Stock Exchange: The Dubai Government expects to generate Dh29.9 bi...: "The Dubai Government expects to generate Dh29.9 billion in revenue against expenditure of Dh33.6 billion this year, leaving it with a Dh3.77..."

Dubai Stock Exchange: UAE entering 2011 with signs of recovery from the ...

2011-01-02T04:22:00.000-08:00

Dubai Stock Exchange: UAE entering 2011 with signs of recovery from the ...: "By Nadim KawachThe UAE is entering 2011 with signs of full recovery from the clutches of the 2008 global fiscal distress, with its economy g..."

Global Economy Remains Fragile, Says IMF

2010-10-13T04:13:00.000-07:00

Unemployment remains major economic, social challenge

■Need to revive private sector growth in advanced economies, while rolling back large fiscal deficits

■Emerging markets should shift toward more domestic-led growth

The world economy, led by emerging market and developing countries, is forecast to grow by 4.8 percent in 2010 before falling back to 4.2 percent next year, but a sharper global slowdown is unlikely, the IMF says in its latest forecast.

With the world still trying to bounce back from the global economic crisis, the IMF says in its latest World Economic Outlook that the recovery remains fragile and uneven. Unemployment remains a major economic and social challenge. More than 210 million people across the globe may be unemployed, an increase of more than 30 million since 2007. Three-fourths of the increase has occurred in advanced economies, the IMF said.

“The world economic recovery is proceeding,” IMF Chief Economist Olivier Blanchard told a press conference. “But it is an unbalanced recovery, sluggish in advanced countries, much stronger in emerging and developing countries.”

Achieving more balance

The key policy challenge is to effect a smooth transition from public to private sector-led growth in many advanced economies, and from external to domestically driven growth in key emerging economies. While short-term macroeconomic policies are broadly appropriate, completing the two rebalancing acts will require tackling the medium-term fiscal, financial, and structural challenges raised by the crisis.

Blanchard said that the pieces of the global economy were interconnected and countries should act in coordination. “Unless advanced countries can count on stronger private demand, both domestic and foreign, they will find it difficult to achieve fiscal consolidation. And worries about sovereign risks can easily derail growth,” he warned.

Blanchard: “Unless advanced countries can count on stronger private demand … they will find it difficult to achieve fiscal consolidation”

“If growth were to slow or even stop in advanced countries, emerging market countries would have a hard time decoupling. The need for careful design at the national level, and coordination at the global level, may be even more important today than they were at the peak of the crisis a year and a half ago.”

Different speeds

The report notes that economies are recovering at different speeds and intensities (see table). Recoveries in most advanced and a few emerging economies are moving at a sluggish pace and unemployment is high, holding back consumption. Improvements in business investment in the hard-hit economies have not translated into substantially lower unemployment. Financial sector weaknesses remain largely unresolved, undermining credit provision. By contrast, many emerging and developing economies, which did not have major financial excesses prior to the Great Recession, are again seeing strong output and employment growth.

Global activity is forecast to expand by 4.8 percent in 2010 and 4.2 percent in 2011, broadly in line with earlier IMF staff projections. In advanced economies, growth is projected at 2.7 percent in 2010 and 2.2 percent in 2011, with some economies slowing noticeably during the second half of 2010 and the first half of 2011. As a result, economic slack will remain substantial and unemployment persistently high for some time.

Prospects are better for emerging and developing economies, which are projected to expand at rates of 7.1 percent and 6.4 percent for 2010 and 2011. Inflation is projected to stay generally low, amid continued excess capacity and high unemployment, with a few exceptions among the emerging economies.

Need for coordinated policies

To spur a stronger recovery and more employment growth, government policies need to become more proactive and coordinated to achieve the internal and external rebalancing required for robust real GDP and employment growth. “Historical evidence suggests that countries hit by financial crises typically suffer permanent output losses relative to precrisis trends,” the report says. “However, outcomes after individual crises have varied widely, depending on the policy responses.”

Households and companies have already scaled back expectations for growth over the next one or two years. Policymakers must avoid paralysis and put in place policies to strengthen medium-term prospects. “The challenge ahead if for policymakers to put in place, in a coordinated manner, policies that support the fundamental adjustments needed for a return to healthy medium-term growth,” the report states.

The IMF has warned that the financial sector remains the Achilles’ heel of the recovery. The global crisis was rooted primarily in the financial sector and the failure of policymakers to grasp the depth and breadth of ways in which financial shocks could be amplified across financial institutions and economies.

Ensuring that a still-damaged financial sector does not act as a drag on activity requires

• restructuring or resolving weak banks;

• enhancing banks’ capital adequacy and liquidity buffers;

• pursuing orderly and globally consistent regulatory reform; and

• strengthening supervision and oversight of the financial system.

Monetary and fiscal responses

Monetary policy should stay highly accommodative to support activity and help bring down unemployment, but fiscal consolidation needs to start in 2011 in the advanced economies. If global growth threatens to slow appreciably more than expected, countries with budgetary room could postpone some of the planned consolidation.

One of the most urgent challenges for advanced economies is to adopt plans that help achieve sustainable fiscal positions before the end of the decade. This task is now more pressing than it was six months ago to rebuild room for fiscal policy maneuver in the face of still volatile sovereign debt markets. Such room could be needed because monetary policy alone might not be able to provide sufficient support to counter a threat for a markedly more pronounced-than-expected weakening of activity.

Emerging economies that relied heavily on demand from advanced economies will have to rebalance growth further toward domestic sources to achieve growth rates similar to those before the crisis. In economies with excessive external surpluses, removing distortions that drive high household or corporate saving rates and deter investment in nontradable sectors would facilitate the rebalancing of growth to domestic sources. Such rebalancing will also require further deregulation and reform of financial sectors and corporate governance, as well as stronger social safety nets in key Asian economies.

Sensex ends at 20000; Tata Power, Wipro, HDFC up

2010-09-21T04:02:00.000-07:00

MUMBAI: Benchmarks ended above psychological resistance levels as foreign funds continued to drive the indices ahead of US Federal Reserve meet. IT, capital goods and pharma stocks led the rally while FMCG and realty ended lower.

Bombay Stock Exchange’s Sensex ended at 20001, up 94.90 points or 0.48 per cent. The 30-share index touched a high of 20088.96 and low of 19860.88 in today’s trade.

National Stock Exchange’s Nifty closed at 6008.25, up 27.80 points or 0.46 per cent. The index touched intraday high of 6032.80 and low of 5961.85.

BSE Midcap Index was down 1.02 per cent and BSE Smallcap Index declined 1.35 per cent.

Amongst the sectoral indices, BSE IT Index gained 2.55 per cent and BSE Capital Goods Index moved 1.11 per cent higher. BSE FMCG Index declined 1.54 per cent and BSE Realty Index slipped 1.51 per cent.

Tata Power (2.93%), Wipro (2.73%), TCS (2.53%), HDFC (2.19%) and L&T (1.99%) led the Sensex gainers.

ITC (-2.58%), Jaiprakash Associates (-1.52%), DLF (-1.38%), Hindalco (-1.22%) and Reliance Communications (-1.20%) were amongst the laggards.

Market breadth was negative on the BSE with 1773 declines against 1120 advances.

Not a good time to chase the market: Rashesh Shah, Edelweiss Capital

2010-09-21T03:44:00.000-07:00

This is a bitter sweet kind of a 6000. What are the lessons you think this particular rally provides?

Everybody was trying to wait for the market to break out and then say I will buy after the market starts going up. It is hardly ever an optimal strategy because we had almost a year of a sideways market where the market was hovering around in an 8-10% zone and then it just broke out about 4 weeks ago. So in the last 4 weeks, it has gone off almost 12-13-14%. So it is not worthwhile because there are a few weeks in the year in which the market really makes a move and for investors to try and catch those period is very hard. So all through the year whenever opportunities are good, whenever good companies and good sectors are there, investors should take that opportunity and not try to time the market so efficiently.

Did you see this coming? A couple of weeks back we were talking about the index has not done too much year to date and now the tables have completely turned. If you are looking at an upside from these levels, how much are you working with?

Almost for the last 4 to 5 months every time we spoke to investors, especially international investors (I was in the US a couple of months ago), almost all investors were underweight India and everybody was waiting for a correction because all of us have been saying India is more expensive as compared to other emerging markets, is slightly premium priced and everybody thought that India will become equal to other emerging markets and that is when people were actually planning to increase their allocation. But obviously things do not happen in that way. Now could anybody have anticipated the catalyst this time? It is hard to say when, but we all knew that there were a lot of allocations which were waiting on the sidelines, most people were underweight India and everybody was awaiting a correction which obviously has not come at all.

In an interview with ET Now, Rashesh Shah, chairman & CEO, Edelweiss Capital Ltd, spoke on current markets trends. Excerpts:

IMF Signs US$10 Billion Note Purchase Agreement with India

2010-03-16T23:11:00.001-07:00

The International Monetary Fund (IMF) and the Reserve Bank of India have signed an agreement under which the Reserve Bank of India would purchase up to US$10 billion in IMF notes.

