The inflation for the week ended June 06, 2009 stood negative by falling sharply to –1.61% from the previous week’s level of 0.13%. However, the negative run of the inflation has raised concerns of the analysts of its co-relation with the actual price scenario in the economy.

The decline in the inflation rate was mainly attributed to the high base effect of the previous year created by a steep 1.8% week-over-week (WoW) increase during the corresponding period of the last year.

The wholesale price index (WPI) stood at 232.7 marginally up by 0.04% on a WoW basis. The WPI has, continued its increasing trend on a sequential basis for the past seven weeks, despite the headline inflation rate remained below 1% for past three months.

The rise in the inflation rate was mainly on the back of a 0.68% WoW rise in the fuel, power & light category. The inflation rate in the primary articles category declined by 0.66% WoW as the inflation rate in the nonfood articles remained negative at –0.92% for the week.

However, the inflation rate in the food articles segment remained high and inched up to 8.71% from 8.6% in the previous week, which is worrisome.

The deflationary trend in the fuel, power & light category has now continued for over six months with the inflation rate for the segment reaching –12.83% for the week.

Interestingly, the inflation rate measured in terms of the Consumer Price Index (CPI) remains high despite the WPI inflation falling to sub-zero levels. The inflation rate in terms of the CPI (for industrial workers) has softened from its peak of 10.5% in January 2009 but still remains high at 8.7% as in April 2009.

The inflation measured in terms of WPI has fallen significantly from its peak of 12.91 in August 2008 and is now in the negative zone.

However, according to experts, the negative inflation rate is more statistical in nature and not a result of any significant fall in the consumption demand. The actual price scenario is much different from, which could be understood from the negative WPI inflation. The fact is that the inflation measured in terms of the CPI is still hovering at higher levels.

Considering the sharp fall in WPI inflation, central bank would require a strong monetary easing policy. However, experts opined that any such move is unlikely as there is ample liquidity in the system and further stimulus may cause the fears of higher consumption led inflation on account of expectations of economic recovery.

Source: Commodity Online

Sensex up for 13th week, best run in 4 yrs
The BSE Sensex rose 0.6 percent on Friday, extending its weekly run of gains to 13 in a row for the first time in four years, as signals the global economic turmoil was abating boosted risk-appetite across Asia and Europe.
The 30-share BSE index, which climbed to its highest close in almost 10 months, rallied 3.3 percent on the week and boosted its rise to 88 percent from a 2009 low in early March.
Hefty foreign portfolio inflows of more than $6 billion since mid-March and expectations the ruling coalition will pursue investor-friendly reforms to boost growth after it won a second five-year term in May have underpinned the market.


(Source: Economic times)


Humbled GM files for bankruptcy protection
General Motors filed for Chapter 11 bankruptcy protection Monday as part of the Obama administration’s plan to shrink the automaker to a sustainable size and give a majority ownership stake to the federal government.
GM’s bankruptcy filing is the fourth-largest in U.S. history and the largest for an industrial company. The company said it has $172.81 billion in debt and $82.29 billion in assets.
“The General Motors board of directors authorized the filing of a Chapter 11 case with regret that this path proved necessary despite the best efforts of so many,” GM Chairman Kent Kresa said in a written statement. “Today marks a new beginning for General Motors. ... The board is confident that this New GM can operate successfully in the intensely competitive U.S. market and around the world.”


(Source: MSNBC)


Hug, hug, kiss, kiss: multiplex war ends
As with all good arguments, it featured icy silences and bruised egos, power struggles and temper tantrums. And as in all happy endings, the warring parties made up with a hug and a kiss.
In a grand finale that lasted about 14 hours and culminated in a nail-biting finish, the film fraternity resolved its two-month-long stand-off with multiplex owners in the early hours of Friday morning, opening the floodgates for a backlog of cinematic releases, starting with Star Trek, which released on Friday.
“We have agreed, on good terms,” said Mukesh Bhatt, spokesman for the Producers Distributors Forum, whose film Jashn has been slated for a 3 July release, following a sleepless night of talks at Yash Raj studios in the Mumbai suburb of Andheri. “The strike has been called off and we are very happy with the outcome.”
Up to 40 films, including Vishal Bhardwaj’s Kaminey, starring Priyanka Chopra and Shahid Kapoor, as well as Sajid Nadiadwala’s Kambakkht Ishq, with Kareena Kapoor and Akshay Kumar, which had been put on hold since the start of the dispute over revenue-sharing terms on 4 April, are now being lined up for release in the coming months.


(Source: Economic Times)


Fortis Health Leads Race for Wockhardt Hospitals
Fortis Healthcare Ltd. is a front runner to buy rival Indian hospital-chain operator Wockhardt Hospitals Ltd., a person close to the development said Friday.
"Fortis will buy Wockhardt Hospitals sooner rather than later," the person, who declined to be named, told Dow Jones Newswires. He wouldn't say how much stake Fortis Healthcare will buy or at what price.
Television channel CNBC-TV18 reported earlier, citing unnamed persons, Fortis Healthcare would acquire Wockhardt Hospitals for 9.70 billion rupees ($206 million).
Fortis Healthcare, in a notice to India's stock exchanges, however said the report was "speculative," adding, "at this stage the company has not entered into any definitive agreement for the acquisition."
A spokesman for Wockhardt Ltd. said the drug maker's founders, who own Wockhardt Hospitals, aren't selling their entire stake in the hospital operator. He refused to elaborate or comment further.
(Source: Wall Street Journal)


