India’s inflation exceeded 9 percent for a 10th straight month in September, maintaining pressure on the central bank to extend its record interest-rate increases.
The benchmark wholesale-price index rose 9.72 percent from a year earlier after a 9.78 percent jump in August, the commerce ministry said in New Delhi today. The median of 21 estimates in a Bloomberg News survey was for a 9.75 percent increase.
Elevated inflation in India and China are crimping room for policy makers to ease monetary policy and support global growth amid Europe’s debt crisis and a faltering U.S. recovery. India’s central bank Governor Duvvuri Subbarao said yesterday that a more than 9 percent inflation is above “comfort level.”
“The inflation trajectory is not decidedly shifting downwards,” Samiran Chakraborty, a Mumbai based economist at Standard Chartered Plc, said before the report. He expects the Reserve Bank of India to raise its repurchase rate by a quarter of a percentage point to 8.5 percent at its Oct. 25 meeting.
India’s rupee has weakened 8.9 percent against the dollar this year as investors sold stocks in emerging markets because of risks to global growth, making the currency the worst performer in Asia and threatening to boost import costs.
The currency gained 0.1 percent to 49.06 per dollar at 11.47 a.m. in Mumbai. The yield on the 7.8 percent government note due April 2021 rose six basis points, or 0.06 percentage point, to 8.79 percent. The BSE India Sensitive Index advanced 0.6 percent.
‘Comfort Range’
India’s inflation must ease before interest rates can be reduced, Subbarao said Oct. 12. He said on Sept. 26 that price gains will slow by March 2012, “but more slowly than initially expected” and that a rate of 4 percent to 6 percent is the “short-term comfort range” for inflation.
In China, inflation exceeded 6 percent for a fourth month, according to a report today, limiting Premier Wen Jiabao’s room to cut borrowing costs.
By contrast, Brazil and Russia are among the so-called BRIC nations that have either cut rates or injected money into lenders to protect their economies from a possible global slowdown.
“As much as we look at what the other central banks are doing, we take into account our own domestic circumstances and the domestic context in formulating our policy,” Subbarao said yesterday.
Political Issue
Inflation is a political issue in India as it erodes spending power in a nation where the World Bank estimates more than three-quarters of the population live on less than $2 a day.
Subbarao has boosted the central bank’s benchmark rate 12 times since mid-March 2010 by a total of 350 basis points, the fastest round of increases since the Reserve Bank was established in 1935, Bloomberg data show.
That’s curbing consumer demand. Sales at companies including Maruti Suzuki India Ltd. (MSIL), the nation’s biggest carmaker, fell 1.8 percent in September, the third straight monthly decline, the Society of Indian Automobile Manufacturers said Oct. 10.
India’s industrial production rose less than expected in August, according to the Central Statistical Office. Output at factories, utilities and mines increased 4.1 percent from a year earlier, slower than the 4.7 percent median of 20 estimates in a Bloomberg News survey.
The International Monetary Fund last month cut its forecast for India’s economic growth. The South Asian economy will expand 7.8 percent in 2011, the Washington-based lender said, slower than the 8.2 percent projected in June. For 2012, it lowered its estimate to 7.5 percent from 7.8 percent.
“When inflation runs as high as 9.8 percent, it is difficult to bring it down without compromising on growth,” Subbarao said yesterday. “So we are trying the trade-off this time, by bringing down inflation even if it means compromising on growth by a few basis points.”
To contact the reporter on this story: Unni Krishnan in New Delhi at ukrishnan2@bloomberg.net.
To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Friday, October 14, 2011
Thursday, October 13, 2011
Gold Traders Turn Most Bullish in Three Months After 20% Rout: Commodities By Nicholas Larkin - Oct 13, 2011
Gold’s biggest slump in three years means traders and analysts are now the most bullish in three months, speculating that Europe’s debt crisis, slowing growth and a bear market in equities will drive demand for bullion.