The note purchase agreement follows the endorsement by the Executive Board on July 1, 2009 of the framework for issuing notes to the official sector (see Press Release No. 09/248). The Indian authorities had already expressed their intention to invest in IMF notes (See Press Release No. 09/300).

The agreement offers India a safe investment instrument at the same time as boosting the Fund’s capacity to help its members to weather the global financial crisis, and to facilitate an early recovery from the worldwide economic crisis.

The Fund can now add these resources to those already available through agreements signed with other members, which contribute toward an increase in Fund resources that was requested in April 2009 by G-20 leaders and the International Monetary and Financial Committee.

Earn Money by investing in Share Market

2010-02-09T00:41:00.000-08:00

Are you interested in buying shares of some blue chip companies or watching your profits build up? If your answer is affirmative, then it is important for you to learn the basics of this term. In order to accomplish your desire of learning these basics, there are a number of online courses and stock brokers available to help you out. It requires a minimal investment with a broker to decide the stocks you are looking for. Before getting started in the share market, you should remember that the prices of diverse shares will be different, according to how prospective investors will examine their value. In fact, some of the factors such as opinion, news, financial matters and others can affect the cost/value of the shares.

With the advent of the internet, it has become very easy to buy and sell any stock through online stock trading. In the trading system, there is no need of a broker. Now you can start your online stock trading with a minimal investment. You are advised to seek professional guidance while investing in various stocks of the company. In India, you can make investment by buying financial instruments like bonds, government securities, derivatives, etc and earn huge amount of money. It is worth to disclose that nowadays, for raising money, Indian share market is considered as one of the important sources for various companies.

In India, there are two popular stock exchanges namely National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). Apart from these two, some of the others include:

• Calcutta Stock Exchange Association Limited

• Delhi Stock Exchange Association

• Inter-connected Stock Exchange of India

• Securities and Exchange Board of India (SEBI)

So, if you want to earn huge money by investing money these financial instruments, then avail the professional guidance of numerous websites, that assists you to learn and understand the basics of stock market. It also helps you out to learn the bare share market essentials and become an online trading guru.

Don't mix up between government and companies debts, urges Dhahi Khalfan

2009-11-30T22:48:00.000-08:00

The reaction experienced by the world markets in the wake of Dubai government's decision to restructure Dubai World Group was exaggerated, said Abdul Rahman Al Saleh, Director General of Dubai Finance Department. Speaking at the press centre at Dubai Media Incorporated (DMI), he underlined that there was huge media mixed up between the Dubai World Group and the Dubai government, adding that Dubai World Group "is a company set up with commercial basis and its transactions with creditors and investors were based on that respect. He added that the group used to get financing based on its commercial status and feasibility of its projects. "The gross mistake of the media is that they deem the company as part of the government. It is baseless", he said, stressing that the government of Dubai has supported the group since its inception. Al Saleh noted that Dubai World Group has implemented huge projects in the emirate of strategic significance, but has been affected by the World Financial Crisis similar to what happened to many corporations worldwide. He added that it faced difficulties in the redemption of its financial obligations, and hence, the decision taken by the government to restructure the company was to help it overcome that situation. He added that the debts and obligations were not guaranteed by the government, indicating that it was set as an independent commercial company. He added that though the government is owner, " the company has multi activities and prone to risks. So from the date one it was indicated that the government is not a guarantor. Therefore, the dealing of company with all parties was based on this conception." Al Saleh underscored that the creditors should bear part of responsibility as they offered loans as per feasibility of projects and not upon the guarantees offered by the government. In reference to the restructure decision, which might have created inconvenience, particularly for the creditors, Al Saleh reiterated that the decision was sound and favours all parties in long term and not short term as Dubai World Group has strategic projects. He emphasised that the reaction was disproportionate to the size of Dubai World Group loan problem and that the situation would be rectified, calling on the media to learn from the experience. Al Saleh said the restructure of companies is normal in many countries through intervention of governments or boards of companies to deal with difficulties of some companies when they occur. He cited the intervention of the UAE Central Bank yesterday to assure the markets and banks, stressing the existence of good federal coordination in this respect. â€“ Emirates News Agency, WAM

IMF Announces Sale of 200 metric tons of Gold to the Reserve Bank of India

2009-11-04T02:06:00.000-08:00

The International Monetary Fund announced today the sale of 200 metric tons of gold to the Reserve Bank of India. This amount represents almost half of the total sales volume of 403.3 metric tons that was approved by the Executive Board in September (see Press Release No. 09/310).
“I strongly welcome this transaction with the Reserve Bank of India,” Managing Director Dominique Strauss-Kahn stated. “This transaction is an important step toward achieving the objectives of the IMF’s limited gold sales program, which are to help put the Fund’s finances on a sound long-term footing and enable us to step up much-needed concessional lending to the poorest countries” (see Press Releases No. 08/74 and No. 09/268).
The transaction, which is in the process of being settled, involved daily sales that were phased over a two week period during October 19-30, 2009, with each daily sale conducted at a price set on the basis of market prices prevailing that day. The total sales proceeds are equivalent to US$ 6.7 billion or SDR 4.2 billion. Under the Fund’s Articles of Agreement, all gold sales must be conducted at prices based on market prices, including direct sales to official holders as in the case of this transaction.
As previously announced (see Press Release No. 09/310), in accordance with the guiding principle of avoiding disruption of the gold market, the IMF’s Executive Board adopted modalities for the gold sales consistent with guidelines it had earlier established. In particular, the Fund is standing ready for an initial period to sell gold directly to central banks and other official holders that may be interested in such sales. Thereafter, on-market sales of any amounts remaining from the 403.3 tons would be conducted in a phased manner over time, following the approach adopted successfully by central banks participating in the Central Bank Gold Agreement.
As previously indicated, the Fund will inform markets before any on-market sales commence, and will report regularly to the public on progress with the gold sales.

RIL net profit dips 12% in Q1

2009-07-27T06:39:00.001-07:00

Mumbai, Jul 25: Severely hit by the falling demand for fuel, Reliance Industries Ltd (RIL) posted a 11.5 per dip in its net profits for the first quarter ended Jun 30, 2009. The company's net profit stood at Rs. 3,636 crore for the quarter against Rs. 4,110 crore of the corresponding quarter of the previous year. The turnover plummeted by 22.6 per cent to Rs. 33,309 crore from Rs. 43,050 crore.
India's largest private sector company that posted its Q1 results on Friday, Jul 24 said that decline in prices accounted for a 24 per cent reduction in revenue.
While the gross refining margin was at 7.5 dollars per barrel, the net debt to equity of the company is 0.24 as on June 30, 2009.
Commenting on the results, RIL Chairman and Managing Director Mukesh D Ambani said, “Timely completion with safe and stable start up of the new SEZ refinery and the deep-water oil and gas KG D6 block are noteworthy accomplishments. These projects will not only play a significant role in shaping the future growth at RIL but more importantly will help change the energy landscape of India and the industry globally."

The World Bank said on Monday that the global recession this year will be deeper than it predicted in March world Bank

2009-06-23T05:17:00.000-07:00

The world economy will contract 2.9 percent, compared with a previous forecast of a 1.7 percent decline, the Washington-based lender said in its latest report. Growth will be 2 percent next year, down from a 2.3 percent prediction, the bank said.
Regionally, the bank said that while the Middle East and North Africa region has been less directly affected by the credit crunch than other regions, local equity and property markets have come under intense pressure, and developing countries in the region have suffered from much weaker conditions in the high-income countries in the region.
Consequently, remittances, services exports and FDI flows from these countries and high-income Europe are expected to fall in 2009 - cutting into incomes. Growth is projected to halve to 3.1 percent in 2009, then edge up to 3.8 percent in 2010 and 4.6 percent in 2011.
Global GDP growth is expected to rebound to 2% in 2010 and 3.2% by 2011. In developing countries growth is expected to be higher, at 4.4 % in 2010 and 5.7 % in 2011, albeit subdued relative to the robust performance prior to the current crisis.
"The need to restructure the banking system, combined with emerging limits to expansionary policies in high-income countries, will prevent a global rebound from gaining traction," said Justin Lin, World Bank Chief Economist and Senior Vice President, Development Economics,
'''Developing countries can become a key driving force in the recovery, assuming their domestic investments rebound with international support, including a resumption in the flow of international credit."
While the authors note that extraordinary policy responses by a number of big economies have prevented systemic collapse, they stress the importance of concerted global action while the crisis is still underway.

Election Results India 2009 -Are election results positive for the country and the economy

2009-05-16T00:36:00.000-07:00

The figures available so far indicate a clear lead for the Congress led grouping. The Congress and its allies have performed much better than expected and have proven exit polls wrong. But, even with the numbers it has notched up, it will still need to seek support from some other parties. Will the UPA be able to get enough allies to form a stable government? Will the new government now be in a position to push through more critical reforms now that it has a much clearer mandate? What is your take on the election results and the implications it has for the country?