Air France jet missing over Atlantic
An Air France jet disappeared after hitting stormy weather over the Atlantic Ocean on Monday and all 228 people on board were feared dead.
France and Brazil sent military planes and ships to scour a vast area of ocean where the Airbus A330 jet may have come down during the flight from Rio de Janeiro to Paris. But officials said there was little chance that anyone could have survived.
"It's a tragic accident. The chances of finding survivors are tiny," French President Nicolas Sarkozy said at Paris's Charles de Gaulle airport after meeting passengers' relatives.
If no survivors are found, it would be the worst loss of life involving an Air France plane in the carrier's 75-year history. An Airbus A330 has never been lost during a commercial airline flight and it is extremely unusual for an airliner to be brought down by storms.


(Source: Rediff.com)




FDA Is Reviewing Ranbaxy’s Corrective Plan on Drugs to the U.S.
The US drug regulator is reviewing a corrective action plan from Ranbaxy Laboratories Ltd after some medicines from its plants in the nation were barred from being exported to the US. The Food and Drug Administration (FDA) is working very closely with the firm to ensure that all the Ranbaxy products currently in the US market are safe and effective, FDA spokesman Christopher Kelly said in an email on Wednesday. The next steps will be dependent on the actions identified in the plan, he said.


US sales of Ranbaxy, the country’s biggest drug maker, fell for two straight quarters after the US FDA on 16 September blocked the import of 30 medicines produced at two of its factories. The FDA decision to block the products in the US, the world’s largest drug market, led Ranbaxy’s stock to plunge 45% until chief executive officer Atul Sobti said earlier this week that the company had submitted the plan.


(Source: Bloomberg)

A CAR, stripped to its bare bones and rebuilt using only those bits that are strictly necessary, might turn out to be super-light and capable of taking on the speediest of competitors. Or it could just end up as two piles of junk. On Monday June 1st, putting an end to weeks of expectation, General Motors filed for Chapter 11 bankruptcy protection. The idea is that the 100-year-old carmaker will be stripped of debts, other obligations and unsaveable parts and will then emerge from the bankruptcy court ready to perform like a sleek racer. The risk, however, is that it instead emerges as an old crock with a dodgy respray.

Bankrutpcy will certainly ensure the emergence of a smaller firm. The car company is being remade to cope with operating in a North American market with sales of 10m vehicles a year, roughly the number that will find buyers in 2009. GM might expect to get a little over a fifth of that market. To get into shape, more than 12 of its American plants will close and four brands—Pontiac, Saturn, Hummer and Saab—will be sold out of bankruptcy or will disappear for good. Hummer, apparently, already has a buyer. A significant proportion of GM’s dealers will go too. The end result will be over 21,000 GM workers out of a job.

GM’s European operation, Opel, will also go, ensuring that the American company is no longer a truly global car company (although it will retain arms in Latin American and Asia). Opel’s fate is now in the hands of Germany’s government, which sealed a deal on Saturday between GM and Magna, a Canadian car-parts business. Germany, home to many of Opel’s operations, will provide loans and guarantees worth €4.5 billion ($6.4 billion) to keep Opel from entanglement with GM’s bankrutpcy filing and to support the company until Magna takes over.

The demise of GM, a company that made over half of the cars on America’s roads a few decades ago, is a reminder that companies cannot afford to take their eyes off the road. GM, along with Chrysler and Ford, kept their vast share of the American car market only until globalisation had its way. High import duties on profitable light trucks and sports utitily vehicles kept competitors at bay until Asian carmakers set up shop in America (with generous subsidies from states where they located). Detroit’s competitiveness was further weakened by pension liabilities and huge health-care costs that added hundreds of dollars to the cost of each vehicle.

As market share shrunk and profits dwindled, America’s carmakers made periodic attempts to restructure, in the face of stiff union resistance until recent years. But these efforts were insufficient, usually amounting to cutting capacity usually long after market share had evaporated. At least the wholesale rejigging of GM in bankruptcy should bring the two into line for a time. And a deal with the United Auto Workers will allow GM to forgo a $10 billion payment to a union healthcare fund in return for a 17.5% stake in the new GM. Aggrieved bondholders are likely to emerge with 10% of the new firm for loans totalling $27 billion.

The UAW and GM’s other likely new owners—the governments of America and Canada, with 72.5%—have said that they want to sell out as soon as possible after GM emerges from bankruptcy. But will America’s government ever come close to recouping the $50 billion so far sunk into GM?

The cuts will take some of the overcapacity out of the North American car market, unlike the arrangements with Opel, where Germany’s government is intent on preserving jobs and hence the car manufacturintg capability that Europe could do with shedding. But GM’s problem is that it must still compete with Asian manufacturers that make cheap and reliable cars. Chrysler, set to emerge from bankruptcy with Fiat as a partner and Ford, still loaded with debt and other liabilities, will also provide car buyers with more choices. GM now makes some decent vehicles but its reputation it still suffering from the decades when it made bad cars. If GM cannot revive its good name, and if the cycle of falling market share and piecemeal readjustment begins again then GM, in any form, looks doomed.

(Source: Economist)