Twenty-two of 25 people surveyed by Bloomberg expect the metal to rise next week, the highest proportion since mid-July. Prices rebounded 8.3 percent since reaching a two-month low at the end of September and investors are adding to their holdings in gold-backed exchange-traded products for the first time in a month, according to data compiled by Bloomberg. Traders also expect gains in copper, sugar, corn and soybeans, surveys show.
Gold slumped as much as 20 percent since reaching a record $1,923.70 an ounce on Sept. 6 as investors sold the metal to cover losses in other markets. As much as $4.2 trillion was erased from the value of global equities in the past month on mounting concern that economies will tip back into recession and European lawmakers will fail to prevent sovereign defaults. The last time traders and analysts were this bullish, bullion surged 21 percent to an all-time high within eight weeks.
“There’s macro-economic, systemic and monetary risk in the world and there’s no sign of that going away any time soon,” said Mark O’Byrne, the Dublin-based executive director of GoldCore Ltd., a brokerage handling everything from quarter- ounce British Sovereigns to one-kilogram (2.2-pound) bars. “All the factors that drove gold to a record are still there.”
Bank of America
Gold advanced 17 percent this year to $1,662.90 by 12:51 p.m. in New York yesterday, heading for an 11th consecutive annual advance. It’s the second-best performer behind gasoil in the Standard & Poor’s GSCI Index of 24 commodities, which fell 2 percent. The MSCI All-Country World Index of equities fell 10 percent and Treasuries returned 7.4 percent, according to a Bank of America Corp. index.
Bullion dropped 11 percent in September, the most since October 2008. That spurred speculators in U.S. futures to cut their net-long position, or bets on higher prices, to the lowest since February by Oct. 4, according to data from the Commodity Futures Trading Commission. They held a net 127,249 futures and options, 13 percent below the average over the past five years.
Investors reduced their holdings in gold-backed ETPs by almost 17 metric tons last month, a pile now valued at about $900 million, data compiled by Bloomberg show. They added 3.4 tons so far this week, taking combined assets to 2,213 tons, more than the holdings of all but four central banks.
Accelerating Purchases
Those central banks are also accelerating their purchases. Thailand, Bolivia and Tajikistan bought a combined 18.2 tons in August, International Monetary Fund data show. The slump in prices means more buying for reserves is “very likely,” according to Edel Tully, a London-based analyst at UBS AG. Central banks are adding to their holdings for a third year, the longest expansion in almost four decades.
The traders and analysts surveyed by Bloomberg are also bullish on copper, which entered a bear market last month after slumping more than 20 percent from a peak in July. Seven of nine people expect prices to rise next week. The metal for delivery in three months, the London Metal Exchange’s benchmark contract, dropped 24 percent to $7,310 a ton this year. Copper reached a 14-month low of $6,635 on Oct. 3 as investors speculated that slowing growth will curb demand for raw materials.
China, the world’s biggest copper consumer, imported the most metal in 16 months in September, customs data show. Diego Hernandez, chief executive officer of Codelco, the largest copper producer, said in an interview in London on Oct. 4 that the Asian nation should take advantage of the slump to restock.
Warehouse Stockpiles
While Barclays Capital cut its forecast for this year’s shortfall in copper supply five times since April, the bank is still predicting a 468,000-ton deficit. That’s enough metal to supply Japan for five months. Stockpiles in warehouses monitored by exchanges in London, Shanghai and New York fell about 8 percent since the end of March, a sign production is still failing to keep up with demand.
“Should debt concerns in the euro zone recede, we are looking to more fundamentally based trading through next year where the likes of copper should benefit,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “We just need to shake off macro fears and concentrate on market specifics.”
Seven of 12 people surveyed anticipate gains in raw-sugar prices next week and eight said white, or refined, sugar would also advance. Raw sugar traded on ICE Futures U.S. in New York slipped 16 percent this year to 26.91 cents a pound. White sugar traded on NYSE Liffe in London fell 12 percent to $684.10 a ton.
Top Producer
Raw sugar climbed 7 percent this week and white sugar 4.7 percent on speculation that flooding in Thailand, the world’s second-largest shipper, may delay harvests at a time when mills in top producer Brazil are ending their season early.