Manmohan Singh all set to return to power in India

2009-05-16T00:35:00.000-07:00

The Congress-led UPA is all set to retain power at the Centre putting up an impressive performance in states like Andhra Pradesh and Tamil Nadu to overwhelm the BJP-led NDA.The UPA alliance was ahead in 250 constituencies with Congress alone leading in 198 seats. The ruling Front is just short of a little over 20 seats for the magic figure of 272 in the 543-member Lok Sabha.The NDA was leading in 157 seats with BJP ahead in 119 seats.The Congress exulted over its victory saying it was a vindication of its policies while BJP spokespersons were still unwilling to concede defeat though they admitted that the UPA was ahead in early trends.Manmohan Singh will be the first Prime Minister after Jawaharlal Nehru to return to power after a full five-year term with the Congress having nominated him as its candidate for the top post, first time it had done in its history.The Congress performance was spectacular in Kerala where it routed the Left Front and dealt a severe blow to the Marxists in West Bengal with help from ally Trinamool Congress.It also swept Delhi, did exceedingly well in Rajasthan, Haryana, Punjab, Uttarakhand and more than doubled its tally in UP leading in 20 of the 80 seats there.

Global Projection Model (GPM) Bayesian system estimation technique

2009-04-08T02:12:00.000-07:00

GPM is well suited to analysis of the practical problem at hand; employ a Bayesian system estimation technique. This efficiently combines information in the current data set with prior information about coefficients, based on economic theory and existing empirical knowledge, and on properties implied by the model as whole. In contrast, pure a priori calibration may lack empirical plausibility, while data-driven estimation procedures may yield anomalous results, especially when the relevant data series are short. GPM builds from the standard modern monetary policy model, with equations determining:
• The output gap;
• The inflation rate (an inflation-expectations augmented Phillips curve);
• The exchange rate, and
• The interest rate (a monetary policy rule).

The model adds several features to earlier versions of the standard model. Thus, expectations are based on both lags and leads, representing backward- and forward-looking elements. And it includes important nonlinearities, including the zero bound on interest rates. Moreover,GPM offers various options for monetary policy rules, which may be estimated from the data, or determined by an optimization process, or set to represent counterfactual options. Output is represented by real GDP; the output gap is the difference between actual and potential.24 The inflation rate is modeled as the annualized quarterly change in the CPI, but for reporting purposes we follow the normal year-over-year convention. The US exchange rate is euro or yen per dollar (an increase corresponding to US dollar appreciation); the real exchange rate adjusts for differential changes in CPIs (an increase implying an increase in the relative price of US goods). It is convenient to express all variables as deviations from longrun equilibrium, i.e. in gap form.
The United States sector includes endogenous credit conditions. We construct an index of bank lending tightening (BLT) in the United States from the Federal Reserve Board's Senior Loan Officer Survey. The index subtracts the percentage of "eased" responses against the percentage of "tightened." A BLT in excess of 50 percent means an unusually sharp tightening. This index predicts the US business cycle over the last decade with high precision.25 The policy rule for the short-term interest rate is based on a forward-looking Taylor rule in which the policy rate depends on the central bank’s forecast of inflation (3 quarters ahead),on the output gap, and on the lagged policy rate.
The Bayesian method provides an estimate of the posterior distribution of the variance covariance
matrix of disturbance terms, as well as of the system parameters. We work with the mode of the posterior distribution and condition all the remaining experiments on this point estimate. Unobservable historical variables, such as potential output, are estimated using a linear Kalman filter, conditioned on the posterior mode.
Simulations to construct the confidence intervals in the baseline forecast, and to derive the
results for the policy rule experiments, are done on the assumption that shocks are unanticipated. In each period, the solution is derived on the assumption that all the future shocks will be zero. Thus, in the model simulations, we suppose that the shocks that we simulate surprise economic agents, and we neglect the potential behavioral implications of uncertainty about the future.
Variable definitions

France Hints at Leaving G-20 Summit if no progress was made on global financial regulations

2009-04-01T02:01:00.000-07:00

French Finance Minister Christine Lagarde said President Nicolas Sarkozy would walk away from this week's Group of 20 meeting in London if no progress was made on global financial regulations.
"President Sarkozy was very clear on that front," Ms. Lagarde said in an interview with the BBC television recorded on Monday and made available on the BBC's website on Tuesday. "He said: 'If the deliverables aren't there, I won't sign the communiqué.' It means walking away."

Ms. Lagarde's comment came as the U.S., the U.K. and other members of the G-20 are struggling to reach a consensus on how to tighten financial rules and boost the world economy. The U.S. and the U.K. are calling for tougher financial regulation at the national level, while France and Germany are lobbying in favor of more supra-national regulation.
Asked Tuesday whether he might leave before the end of the summit, Mr. Sarkozy said that he remained focused on working with other G-20 members to find ways to solve the global economic crisis.

The world economy is set to shrink by between 0.5% and 1.0% in 2009, the first global contraction in 60 years

2009-03-22T02:05:00.000-07:00

In its gloomiest forecast yet, the International Monetary Fund (IMF) says that developed countries will suffer a "deep recession". The global economic body says "the prolonged financial crisis has battered global economic activity beyond what was previously anticipated". Just two months ago, the IMF predicted world output would increase by 0.5%. But in its report drawn up for the G20 group of finance ministers, the IMF now says that the whole world economy will shrink, and predicts that the advanced economies will suffer a decline in output of between 3% and 3.5% in 2009, and barely grow in 2010, with growth of between 0% and 0.5%.
The IMF says this will happen despite a big fiscal stimulus from many G20 countries designed to boost growth. It says that the G20 as a whole is adding 1.8% of GDP ($780bn) to boost growth this year - but that the EU is lagging behind with only 1%. And it warns that the UK is building up the biggest fiscal deficit amongst all the G20 countries, which will amount to 11% of GDP by 2010.
Financial crisis unresolved
The IMF warns that the economic conditions could still deteriorate further if the banking crisis was not tackled head on by governments around the world. "In the event of further delays in implementing comprehensive policies to stabilise financial conditions, the recession will be deeper and more prolonged," the report says. The global slowdown has affected exporters such as Bangladesh
The IMF says its revised projections reflect "unrelenting financial turmoil, negative incoming data, sinking confidence, and the limited effect to date of policy responses with respect to the restoration of financial system health." Japan is forecast to decline the most, by 5.8% this year, while the eurozone will contract by 3.2% and the US by 2.6%. The most urgent problem in restoring the banking system to health is in the United States, where the Obama administration has yet to reveal details of its plan for private-public partnership to buy up to $1tn in toxic assets. At the G20 finance ministers meeting at the weekend, restoring lending by tackling problems in the financial system was cited as the "key priority" - a message reinforced by G20 business leaders who met in London on Wednesday

India confronts the current global economic and financial crisis IMF

2009-03-18T03:11:00.000-07:00

After five years with average growth of 8¾ percent, India’s economy is slowing. On February 9, 2009, the Central Statistical Organization released advanced estimates for 2008/09 (April-March) real GDP growth of 7.1 percent. Partly reflecting the deteriorating global outlook, staff project India’s growth to moderate to 6¼ percent in 2008/09 and further to 5¼ percent in 2009/10. Corporate investment—the major growth driver during recent years—is expected to slow because of weakening profitability and confidence, and tightening of financing conditions from foreign and nonbank sources. Policy measures to stimulate the economy and a good harvest should support domestic demand. The uncertainty surrounding the forecast is unusually large, with significant downside risks. The main upside risk stems from a larger-than-anticipated impact of the stimulus measures that the authorities have already implemented.

After rising to nearly 13 percent (year-on-year) in August 2008, headline inflation (Wholesale Price Index) dropped to 4.4 percent (y/y) at the end of January 2009. With commodity prices waning and demand slackening, inflation is expected to fall further to 3 percent (y/y) by March 2009 and to 2 percent on average in 2009/10.

The current account deficit is projected at about 3 percent of GDP in 2008/09, primarily due to a markedly higher oil import bill. While export performance has deteriorated sharply in recent months, softer import growth is keeping the trade deficit in check. For 2009/10, the current account deficit is forecast to narrow to 1½ percent of GDP, reflecting lower oil prices and weaker domestic demand.

After last year’s record of 9.2 percent of GDP, capital inflows are expected to decline this fiscal year; until December 2008 portfolio investment recorded a US$11 billion outflow and external commercial borrowing has slowed considerably, though there has been a mild recovery in portfolio investment since October 2009 and foreign direct investment (FDI) has held up relatively well. While reserves have declined this fiscal year, from a historic peak of US$315 billion in May 2008 to US$252 billion as of February 6, 2009, they remain adequate compared to the country’s gross financing requirement and imports.

As a result of the global crisis, the stock market index declined by over 50 percent in 2008 and the rupee depreciated 23 percent versus the U.S. dollar and 13 percent in nominal effective terms. The real effective exchange rate depreciated by 10 percent and is in line with its equilibrium value. In early 2009, however, the rupee and the stock market have stabilized somewhat.

