Market News and Indices

Rama Krishna Vadlamudi, HYDERABAD 10 October 2011

www.ramakrishnavadlamudi.blogspot.com
7 Oct 2011: Moodys Investors Service has cut ratings (senior debt and deposit ratings) of Royal Bank of Scotland, Lloyds TSB Bank, Santander UK and nine other British financial entities. Moodys thinks that the chances of the UK Government extending support to them are less. Deepak Parekh, Chairman, HDFC, has said that housing finance companies should be allowed to levy pre-payment charges from borrowers as their lenders are charging them pre-payment charges. Last month, RBI has advised banks not to charge prepayment charges in floating rate loans. In his new book Eclipse: Living in the Shadow of Chinas Economic Dominance, Professor Arvind Subramanian argued that Chinese econmy will surpass the US economy by 2030 and Chinas renminbi will be premier reserve currency by the end of the decade. 6 Oct 2011: Moodys Investor Service downgraded Italys credit rating by three notches to A2 from Aa2. (on 19 September 2011, S & P downgraded Italys rating by one notch.) Italy is eurozones third largest economy. A combination of low growth and high

government debt at around 120 per cent of GDP are causing concerns about Italys economy. 4 Oct 2011: Moodys Investor Services has said Indias fiscal deficit will be 5 per cent of GDP in 2011-12 rather than 4.6 per cent projected as per Union Budget 2011-12. the credit rating agencys views are as follows: --- Global slowdown will cause deceleration in exports --- Tax collections will suffer due to lower economic activity in second half --- High interest rates will curtail corporate profits --- High global oil prices and rupee depreciation will increase oil subsidy --- Interest payments of the Government may go up --- The Government may not reach its divestment target of Rs 40,000 crore --- Increased market borrowings of Rs 53,000 crore in second half will push up government debt further The SEBI has disposed of the case against HDFC Mutual Fund by a consent order after the mutual fund paid a sum of Rs 55 crore to SEBI. SEBI alleged that the mutual fund failed to contain the act of front running by the two of its employees. The Planning Commission has clarified that the poverty line of Rs 32/day (urban areas) and Rs 26/day (rural areas) per capita expenditure are not caps saying that entitlements will be delinked from the poverty line.

Fitch Ratings has revised Indias GDP growth projections to 7.5 per cent from 7.7 per cent for 2011-12 on the back of deteriorating global growth prospects. Indias exports soared by 54 per cent to $ 134.5 billion during April-August 2011, while imports during the same period jumped by 40 per cent to $ 189.4 billion. The trade deficit widened to $ 55 billon during April-August 2011 from $ 47.7 billion in Apr-Aug 2010. The main drivers of export growth this fiscal are readymade garments, electronics, petroleum products, engineering, gems and jewellery; while that of imports are machinery, petroleum products, chemicals, electronics, coal, gold and silver. 3 Oct 2011 India signed Free Trade Agreement (FTA) with Asean. So far, Singapore, Indonesia, Malaysia, Vietnam, Brunei, Laos, Thailand and Myanmar have ratified the treaty. And other countries are yet to ratify the treaty. 27 Sep 2011 Reserve Bank of India has allowed Indian companies in infrastructure sector to avail External Commercial Borrowings in Renminbi (Chinese Yuan) under approval route, subject to an annual ceiling of USD 1 billion. Till now, RBI allowed ECBs in four currencies, dollar, euro, pound sterling and yen.

23 Sep 2011: Indias planning commission has said that families spending Rs 32 per day in urban areas and Rs 26 per day in rural areas will not be entitled to benefits provided to Below Poverty Line (BPL) families. SEBIs new takeover norms have been notified by SEBI. The highlights are: --- Open offer trigger hiked from 15 per cent to 25 per cent --- Offer size increased from 20 per cent to 25 per cent --- Auto-delisting not allowed --- Voluntary open offer subject to conditions --- Non-compete fee removed 21 Sep 2011: S & P has downgraded Italys credit rating by one notch.

Important Data:
Indices Closing 7-Oct-11 11 103 2 479 1 155 5 303 5 676 8 606 17 707 2 359 16 233 4 888 78.7 Commodities Nymex Crude ($/barrel) Brent Crude ($/barrel) Gold ($/ounce) Silver ($/ounce) Currencies GBP-USD EUR-USD USD-JPY USD-RMB USD-INR Closing 7-Oct-11 83 106 1 651 32

Dow Jones Nasdaq S&P 500 FTSE 100 Dax Nikkei 225 Hang Seng Shanghai composite Sensex 30 Nifty 50 US dollar index

1.56 1.34 76.73 6.38 49.16