The Thai sugar harvest may be delayed by two weeks, according to Newedge Group SA. Mills in Brazil’s Sao Paulo state, which accounts for more than 50 percent of the nation’s cane production, started shutting for the season in late September, the earliest in 12 years, because of a smaller crop, according to Celso Junqueira Franco, president of the Union of Biofuel Producers.
Fourteen of 28 people surveyed expect corn to rise next week and 19 of 27 anticipate the same thing for soybeans. Prices for both crops plunged by the most in at least three years last month on prospects for improving harvests. Both commodities rose the most in a year or more on Oct. 11 on the Chicago Board of Trade as traders speculated that declines in September would boost purchases by makers of food, animal feed and biofuels.
“Commodity markets are in the process of bottoming out and I think it may take a little time, maybe a few months, to solidify that bottom,” said James Paulsen, the chief investment strategist at Minneapolis-based Wells Capital Management, which oversees about $360 billion of assets. “You will see commodities going up now. The intensity of commodity selling may be ending and we may be heading in another direction.”
Gold survey results: Bullish: 22 Bearish: 1 Hold: 2
Copper survey results: Bullish: 7 Bearish: 1 Hold: 1
Corn survey results: Bullish: 14 Bearish: 9 Hold: 5
Soybean survey results: Bullish: 19 Bearish: 5 Hold: 3
Raw sugar survey results: Bullish: 7 Bearish: 4 Hold: 1
White sugar survey results: Bullish: 8 Bearish: 3 Hold: 1
White sugar premium results: Widen: 6 Narrow: 2 Neutral: 4
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Twenty-two of 25 people surveyed by Bloomberg expect the metal to rise next week, the highest proportion since mid-July. Prices rebounded 8.3 percent since reaching a two-month low at the end of September and investors are adding to their holdings in gold-backed exchange-traded products for the first time in a month, according to data compiled by Bloomberg. Traders also expect gains in copper, sugar, corn and soybeans, surveys show.
Gold slumped as much as 20 percent since reaching a record $1,923.70 an ounce on Sept. 6 as investors sold the metal to cover losses in other markets. As much as $4.2 trillion was erased from the value of global equities in the past month on mounting concern that economies will tip back into recession and European lawmakers will fail to prevent sovereign defaults. The last time traders and analysts were this bullish, bullion surged 21 percent to an all-time high within eight weeks.
“There’s macro-economic, systemic and monetary risk in the world and there’s no sign of that going away any time soon,” said Mark O’Byrne, the Dublin-based executive director of GoldCore Ltd., a brokerage handling everything from quarter- ounce British Sovereigns to one-kilogram (2.2-pound) bars. “All the factors that drove gold to a record are still there.”
Bank of America
Gold advanced 17 percent this year to $1,662.90 by 12:51 p.m. in New York yesterday, heading for an 11th consecutive annual advance. It’s the second-best performer behind gasoil in the Standard & Poor’s GSCI Index of 24 commodities, which fell 2 percent. The MSCI All-Country World Index of equities fell 10 percent and Treasuries returned 7.4 percent, according to a Bank of America Corp. index.
Bullion dropped 11 percent in September, the most since October 2008. That spurred speculators in U.S. futures to cut their net-long position, or bets on higher prices, to the lowest since February by Oct. 4, according to data from the Commodity Futures Trading Commission. They held a net 127,249 futures and options, 13 percent below the average over the past five years.
Investors reduced their holdings in gold-backed ETPs by almost 17 metric tons last month, a pile now valued at about $900 million, data compiled by Bloomberg show. They added 3.4 tons so far this week, taking combined assets to 2,213 tons, more than the holdings of all but four central banks.
Accelerating Purchases
Those central banks are also accelerating their purchases. Thailand, Bolivia and Tajikistan bought a combined 18.2 tons in August, International Monetary Fund data show. The slump in prices means more buying for reserves is “very likely,” according to Edel Tully, a London-based analyst at UBS AG. Central banks are adding to their holdings for a third year, the longest expansion in almost four decades.