The Reserve Bank of India’s (RBI’s) measures—including cutting policy rates, lowering the cash reserve ratio and the statutory liquidity ratio, and easing controls on capital inflows—have eased the domestic liquidity pressures that appeared in September and October and brought down interbank rates significantly. Nevertheless, the TED2 and commercial paper spreads remain elevated and commercial lending rates have fallen much less than policy rates. Given the rapid decline in inflation, this means that real interest rates have actually increased over the past months. Credit growth remains relatively high, though this in part reflects the switch of corporate funding to banks as financing from other sources has declined.

Banks, which dominate the financial system, appear well-capitalized, relatively liquid, and have low non-performing assets (NPA) ratios. However, over the last few years, an increase in foreign liabilities, combined with rapid domestic credit expansion, has increased banks’ vulnerability to global deleveraging and slowing economic activity. Consequently, their share prices have fallen sharply and their credit default swap (CDS) spreads and default probabilities have risen. Mutual funds faced significant redemptions in September, and other nonbank financial institutions face a marked increase in borrowing costs.

Although the 2008/09 budget targeted further consolidation in line with the previous five years, spending rose sharply even before the onset of the crisis, reflecting a soaring subsidy bill, agricultural debt forgiveness, an expansion of a rural employment guarantee scheme, and a 21 percent civil service wage hike. In addition, tax revenue has slowed sharply as the economy is losing steam. Staff project the central government deficit at about 7 percent of GDP this year, including 1¼ percent of subsidy-related bond issuance. The general government deficit, which includes the states’ deficit, is forecast to rise to nearly 10 percent of GDP. Public debt remains elevated at about 80 percent of GDP. On February 16, 2009, the government issued the 2009/10 interim budget, which targets a reduction in the central government headline deficit of ½ percentage point of GDP.

Executive Board Assessment

Executive Directors commended India’s strong economic performance in recent years, which reflected sound macroeconomic policies and continued progress with structural reform. They noted that India confronts the current global economic and financial crisis from a position of strength.

Directors observed, however, that there have been spillovers from the global crisis. They commended the authorities’ swift and comprehensive policy response, but underscored the downside risks and called for maintenance of a flexible, pragmatic, and proactive policy stance. Directors agreed that a key short-run policy objective should be to sustain liquidity and credit flows. They believed that monetary and structural policies will have to continue to carry most of the burden of adjustment, given the high public debt-GDP ratio.

Directors welcomed the central bank’s actions to ease monetary policy and stimulate bank lending. A number of Directors saw scope for further monetary easing, in light of the projected decline in inflationary pressures and the need to reinforce confidence and sustain bank credit. However, a number of other Directors saw merit in the authorities’ wait-and-see approach, given the highly uncertain economic environment.

Directors supported the authorities’ flexible exchange rate policy, which will help the economy to adjust to the global downturn. They underscored that exchange market intervention should be consistent with the goal of ensuring sufficient domestic liquidity, and concurred that international reserves should be conserved to relieve concerns about external financing. At the same time, a number of Directors were not in favor of letting the exchange rate find a floor if depreciation pressures re-emerge, stressing the risk of overshooting in times of financial volatility and uncertainty. Directors noted the staff’s conclusion that the exchange rate appears to be close to its estimated equilibrium level.

Directors commended the strength and resilience of India’s financial system, reflected in favorable financial soundness indicators. However, they stressed that rising credit risk and liquidity pressures could put the financial system under strain, while negative feedback loops between the real and financial sectors could turn out to be strong. Directors therefore encouraged the authorities to take additional preventive action, including identification of potential bank re-capitalization needs and measures to promote early loss recognition, full disclosure of bad assets, and filling of information gaps. They underscored the importance of persevering with reforms to deepen and further strengthen the financial sector, develop the corporate bond market, and improve banking efficiency.

Directors broadly supported the authorities’ gradual and cautious approach to capital account liberalization. They encouraged further progress, observing that liberalization could help to ease external financing constraints. Directors also welcomed the authorities’ commitment to trade liberalization.

Directors considered that, while corporate balance sheets have been strong in recent years, slowing economic growth and tighter financing conditions could increase corporate distress. They encouraged the implementation of reforms to strengthen corporate governance and the regulatory framework for corporate restructuring. These measures are also important to improve the investment climate.

Directors acknowledged that the sizeable fiscal stimulus undertaken in 2008-09 should help to support economic growth. However, they stressed that, given the high ratio of public debt to GDP, significant further expansion of the deficit could raise concerns about fiscal sustainability. They encouraged the authorities to use the limited available fiscal space only for high-quality infrastructure and poverty-related spending, and for bank recapitalization if needed. They advised that any further short-term stimulus be combined with fiscal reforms to safeguard medium-term debt sustainability. In this connection, they encouraged the authorities to take advantage of falling international fuel prices by moving expeditiously with their fuel subsidy reform plan, while ensuring that a well-targeted social safety net is in place.

Directors stressed that medium-term fiscal consolidation remains a priority, and should continue to be anchored in a fiscal rules framework. They were encouraged that the authorities are considering a strengthened successor fiscal framework to replace the existing one when it expires in 2009-10. Directors called for the new framework to be backed by comprehensive expenditure reforms and measures to broaden the tax base.

Important Tips to bear in mind while buying stocks

2009-03-11T23:36:00.000-07:00

Stock market Tips
You can find stock market tips in the newspaper, in magazines, and in chat rooms on the Internet. Free stock market tips are dominant everywhere - forums, newsletters, and a wide variety of publications exist solely to give new investors stock market advice tips. This article provides you with details on:Why it is important to but stocks from companies that you trust?How a full service investment adviser can help you in buying shares?What is the risk of overvaluation?When it comes to stock tips, everyone seems to be an expert. You can find stock market tips in the newspaper, in magazines, and in chat rooms on the Internet. Free stock market tips are dominant everywhere - forums, newsletters, and a wide variety of publications exist solely to give new investors stock market advice tips. However, not all stocks tips are the same. If you're looking for tips on buying stocks, you should be very careful to only trust the advice of experts rather than believing everything you read. Above all, you will want to follow your own good common sense rather than blindly believing what you are told.Tips on How to Buy a Company StockWhen it comes to buying company stock, investors have found a few tips that seem to work well:
Research Companies Before You Invest In Their Stock
Research in a company means that you know what the company produces, what the company's future plans are, and are therefore able to predict how successful the company maybe in the future. Researching before you buy stock reduces the chances are that you will buy a company that is headed for bankruptcy rather than profits.
If You Listen to Stock Tips When You Buy Your Stock, Be Wary Where You Get Your Advice
Your friends may know something about the stock market, but you are far more likely to get quality and valuable advice from an adviser rather than an amateur investor.
Buy Into Companies That You Trust
Those companies that you trust for your everyday needs -- the companies that make your clothing, your car, and other products that you rely on for quality -- are often a good lead for good investments. If you trust the company for the quality and notice that they produce consistently good products, chances are that other people will too. This means that the company's product may keep selling and the chances that you will make money on your investment are good.Tips on Where to Go to Buy StockMany people fret about where to buy stock. Today, the investor has more choices than ever before:
The Internet
Today, many investors like buying their stocks on the Internet. Not only is it relatively secure and fast, but it allows an investor maximum control over their stock purchases.
A Stock Broker
Stockbrokers work to buy stocks on your behalf. You tell your broker which micro cap stocks you wish to buy and how much you wish to buy. You give them the money and the broker buys your stock for you.
A Full-Service Investment Adviser
A full-service investment adviser oversees your entire portfolio. This means that they not only buy stocks for you but also provide financial advice and information. A full-service investment adviser will work with you to determine your overall financial goals and will set up a schedule of investment for you so that you invest regularly. Most financial experts suggest that beginning investors use a full-service investment adviser to buy stocks. Even though this costs a little more, it will keep you safe from many of the stock mistakes that initial investors make.
When is the Right Time to Buy Stock?
Most financial experts agree that the correct time to buy stock is -- right now. While it is absolutely true that the stock market timings goes up and down, it is also true that the earlier you invest in stock the faster you will start seeing profits. If you wait for the perfect time to invest you will only delay investment and rob yourself of potential profits. If the stock market is doing well when you enter the market, you may wish to buy less initially as stocks will be more expensive. However, you should invest when you have the money and in fact you should invest as soon as you have the money. The sooner you invest the faster you can start making interest.
What are the Risks of Stock?
The major risk of stocks is that the company you are investing in will fail or will lose money. That is, you will invest in a company that does not make a profit, and when the company does not make a profit, you lose money. If you buy a stock for one dollar, for example, in the company starts to lose money, fewer investors will purchase the stock and in fact many investors will begin to sell. The value of your stock will decrease and if you wish to sell your stock you will have to accept an amount of less than one dollar for the same stock.
The other major risk is that you will buy a stock that is overvalued. This means that you will buy a stock that initially seems to be valuable but will eventually be proven to be valueless. This has happened in the past when famously hot and therefore expensive stocks have become worthless overnight. Often, this happens when a company seems to be on the launch of great profits and everyone rushes to buy stocks from them. If you buy a stock at this point, you will pay more for the stock, simply because there's more demand for it. If eventually the promise of great profits does not come true, then everyone will start selling their stock and stock prices will fall dramatically.

