Dear Niveshaks,

The past month like the previous ones since a long time witnessed growing uncertainty in the Euro zone on the possible measures to prevent an economic meltdown. New ECB president Mario Draghi, in his very first public appearance at the European Banking Congress in Frankfurt, displayed stridency of views and called for immediate action from European politicians to implement the decisions taken in earlier summits. The troubled nations of Greece and Italy now have new Prime Ministers, Lucas Papademos and Mario Monti respectively, in the hope of enforcing better reforms to tide over the crisis. A sense of dismay prevailed in the EU when Mr. Papademos refused to give a written pledge to implement austerity measures prior to release of next instalment package from the EU, saying his words were enough. In neighbouring Italy, the political uncertainty raised their 10-year bond yield to as high as 7.48 %. However, Mr. Monti’s slew of policy priorities on labour and pension reforms helped in raising the confidence of investors and lowering the bond yields to manageable levels. Meanwhile in US, the super committee’s progress on measures to reduce the US deficit by at least $1.2 trillion over the next 10 years would be reviewed on 23rd November. It is widely believed that in case the committee falls short of expectations, the financial markets could be headed for another nosedive. These conditions do not augur well for US, which is still trying to emerge from the after effects of the 2008 recession.
There was no respite for the Indian sub-continent as well. High interest rate and unbridled inflation have led to yet another disappointing IIP number for the month of September, which has slumped to a two year low of 1.9 % against 6.1 % in the corresponding month a year ago. The weak number is mainly due to slow-down in capital intensive manufacturing and mining sectors indicating that though the series of rate hikes have not been able to rein in inflation, it has an adverse effect on growth. Global research firm, Macqquarie, has gone to the extent of lowering the next fiscal year (FY2012-13) GDP projection for India to 6.9% citing lack of political reforms by the government as the major reason while maintaining this year growth marginally higher at 7.4 %. The series of rate hikes by the RBI to control the rampant rise in inflation is expected to show some effect from December onwards. In case that happens, RBI governor has indicated that further tightening in terms of interest rate hikes might not be needed.
This issue brings to you some more interesting and insightful reads. The cover story this month focuses on Green Finance especially carbon credits and its relevance in the current scenario. The issue also features an article on the Housing Finance Market in India and the road ahead for it. Another article in this issue focusses on High Frequency Trading used by large banks for proprietary trading. The Classroom this month explains the process of Factoring.
We, the Editorial Team of Niveshak, are pleased to introduce to you our new team, which has been selected to carry on the legacy of Niveshak. They are: Akanksha, Akhil, Anuroop, Chandan, Harshali, Kailash, Nilkesh, Rakesh and Venkata. Please join us in welcoming them to Team Niveshak. We are confident that the new team will not only meet but will surpass your expectations in this and the coming editions. Keep supporting them the way you have been supporting us.

Stay invested.

Rajat Sethia

Market Watch

After a sudden collapse on the stock exchange, last week saw Sensex rise by 690.55 points, or 4.27 per cent, at 16,848.83 compared to the previous week, while the Nifty closed at 4,998.95, up 202.80 points, or 4.23 per cent. Nifty could not touch the 5000 mark. This rise could be attributed to the increase in global markets and government’s reform initiatives. Also, the robust growth data lifted the spirits of steel and auto sectors. This increase was the best weekly gain in 11 weeks.

States speak about GST

The much awaited discussion paper on GST was released on November 10 communicating the proposed framework in India. The paper also discusses about administrative and threshold aspects. It was a broad consensus among the various states on GST. The final law would be passed by the central government. The two-tier structure was proposed to enjoy concessional rates for some goods by states, though it would raise the GST rate.

L&T strengthens Power sector, reduces stake in Satyam

The last two weeks has seen two major acquisitions by L&T driving company’s growth in thermal and nuclear power sector. Immediately after bagging the Rs 6897 crore order from Mahgenco- Maharashtra for 3 supercritical Boiler – Steam Turbine Generator Package of 660 MW capacity, L&T entered into yet another deal with Madhya Pradesh Power Generation Co. Ltd. (MPPGCL) on turnkey basis. This Rs 1635.30 crore Balance of Plant (BoP) contract was signed for two Coal fired plants of 600 MW each. L&T faced a tough competition from domestic BoP bidders for this project.

On the other hand, L&T plans to sell one-third of its 6.9% stake in Mahindra Satyam fetching them around Rs 304 crores. It is accounted as a strategic move to book profits as the markets recover.

Inflation surges to 1.34% in October

The new monthly index launched on 14^th November, declared a 0.50% increase in the WPI-based inflation to 1.34% in October. Though the fruits and vegetables became cheaper by 11%, still the heightened prices of a few commodities including wheat and rice in the previous month highly affected the inflation. The fuel and power category also rose by 0.1 per cent during October, mainly due to higher prices of furnace oil (3 per cent) and bitumin (1 per cent).