The traders and analysts surveyed by Bloomberg are also bullish on copper, which entered a bear market last month after slumping more than 20 percent from a peak in July. Seven of nine people expect prices to rise next week. The metal for delivery in three months, the London Metal Exchange’s benchmark contract, dropped 24 percent to $7,310 a ton this year. Copper reached a 14-month low of $6,635 on Oct. 3 as investors speculated that slowing growth will curb demand for raw materials.
China, the world’s biggest copper consumer, imported the most metal in 16 months in September, customs data show. Diego Hernandez, chief executive officer of Codelco, the largest copper producer, said in an interview in London on Oct. 4 that the Asian nation should take advantage of the slump to restock.
Warehouse Stockpiles
While Barclays Capital cut its forecast for this year’s shortfall in copper supply five times since April, the bank is still predicting a 468,000-ton deficit. That’s enough metal to supply Japan for five months. Stockpiles in warehouses monitored by exchanges in London, Shanghai and New York fell about 8 percent since the end of March, a sign production is still failing to keep up with demand.
“Should debt concerns in the euro zone recede, we are looking to more fundamentally based trading through next year where the likes of copper should benefit,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “We just need to shake off macro fears and concentrate on market specifics.”
Seven of 12 people surveyed anticipate gains in raw-sugar prices next week and eight said white, or refined, sugar would also advance. Raw sugar traded on ICE Futures U.S. in New York slipped 16 percent this year to 26.91 cents a pound. White sugar traded on NYSE Liffe in London fell 12 percent to $684.10 a ton.
Top Producer
Raw sugar climbed 7 percent this week and white sugar 4.7 percent on speculation that flooding in Thailand, the world’s second-largest shipper, may delay harvests at a time when mills in top producer Brazil are ending their season early.
The Thai sugar harvest may be delayed by two weeks, according to Newedge Group SA. Mills in Brazil’s Sao Paulo state, which accounts for more than 50 percent of the nation’s cane production, started shutting for the season in late September, the earliest in 12 years, because of a smaller crop, according to Celso Junqueira Franco, president of the Union of Biofuel Producers.
Fourteen of 28 people surveyed expect corn to rise next week and 19 of 27 anticipate the same thing for soybeans. Prices for both crops plunged by the most in at least three years last month on prospects for improving harvests. Both commodities rose the most in a year or more on Oct. 11 on the Chicago Board of Trade as traders speculated that declines in September would boost purchases by makers of food, animal feed and biofuels.
“Commodity markets are in the process of bottoming out and I think it may take a little time, maybe a few months, to solidify that bottom,” said James Paulsen, the chief investment strategist at Minneapolis-based Wells Capital Management, which oversees about $360 billion of assets. “You will see commodities going up now. The intensity of commodity selling may be ending and we may be heading in another direction.”
Gold survey results: Bullish: 22 Bearish: 1 Hold: 2
Copper survey results: Bullish: 7 Bearish: 1 Hold: 1
Corn survey results: Bullish: 14 Bearish: 9 Hold: 5
Soybean survey results: Bullish: 19 Bearish: 5 Hold: 3
Raw sugar survey results: Bullish: 7 Bearish: 4 Hold: 1
White sugar survey results: Bullish: 8 Bearish: 3 Hold: 1
White sugar premium results: Widen: 6 Narrow: 2 Neutral: 4
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Wednesday, October 12, 2011
India Inflation Must Ease Before Rates Reduced: Subbarao By Anoop Agrawal and Kartik Goyal - Oct 12, 2011
India’s inflation must ease before the central bank can reduce interest rates, Governor Duvvuri Subbarao said, signaling policy makers may maintain a tight monetary stance for now.
“We are deeply sensitive in making India a low interest- rate regime but that will take time,” Subbarao said in the northern Indian city of Jaipur yesterday. “First, we need to bring inflation down in order to bring interest rates down.”
Emerging-market nations from Brazil to South Korea have turned from fighting price gains to supporting growth as a struggling U.S. recovery and deepening debt crisis in Europe threaten the global economy. In India, the fastest inflation in more than a year is sustaining pressure for higher borrowing costs even as consumer demand wanes.