High debt will lead to low growth

2009-03-02T22:21:00.000-08:00

By Paul Murphy on Monday, March 02, 2009
Feeling stressed? There is no doubt about the fact that we are still feeling the painful effects of the huge financial shock that landed last September. From that, a whole series of negative feedback loops seem to have been set in motion as an overwhelming sense of uncertainty has reverberated through the global economy. This is no longer simply a US and European affair, although conditions in those areas remain crucial in helping us to work out how and when a sense of normality may return.For now, it's just more bad news. The past week, of example, has seen terrible numbers for unemployment, terrible numbers for house prices, and then a truly shocking revision of US GDP data for the fourth quarter – suggesting that the American economy, still the engine of world growth, shrank 6.2 per cent during the last three months of 2008.For this correspondent, living with a large mortgage in London, the chart (available in the print edition) from Christian Broda at Barclays, showing US and UK house prices compared with a global pool, is especially depressing.It's a simple enough chart (available in the print edition), showing how prices in the US have now fallen back to levels last seen in March 2003, while in the UK prices seem to have receded to levels seen in 2005. But look how far the UK remains out of synch with the rest of the world. There is no reason why house prices in Britain should be on a higher long-term trend than anywhere else. Yes, this is a crowded isle and there is not really any prospect of making more land. But, fundamentally, house prices have to be related to economic growth. Just ask someone in Japan, another crowded space, where property prices have been on a downward trend for 17 years or so.The authorities in the UK, like the US, might be doing all they can to reduce pressures on stressed mortgage payers. But it is impossible to avoid the fact that until house prices fully correct, the related uncertainty will continue to drag down the economy as a whole.How is this affecting other countries? Obviously, the growth in uncertainty has caused consumers and businesses to hold off from purchases, causing a shock to those countries producing most of the goods. Broda notes that, consistent with this, the growth of countries that are big exporters– such as Japan, Korea and Germany – has fallen more than that of countries with the largest housing busts and consumer debt levels, such as the UK, US and Spain. Note the case of Japan, which has seen economic growth decline at almost twice the rate of the UK, while Germany's decline has outstripped Spain and China has decelerated faster than the US. Broda has plotted this in the second chart (available in the print edition), showing the share of production in cyclical sectors relative to the decline in growth between the second and fourth quarters last year. The Barclays economist notes that the pattern is unmistakable – in countries with the largest exposure to cyclical sectors, GDP growth has fallen the most. And this, in Broda's view, may provide an important peek into the future:"As the countries with the sharpest output declines do not have large housing or debt problems, and cyclical sectors are [by definition] the fastest to rebound, these countries are likely to provide better growth prospects when a global recovery materialises. By contrast, countries such as the US, UK and Spain, with large deleveraging processes under way, may face larger stumbling blocks to return to healthy levels of growth."The natural conclusion here is that those countries with a structural debt problem will suffer weak demand and low productivity since it will take longer for firms and individuals alike to deleverage. And while house prices are still falling in places like the UK there will be a natural pressure on people like myself to save more of their income.Broda identifies three key reasons why high debt will probably lead to low growth:- As the financial crisis (and impending regulation) implies a lower equilibrium level of household debt, consumers' deleveraging requires higher savings over time.- Debt "overhang" is likely to lead to lower investment by firms.- "Zombie" firms can reduce medium-term growth.If the first two reasons are largely self-explanatory, the idea of "zombie" firms holding us back needs some further explanation. The term heralds, of course, from the experience of Japan during the 1990s, when Japanese banks were effectively incentivised to keep unprofitable companies alive, since if the firms went under the banks themselves would face the threat of insolvency. Naturally enough, keeping these unprofitable firms going produces its own distortions of the economy, reducing overall growth.Now, it should quickly be added here that in the US, UK and certain other parts of Europe, the threat now comes not from zombie companies, but from zombie individuals. The over-leveraging problem is centred on housing and consumer-debt like credit cards. But the effects are similar. Further precipitous falls in house prices, coupled with sharply rising rates of unemployment threaten spiralling default rates and, subsequently, huge losses for the banks.So, if countries such as the US, UK and Spain, with structural debt problems and housing busts, are likely to have a longer period of low growth than countries with (mainly) cyclical vulnerabilities such as Brazil, China and Germany, we must assume that the latter group will rebound faster. As the Barclays economist puts it, the short term cycle in growth is not the trend.For those like myself, living in an environment where levels of personal debt were allowed to get so badly out of control, the threat now is that we will be on zombie-watch for some time to come.- The writer is an Associate Editor with the Financial Times

Reserve Bank of India to cut repo rate by 50 bps

2009-03-01T04:45:00.000-08:00

New Delhi, Mar 1: Not worrying about the inflation, Reserve Bank may now cut the key rates to provide boost to the sagging demand because economy is growing at a low pace of over 5 per cent in Oct-Dec period, the lowest in any quarter.The Bank has planned to cut benchmark rates by 50 basis points (bps) by the end of March keeping in mind that inflation is easing week by week. For the week ended Saturday, Feb 14, the inflation declined to 15-months low of 3.36 per cent. Short term lending (repo) rate currently stands at 5.5 per cent while short-term borrowing (reverse repo) rate is 4 per cent.

India will achieve 7pc growth in FY09: Govt

2009-03-01T04:42:00.000-08:00

New Delhi, Mar 1: The government of India is confident of achieving near to 7 pc growth in this fiscal despite the low 5.3 pc pc growth in the third quarter and global slump. But the global financial institutions predict further fall in the figures. India's GDP (Gross Domestic Product) growth declined to 5.3 pc in the third fiscal against 8.9 pc a year ago. This is the lowest in 5 years. Goldman Sachs, a global financial institution said the India's economic growth will slowdown to a 6.7 pc in 2008-09 and may even weaken to 5.8 pc in the year 2009-10. But Pranab Mukherjee, Indian External Affairs minister said that the economy will clock a growth rate close to 7 pc and said the exact figure will be known only after the economy responds to the stimulus package

Economic Meltdown: German billionaire commits suicide

2009-01-06T23:41:00.000-08:00

The Global recession caused a German billionaire to commit suicide. Adolf Merckle, a German businessman who lost a billion pounds in the financial crisis, has committed suicide.

Merckle, 74, one of the world's richest men and the head of a drugs and engineering conglomerate, was found dead on the railway line not far from his home in the small village of Blauberen near Ulm in southwestern Germany on Monday night, Jan 5 The Telegraph reports.
German police confirmed that a suicide note had been found and said 'no third party is being sought in conjunction with his death'.

Merckle controlled the pharmaceutical group Ratiopharm, cement company Heidelberg Cement and one of Europe's biggest wholesale drug distributors, Phoenix. He also had an investment firm. His family blamed the economic downturn for his death. "The economic state of distress of his companies caused by the financial crisis and the associated uncertainties of the last weeks, as well as the powerlessness not to be able to act anymore broke this passionate family entrepreneur, and he terminated his life," a statement read.

Merckle was one of the richest men in the world last year with a fortune pegged by Forbes at over six billion pounds. The crash and his poor choice of betting on the German DAX in 2006 are thought to have dramatically cut that fortune.

ANI

Ramalinga Raju, Chairman of Satyam Computers resigned

2009-01-06T23:40:00.000-08:00

Ramalinga Raju, Chairman of Satyam Computers resigned on Wednesday, Jan 7. It was rather shocking to know the admittance of fraud by Ramalinga Raju. Raju submitted a letter along with a balance sheet to the board. The Balance sheet and letter clearly indicated the fraudulence of Raju.

Raju in his letter states, "the Balance Sheet shows a inflated balance of Rs 5040 crore. Rs 1230 crores has not been reflected in the books," states Raju.

While Ram Myanpati will act as Interim CEO, Merrill Lynch can be entrusted to explore.

As per the revelations, second Quarter numbers were inflated to Rs 2700 crore vs Rs 2112 crore actual numbers. No board member had any knowledge of the real situation of the books.

Shares in Satyam Computer shed all gains to turn negative after Satyam announced its Chairman's resignation from the board. Share prices of Satyam were down by 61.42 per cent at 69.10 rupees. (12.10 pm)

Raju has claimed to stay in the board till it is extended. He also states that he is prepared to subject himself to the law

Global economy seen sinking into 'severe' 2009 recession

2008-12-21T23:12:00.000-08:00

A major banking group warned the global economy will sink into "severe" recession next year as Japan's battle to stave off a prolonged contraction was Friday hit by predictions of zero growth into 2010.
The Japanese cabinet approved the country's first zero growth forecast in real terms in seven years, which came as the central bank continued a two-day meeting to consider slashing interest rates to rock-bottom.
With the world's second largest economy battered by slumps in domestic demand and exports, the Washington-based Institute of International Finance (IIF) said the global economy would shrink 0.4 percent in 2009, after 2.0 percent growth this year.
Charles Dallara, managing director of the IIF - which represents more than 375 of the world's major banks and financial institutions - called it "the most severe, globally synchronised recession in modern economic history". The global crisis requires a global coordinated response, he said at a news conference.
Dallara said the economy was mired in a negative feedback loop of weakening economic activity and intense financial market strains. "You'll see much more bang for the buck" with a coordinated response, he said, adding: "It will be important that these measures be complemented in Europe and in Japan."
In a grim assessment, the IIF said in its monthly Global Economic Monitor report: "It should be emphasised that an overall contraction in the global economy is a truly weak outcome, and the first time this has happened in the post-1960 period."
Mature economies - including the US, Britain the 15-nation eurozone and Japan - that are now in recession were forecast to contract a hefty 1.4 percent amid the worst financial crisis since the Great Depression. The US economy, the world's largest and the epicentre of the financial tsunami, would shrink 1.3 percent in 2009 after growth of 1.2 percent this year, according to the IIF projections.
The eurozone would contract by 1.5 percent from 0.9 percent growth, and Japan would shrink 1.2 percent after zero growth, the IIF said. France, a part of the eurozone, said Friday it will sink recession next year for the first time since 1993 while it also faces a steep rise in unemployment.
Tokyo share prices were down 1.10 percent by noon Friday following the zero growth forecast, though trade remained cautious ahead of the Bank of Japan decision on interest rate cuts. Japanese news reports said auto giant Toyota is likely to suffer its first-ever operating loss in the year to March 2009 due to a stronger yen and a global industry slump.
It would be Toyota's first operating loss since it began releasing earnings figures in 1941, the Nikkei business daily said. The dollar bounced back from fresh 13-year lows against the yen, which retreated from earlier highs as investors debated whether rates will be cut from the already low 0.3 percent, dealers said.
By late morning, the dollar was at 89.48 yen, the same level as in New York late Thursday. It had fallen to as low as 87.16 Thursday. The euro fell to 1.4228 dollars in Tokyo trade from 1.4268 in New York and to 127.30 yen from 127.70.
World crude prices held steady above 36 dollars on Friday, at their lowest levels in more than four years, as the OPEC oil cartel's announcement of a record 2.2 million barrels per day production cut failed to rally prices. Meanwhile the United Nations Thursday warned countries struggling with the falling value of their currencies to resist hiking interest rates to prevent devaluations.
"Rising interest rates and falling government expenditure will only reinvite speculation and worsen matters in the real economy," said the UN Conference on Trade and Development (UNCTAD) in a policy newsletter. UNCTAD cited Brazil, Hungary, Iceland, Romania and Turkey as countries facing devaluations.

Investors in Stock Funds Show Calm

2008-09-22T02:05:00.000-07:00

investors have been pulling money from stock-based mutual funds since mid-June but have been relatively calm in the face of the extreme volatility of recent weeks.

"There has not been during this period a huge exodus from equity mutual funds," said Robert Adler, president of AMG Data Services Inc., an Arcata, Calif., company that tracks mutual-fund flows. "On balance, mutual-fund investors have been relatively stable."Investors sold a net $3.9 billion of stock-focused mutual funds in the week through Wednesday, the largest one-week outflow since July 23, according to AMG. The funds have experienced steady outflows since the week of June 11, but those outflows are relatively small, considering that the equity mutual funds reporting to AMG weekly hold some $2 trillion in assets, he said.

Net selling of stock mutual funds, which was $172 million in June, hit $23.6 billion in July before dropping to $7 billion in August, and about $6 billion so far in September, according to AMG.

Bond funds experienced net selling of nearly $2.2 billion in the week through Wednesday, according to AMG. The only bond-fund sectors to report net buying in the week were Treasury funds and Treasury and mortgage funds, it said.

Mr. Adler said mutual-fund investors are highly responsive to the market, and will begin returning to stock funds if they see the rally of late last week continuing. Despite the week's plunge and rally that left the Dow Jones Industrial Average down 0.3%, more than $3 trillion is in money-market funds, he noted, and that could be quickly invested in stock funds if investors see positive signs in the market.

Avi Nachmany, director of research at fund consultant Strategic Insight, said mutual-fund redemption spikes following market declines have historically been limited in scope and short-lived.

"Even during times of heightened anxiety, the great majority of mutual-fund investors stuck to their portfolios and have not acted defensively," he said. "There is a very small percentage of investors, generally no more than 1% or 2%, that move defensively. Yet, even for them, such actions, again and again, are short-lived. After the days or the week of extreme market anxiety, the pace of redemptions goes back to where it used to be before the crisis."

The pace of mutual-fund redemptions has declined in the past 10 years, in part because the mutual-fund universe has changed, he said. Two-thirds of the assets in equity mutual funds are now held in retirement accounts, he noted, and mutual-fund assets are increasingly held in asset-allocation programs.

Among different types of stock funds, investors have been net buyers of real-estate funds weekly since April 2, except for small outflows in the week ending June 25, according to AMG.

They also generally have been net buyers of high-yield corporate bond funds since the week of July 23, although they were sellers and the week of Aug. 20 and the most recent week, AMG's Mr. Adler said. "That means that these investors feel the spread between high yield and Treasury funds has been so wide as to compensate for the default risk or credit risk," he said.

But investors have been net sellers of international funds every week since May 28. Such funds had received a disproportionate amount of money over the last couple of years.

"Money is not only leaving international funds, but it's leaving at an accelerating pace," he said.

Goldman, Morgan Stanley Bring Down Curtain on Wall Street Era

2008-09-22T02:01:00.000-07:00

By Christine Harper and Craig Torres

Sept. 22 (Bloomberg) -- The Wall Street that shaped the financial world for two decades ended last night, when Goldman Sachs Group Inc. andMorgan Stanley concluded there is no future in remaining investment banks now that investors have determined the model is broken.

The Federal Reserve's approval of their bid to become banks ends the ascendancy of the securities firms, 75 years after Congress separated them from deposit-taking lenders, and caps weeks of chaos that sent Lehman Brothers Holdings Inc. into bankruptcy and led to the rushed sale of Merrill Lynch & Co. to Bank of America Corp.

``The decision marks the end of Wall Street as we have known it,'' saidWilliam Isaac, a former chairman of the Federal Deposit Insurance Corp. ``It's too bad.''

Goldman, whose alumni include Henry Paulson, the Treasury Secretary presiding over a $700 billion bank bailout, and Morgan Stanley, a product of the 1933 Glass-Steagall Act that cleaved investment and commercial banks, insisted they didn't need to change course, even as their shares plunged and their borrowing costs soared last week.

By then, it was too late. As financial markets gyrated -- the Dow Jones Industrial Average whipsawed 1,000 points in the week's last two days -- and clients defected, executives at the two firms concluded they had no choice. The Federal Reserve Board met at 9 p.m. yesterday and considered applications delivered that day, said Michelle Smith, a spokeswoman for the central bank. The decision was unanimous, she said.

`Blood in Water'

``There's blood in the water in the industry and the sharks are circling,''Peter Kovalski, who helps oversee about $10 billion at Alpine Woods Capital Investors LLC, said at the end of last week. ``It all comes down to perception and the current trust within the community.''

Wall Street hasn't had such a shakeup since the 1980s, when firms including Morgan Stanley and Bear Stearns Cos. went public and London's financial markets were altered forever with the so-called Big Bang reforms implemented in 1986. Bear Stearns disappeared in March, when it was bought by JPMorgan Chase & Co.

The announcement paves the way for the two New York-based firms, both of which will now be regulated by the Fed, to build their deposit base, potentially through acquisitions. That will allow them to rely more heavily on deposits from retail customers instead of using borrowed money -- the leverage that led to the undoing of Bear Stearns and Lehman.

Morgan Stanley has taken $15.7 billion of writedowns and losses on mortgage-related securities and other types of loans since the credit crunch started last year. Goldman's tally stands at about $4.9 billion. While both companies have remained profitable and avoided money-losing quarters suffered by Lehman and Merrill Lynch, their revenue from sales and trading and investment banking have been declining this year.

Depositors Rule

``Deposit-banking is king right now,'' said David Hendler, an analyst at CreditSights Inc. in New York. ``It's the only meaningful critical-mass way to make money.''

Morgan Stanley may feel it has more time to contemplate alternatives to the deal that it began to shape last week with Wachovia Corp., said Tony Plath, a finance professor at the University of North Carolina at Charlotte.

``This means Morgan Stanley is reassessing its plan for a merger with Wachovia,'' Plath said. ``Morgan Stanley is going to try to go it alone, and I expect it will try to buy a bank with a market-to-book ratio that is next to nothing. It means they are walking away from Wachovia.''