“Even though there are signs of demand weakening, India’s central bank can’t afford to lower its guard as yet because inflation is at a high level,” said Arun Singh, Mumbai-based senior economist at Dun & Bradstreet Information Services India Pvt. He expects the Reserve Bank of India to raise its repurchase rate by a quarter of a percentage point to 8.5 percent in the Oct. 25 policy meeting.
“Whether we will be pausing the hikes or whether we will be continuing with hiking, it’s not clear,” Subbarao said, adding that he would “consult experts and discuss internally” and announce the decision in this month’s policy review.
India’s 10-year bonds fell at the close in Mumbai yesterday, pushing yields up by 0.03 percentage point to 8.74 percent, near a three-year high, as a government report this week may show inflation held close to a 13-month peak in September.
Weak Currency
The Bombay Stock Exchange Sensitive Index climbed 2.6 percent, and the rupee strengthened 0.8 percent to 48.96 per dollar yesterday. The currency has weakened 8.7 percent this year, the worst performer in Asia, boosting import costs.
“Money is moving out of emerging markets and India and that is putting pressure on the rupee,” Reserve Bank Deputy Governor Subir Gokarn said in Jaipur yesterday, before the central bank’s board meeting today. He said oil and food costs are stoking inflationary pressures in India.
India’s benchmark wholesale-price inflation rate was probably 9.75 percent in September, the median of 20 estimates in a Bloomberg News survey showed. The commerce ministry will release the data on Oct. 14.
Inflation is a political issue in India as it erodes spending power in a nation where the World Bank estimates more than three-quarters of the population live on less than $2 a day.
‘Calibrating’ Rates
“In calibrating interest rates, the RBI takes into account the need of the industry, which wants interest rates low as well as the need of the poor, who want low inflation,” Subbarao said. “We have had to raise rates to combat inflation.”
In his most recent policy decision on Sept. 16, Subbarao raised the central bank’s repurchase rate by a quarter point to 8.25 percent. He said on Sept. 26 that inflation will slow by March 2012, “but more slowly than initially expected.”
The governor in July predicted inflation to ease to 7 percent by March 31. He forecast India’s economy to expand about 8 percent in the year through March from 8.5 percent in the previous year.
Subbarao has boosted the Reserve Bank’s benchmark rate by 350 basis points since mid-March 2010, the fastest round of increases since the central bank was established in 1935, Bloomberg data show.
Consumer Demand
That’s curbing consumer demand. Sales at companies including Maruti Suzuki India Ltd. (MSIL), the nation’s biggest carmaker, fell 1.8 percent in September, the third straight monthly decline, the Society of Indian Automobile Manufacturers said Oct. 10.
India’s industrial production rose less than expected in August, the Central Statistical Office said yesterday. Output at factories, utilities and mines increased 4.1 percent from a year earlier, slower than the 4.7 percent median of 20 estimates in a Bloomberg News survey.
“Bringing inflation under control, that remains and sustains at some comfortable level over a period of time, is the primary objective of our policy,” Gokarn said. “It may cause some disruptions. Moderation of growth is the price we pay but the alternate could be much worse.”
To contact the reporters on this story: Anoop Agrawal in Mumbai at aagrawal8@bloomberg.net; Kartik Goyal in New Delhi at kgoyal@bloomberg.net
To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
“We are deeply sensitive in making India a low interest- rate regime but that will take time,” Subbarao said in the northern Indian city of Jaipur yesterday. “First, we need to bring inflation down in order to bring interest rates down.”
Emerging-market nations from Brazil to South Korea have turned from fighting price gains to supporting growth as a struggling U.S. recovery and deepening debt crisis in Europe threaten the global economy. In India, the fastest inflation in more than a year is sustaining pressure for higher borrowing costs even as consumer demand wanes.
“Even though there are signs of demand weakening, India’s central bank can’t afford to lower its guard as yet because inflation is at a high level,” said Arun Singh, Mumbai-based senior economist at Dun & Bradstreet Information Services India Pvt. He expects the Reserve Bank of India to raise its repurchase rate by a quarter of a percentage point to 8.5 percent in the Oct. 25 policy meeting.