Morgan Stanley, the second-biggest securities firm until this week, had $36 billion of deposits and three million retail accounts at the end of August. The company plans to convert its Utah-based industrial bank into a national bank.

`Certainty'

``This new bank holding structure will ensure that Morgan Stanley is in the strongest possible position,'' Chairman and Chief Executive Officer John Mack, 63, said in a statement last night. ``It also offers the marketplace certainty about the strength of our financial position and our access to funding.''

Goldman, the largest and most profitable of the U.S. securities firms, will become the fourth-largest bank holding company. The firm already has more than $20 billion in customer deposits in two subsidiaries and is creating a new one, GS Bank USA, that will have more than $150 billion of assets, making it one of the 10 largest banks in the U.S., the firm said in a statement last night. The firm will increase its deposit base ``through acquisitions and organically,'' Goldman said in a statement last night.

``Goldman Sachs, under Federal Reserve supervision, will be regarded as an even more secure institution with an exceptionally clean balance sheet and a greater diversity of funding sources,'' Lloyd Blankfein, 54, Goldman's chairman and CEO, said in the statement.

Citigroup, JPMorgan

The Washington-based Fed is the primary regulator of bank- holding companies, which are firms that own or control banks. Citigroup Inc., Bank of America Corp. and JPMorgan are bank- holding companies regulated by the Fed.

Securities firms, by contrast, had been regulated by the Securities and Exchange Commission. The SEC's future becomes dimmer with the change in Goldman and Morgan Stanley's structures.

``You can't kiss goodbye to the last two important investment banks without noting that the house is empty,'' said David Becker, a former SEC general counsel who is now a partner at Cleary Gottlieb Steen & Hamilton in Washington. ``It's a downward spiral where the less significant the population you regulate, the less your available resources.''

Less Risky

The change is also likely to lead to less risk-taking by the companies and possibly lower pay for their employees. Both Goldman and Morgan Stanley held more than $20 of assets for every $1 of shareholder equity, making them dependent on market funding to operate.

Goldman, in particular, has been remarkable for the high bonuses it pays to its employees. Goldman's CEO and two co- presidents were each paid more than $67 million last year.

``They're going to have to protect their deposit bases by law, and the days of high leverage are gone,'' said Charles Geisst, a finance professor at Manhattan College in Riverdale, New York, who wrote ``Wall Street: A History.'' ``The days of the big bonuses are gone.''

To contact the reporter on this story: Christine Harper in New York atcharper@bloomberg.net.

7 Ingredients of Market Beating Stocks

2008-06-30T03:58:00.000-07:00

"Don’t “Pick Stocks,” Buy Great Companies at Great Prices

Warren Buffett, arguably the world’s greatest investor, has often preached: “buy companies, don’t rent stocks.” Accounting gimmicks, or other corporate smoke and mirrors, don’t create wealth. While the stock market can be irrational in the short term, companies with real products and real profits do create wealth for their shareholders in the long run.

Specifically, we look for companies that…

• Have strong fundamentals, good management and a profitable (or soon to be) business model.

• Would be attractive as business owners.

• Have obvious long-term potential for good returns.

We’re not saying that you can’t make money in the short-term – some people make a good living trading, but that’s not our style. We invest.

More to the point, we like to invest in companies committed to creating value for shareholders. We find those companies by approaching the stock market as skeptics, and leaving it up to the companies themselves to convince us otherwise with their performance and the inner workings behind it. Come see what other investors think in our Investopedia Community."

Stock Exchanges In India

2008-06-26T01:04:00.000-07:00

Stock Exchanges are an organised marketplace, either corporation or mutual organisation, where members of the organisation gather to trade company stocks and other securities. The members may act either as agents for their customers, or as principals for their own accounts.

Stock exchanges also facilitate for the issue and redemption of securities and other financial instruments including the payment of income and dividends. The record keeping is central but trade is linked to such physical place because modern markets are computerised. The trade on an exchange is only by members and stock broker do have a seat on the exchange.

List of Stock Exchanges In India

* Bombay Stock Exchange
* National Stock Exchange
* Regional Stock Exchanges
o Ahmedabad Stock Exchange
o Bangalore Stock Exchange
o Bhubaneshwar Stock Exchange
o Calcutta Stock Exchange
o Cochin Stock Exchange
o Coimbatore Stock Exchange
o Delhi Stock Exchange
o Guwahati Stock Exchange
o Hyderabad Stock Exchange
o Jaipur Stock Exchange
o Ludhiana Stock Exchange
o Madhya Pradesh Stock Exchange
o Madras Stock Exchange
o Magadh Stock Exchange
o Mangalore Stock Exchange
o Meerut Stock Exchange
o OTC Exchange Of India
o Pune Stock Exchange
o Saurashtra Kutch Stock Exchange
o Uttar Pradesh Stock Exchange
o Vadodara Stock Exchange

History of Stock Exchanges In India:
In 1860, the exchange flourished with 60 brokers. In fact the 'Share Mania' in India began when the American Civil War broke and the cotton supply from the US to Europe stopped. Further the brokers increased to 250.

At the end of the war in 1874, the market found a place in a street (now called Dalal Street). In 1887, "Native Share and Stock Brokers' Association" was established. In 1895, the exchange acquired a premise in the street which was inaugurated in 1899.

Cochin Stock Exchange Facilities

2008-06-26T00:56:00.000-07:00

A software called MULTEX is given to all brokers. The brokers can simultaneously access to BSE and NSE terminals. To analyse the market trends, the exchange has provided a software package known as Meta Stock and ERS. It has gained wide acceptance from members, investors and students from various institutes.

The exchange maintains a good library with over 2500 books, journals, business magazines and reports. Beside all these, it also maintains various committees for the betterment of the brokers, public and other associated with the exchange. An optical fiber connection has been laid down by Asianet Satellite Telecommunications to facilitate more trading options.

Cochin Stock Exchange Investor Protection Cell

2008-06-26T00:55:00.000-07:00

CSE maintains a separate legal department which is headed by Manager-Legal. It advises the management about the merits and demerits of legal issues including the exchange. The department's major function is to bring to notice to members and the investing public about the different rules, regulations and directives of SEBI with regard to trading in the capital market by the brokers and sub-brokers.

The areas which are being looked after are:

Investor Grievance Service
Arbitration
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Cochin Stock Exchange Membership Profile

2008-06-26T00:53:00.000-07:00

At present Cochin stock Exchange is having 508 members. Each share of the members carries a value of Rs 1250. The paid up capital is Rs. 580,850 and the authorised capital is Rs. 10,00,000 with the total membership limited to 1000.

According to the norms of SEBI, Cochin Stock Exchange charges an initial deposit of Rs. 2 lakhs from its members. Each member has to contribute additional deposits based on the volume of trade. Along with this there is a monthly subscription fee of Rs. 200 and Rs. 500 for individual and corporate members respectively. The members can appoint assistants or sub-brokers based on the guidelines provided by SEBI.

Each member has to pay an annual amount of Rs. 5000 during the five years of membership to SEBI as advance payment on or before 1st October of each financial year. From the 6th to 10th year of membership, the total amount payable is Rs. 5000 being payable at the beginning of the 6th year, which is counted as payment of Rs. 1000 per annum. More to this, if the previous year's turnover is more than 1 crore, a 0.01% of the exceeding amount should be paid to SEBI.

Goals of Cochin Stock Exchange

2008-06-26T00:52:00.000-07:00

To provide investors a high level liquidity where the cost and time in the entry and exit from the market becomes the least.
To provide a high tech solutions and absolute transparency of all the operations, to the extent of possibilities.
To built an infrastructure for the capital market by turning it into a financial super market.
To spread equity cult and serve the investors of the region.
To provide professional stock broking and investment management function.
To impart capital market knowledge to all its intermediaries on a continuous basis.
To develop a winning team of professionals, be it as employees of the exchange to play a crucial role in shaping the future of the exchange and its associates.

US markets drop after oil price surge

2008-06-12T01:32:00.001-07:00

Posted 10 hours 50 minutes ago

The Dow Jones industrial average has plunged 206 points to close at 12,084, a slide of 1.7 per cent. (Reuters: Brendan McDermid, file photo)

A surge in oil prices put the skids under Wall Street overnight.

US stock prices slumped as investors fretted about the impact of high fuel prices on inflation and economic activity.

The oil rally was sparked by a sharp drop in the weekly measure of US stockpiles of crude.

They dipped by 4.6 million barrels last week, which is triple the predicted decline and the fourth weekly decrease in a row.

On the New York Mercantile Exchange, the front futures contract for crude has been as high as $US138.30 a barrel, which is just shy of last Friday's record levels above $US139.

The spot price of West Texas crude is now being quoted at $US136.43, a gain of $5.05.

On equity markets, the financial sector has again been in the spotlight, with concerns growing about the health of investment bank Lehman Brothers.

Its shares are down about 28 per cent over the past four trading days.

On the New York Stock Exchange, the Dow Jones industrial average has plunged 206 points to close at 12,084, a slide of 1.7 per cent.

The high-tech Nasdaq composite index has fallen 55 points, or 2.25 per cent, to 2,394.

European exchanges have also been battered, with the key markets all down about 2 per cent in value.

London's FT100 index has lost 104 points to 5,723.

Yesterday in Australia, the market managed a mid-session turnaround.

After early losses, the All Ordinaries index finished 18 points in front at 5,562.

The banks recovered during the day.

Westpac shares added 65 cents to $22.25 and National Australia Bank (NAB) advanced 85 cents to $28.80.

However investment bank Babcock and Brown is still struggling, plunging 90 cents to $9.52.

Weaker oil and mixed metal prices yesterday kept the resources sector subdued.

On the Sydney Futures Exchange, the Share Price Index 200 contract has closed down 90 points at 5,370.

The 10-year bond contract is up two-points at 93.33 with the implied yield easing to 6.67 per cent.

On foreign exchange markets, the Australian dollar is a little firmer.

At 7am AEDT it was being quoted at 94.70 US cents, up one-eighth of a cent on yesterday's local close.

On the cross-rates, it is at 0.6089 euros, 101.20 Japanese yen; 48.23 pence Sterling and against the New Zealand dollar it is at 1.253.

The gold price has risen overnight to $US880.25 an ounce.

The 500 Billion Dollar Question

2008-05-06T04:19:00.000-07:00

by Kalpana Kochhar
Senior Advisor, IMF Asia and Pacific Department
published in Business Standard (India)
May 4, 2008

Today, few question the need for substantial improvement in India's infrastructure if the rapid growth is to be sustained. Recognizing this, the Planning Commission has put front and center in its strategy to sustain faster, more broad-based and inclusive growth, investment of about $500 billion in infrastructure before the end of the 11th Five Year Plan in March 2012.

Over the past three years, India has invested an average of 4½ percent of GDP each year in infrastructure. Getting to the Planning Commission's target-which is estimated to be the equivalent of 9 percent of GDP in 2011/12-means that infrastructure investment will need to increase by nearly 1 percent of GDP each year between 2007/08 and 20011/12 percent of GDP. The question we ask here is: where will the resources to finance this additional investment-nearly 5 percentage points of GDP by 2012-come from?

Let us look first at domestic sources. India's household sector saves about 24 percent of GDP up from around 16 percent of GDP only a decade ago. Over this same period, India's corporate sector's savings has also increased from around 4 percent of GDP to close to 8 percent. Can we expect such increases to continue? Perhaps but it is not likely. Household savings, are already at the high end of broadly comparable emerging markets. And corporate profitability-which has been remarkably high-is likely to be buffeted by the slowing global economy, the financial turmoil, and upward pressure on wages. Therefore, it may not be realistic to expect much by way of additional savings from India's private sector.

What about the public sector? From dissavings of around 1 percent of GDP a decade ago, public sector savings shot up to an impressive 3 percent of GDP in 2007/08. But given the pressures from the 6th Pay Commission, the agricultural loan waiver, and continued commodity subsidies it will likely be difficult to increase or even to maintain this level of savings in the absence of substantial improvements in tax revenue collection..

So, the 500 billion dollar question: Can India achieve the 11th Five Year Plan's target for infrastructure investment without foreign capital? We argue that it cannot.

In 2006/07, net capital inflows amounted to about 5 percent of GDP but the residual gap between investment and domestic savings was only around 1 percent of GDP. This led to the view amongst analysts and some policy makers that capital flows are "excessive" and should be curbed. There is no denying that a major policy challenge is to maintain macroeconomic stability in the face of capital inflows that may not match outflows in timing. As investment is typically prefunded, capital will flow in before it goes out as imports and profits. And this is true for FDI, portfolio inflows, and fixed-income lending. Such asynchronized timing makes life very difficult for macroeconomic policy makers.

Often and perhaps naturally, policymakers tend to give a much higher weight to the short-term problems than to the longer view and this leads to attempts to fine tune capital controls to manage the impact of the inflows. But fine-tuning capital controls rarely works. To quote Glenn Stevens, now Governor of the Reserve Bank of Australia, as he discussed Australia's experience in the 1980s, "[Capital inflows] occurred in spite of capital controls that were still in place, because the distinction between current and capital transactions was blurring and market participants were becoming more adept at circumventing the controls."

Another rationale that is often provided for active capital account management is the belief that by changing relative prices (through taxes and other forms of transaction costs) policymakers can influence the form of the inflows, i.e., foreign direct investment, or portfolio investment, or borrowings. The choice of such taxes is derived from a hierarchy of the relative desirability of different types of inflows. There is little by way of evidence (even from the famed Chilean experiments with controls) that government policy can do better than the market in pricing different forms of capital. At the same time, there is considerable evidence that controls do at least two things: they make capital inflows less transparent by incentivizing agents to disguise them, and they raise the price of capital, especially for small and medium term enterprises. This would appear to be at cross purposes with the need for large capital inflows to ensure continuance of India's high growth. Ultimately, the only way capital controls are known to have worked is when they were imposed in a draconian and blanket fashion. Fortunately, there is no appetite in India for such extreme measures.

Quo vadis, then? Given India's strong medium term fundamentals, it is quite clear that foreign investor interest in India is here to stay. And the timing of such heightened interest is indeed fortuitous as it coincides with the government's recognition of the urgent need to kick infrastructure investment into high gear. So the right strategy is to rapidly put in place reforms of financial, labor and product markets to absorb these inflows efficiently.

India needs to rethink its capital account framework in the light of the need for $500 billion in infrastructure investment. This means refraining from ad hoc changes in capital controls in the name of macroeconomic management, and quickly expanding the country's real and financial absorptive capacity. In particular, there is an urgent need for an expedited and time-bound plan to develop the corporate bond market, including by raising the limits on foreigners' participation in this market, permitting greater capital outflows, creating fiscal space to finance infrastructure investment by curbing wasteful spending, and implementing structural reforms of labor and product markets.

The author is a Senior Advisor in the Asia and Pacific Department of the International Monetary Fund. The views expressed here are personal.

Cochin Stock Exchange an Introduction

2008-04-15T05:13:00.000-07:00

INTRODUCTION

COCHIN STOCK EXCHANGE LTD. is one of the premier Stock Exchanges in India, established in the year 1978. The exchange had a humble beginning with just 5 companies listed in 1978 -79, and had only 14 members. Today the Exchange has more than 508 members and 240 listed companies. In 1980 the Exchange computerized its offices. In order to keep pace with the changing scenario in the capital market, CSE took various steps including trading in dematerialized shares. CSE introduced the facility for computerized trading - "Cochin Online Trading (COLT)" on March 17, 1997. CSE was one of the promoters of the "Interconnected Stock Exchange of India (ISE)". The objective was to consolidate the small, fragmented and less liquid markets into a national level integrated liquid market. With the enforcement of efficient margin system and surveillance, CSE has successfully prevented defaults. Introduction of fast track system made CSE the stock exchange with the shortest settlement cycle in the country at that time. By the dawn of the new century, the regional exchanges faced a serious challenge from the NSE & BSE. To face this challenge CSE promoted a 100% subsidiary called the "Cochin Stock Brokers Ltd. (CSBL)" and started trading in the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).

CSBL is the first subsidiary of a stock exchange to get membership in both NSE & BSE. CSBL also became a depository participant in the Central Depository Services Ltd.. The CSE has been playing a vital role in the economic development of the country in general, and Kerala in particular and striving hard to achieve the following goals:

• Providing investors with high level of liquidity whereby the cost and time involved in the entry into and exit from the market are minimized.

• Bringing in high tech solutions and make all operations absolutely transparent.

• Building infrastructure for capital market by turning CSE into a financial super market.

• Serve the investors of the region.

• Professional stock broking and investment management.

• Imparting Capital Market knowledge to all intermediaries on a continuous basis.

The Cochin Stock Exchange is directly under the control and supervision of Securities & Exchange Board of India (the SEBI), and is today a demutualized entity in accordance with the Cochin Stock Exchange (Demutualization) Scheme, 2005 approved and notified by SEBI on 29th of August 2005. Demutualization essentially means de-linking and separation of ownership and trading rights and restructuring the Board in tune with the Corporate Governance norms. The first phase of de-linking these rights has since come into effect. And in the second phase, the ownership, which is presently held by the Members of the Exchange, would also undergo a change in that 51% of the share capital will be held by the public, other than stockbrokers, within the next one year.

MANAGEMENT OF CSE LTD.

The policy decisions of the CSE are taken by the Board Of Directors. The Board is constituted with 13 members of whom less than one-fourth are elected from amongst the trading member of CSE, 2 persons are nominated by SEBI, the rest are Public Interest Directors selected by SEBI from the panel submitted by the Exchange. The Board appoints the Executive Director who functions as an ex-officio member of the Board and takes charge of the administration of the exchange.