“Whether we will be pausing the hikes or whether we will be continuing with hiking, it’s not clear,” Subbarao said, adding that he would “consult experts and discuss internally” and announce the decision in this month’s policy review.
India’s 10-year bonds fell at the close in Mumbai yesterday, pushing yields up by 0.03 percentage point to 8.74 percent, near a three-year high, as a government report this week may show inflation held close to a 13-month peak in September.
Weak Currency
The Bombay Stock Exchange Sensitive Index climbed 2.6 percent, and the rupee strengthened 0.8 percent to 48.96 per dollar yesterday. The currency has weakened 8.7 percent this year, the worst performer in Asia, boosting import costs.
“Money is moving out of emerging markets and India and that is putting pressure on the rupee,” Reserve Bank Deputy Governor Subir Gokarn said in Jaipur yesterday, before the central bank’s board meeting today. He said oil and food costs are stoking inflationary pressures in India.
India’s benchmark wholesale-price inflation rate was probably 9.75 percent in September, the median of 20 estimates in a Bloomberg News survey showed. The commerce ministry will release the data on Oct. 14.
Inflation is a political issue in India as it erodes spending power in a nation where the World Bank estimates more than three-quarters of the population live on less than $2 a day.
‘Calibrating’ Rates
“In calibrating interest rates, the RBI takes into account the need of the industry, which wants interest rates low as well as the need of the poor, who want low inflation,” Subbarao said. “We have had to raise rates to combat inflation.”
In his most recent policy decision on Sept. 16, Subbarao raised the central bank’s repurchase rate by a quarter point to 8.25 percent. He said on Sept. 26 that inflation will slow by March 2012, “but more slowly than initially expected.”
The governor in July predicted inflation to ease to 7 percent by March 31. He forecast India’s economy to expand about 8 percent in the year through March from 8.5 percent in the previous year.
Subbarao has boosted the Reserve Bank’s benchmark rate by 350 basis points since mid-March 2010, the fastest round of increases since the central bank was established in 1935, Bloomberg data show.
Consumer Demand
That’s curbing consumer demand. Sales at companies including Maruti Suzuki India Ltd. (MSIL), the nation’s biggest carmaker, fell 1.8 percent in September, the third straight monthly decline, the Society of Indian Automobile Manufacturers said Oct. 10.
India’s industrial production rose less than expected in August, the Central Statistical Office said yesterday. Output at factories, utilities and mines increased 4.1 percent from a year earlier, slower than the 4.7 percent median of 20 estimates in a Bloomberg News survey.
“Bringing inflation under control, that remains and sustains at some comfortable level over a period of time, is the primary objective of our policy,” Gokarn said. “It may cause some disruptions. Moderation of growth is the price we pay but the alternate could be much worse.”
To contact the reporters on this story: Anoop Agrawal in Mumbai at aagrawal8@bloomberg.net; Kartik Goyal in New Delhi at kgoyal@bloomberg.net
To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Tuesday, October 11, 2011
Infosys Profit Beats Estimates After Orders Increase
By Ketaki Gokhale and Shikhar Balwani - Oct 12, 2011
Infosys Ltd., India’s second-largest software exporter, reported second-quarter profit that beat analysts’ estimates as customers raised spending on outsourcing.
Net income rose 9.8 percent to 19.1 billion rupees ($387 million) in the three months ended Sept. 30, or 33.36 rupees a share, from 17.4 billion rupees, or 30.40 rupees, a year earlier, Infosys said in a statement today. That compares with the 18.7 billion rupee median of 35 analysts’ estimates compiled by Bloomberg.
Infosys shares rose the most in a month, leading stocks of Tata Consultancy Services Ltd. (TCS) and Wipro Ltd. (WPRO) higher, after earnings beat expectations for the first time in a year and the company raised full year sales guidance. The Bangalore-based code writer joins Accenture Plc (ACN) in reporting profit that exceeded estimates, as outsourcing demand remains buoyant.
“The dollar revenue outlook for the third quarter and the rupee guidance for the full year are positive,” Rohit Kumar Anand, an analyst at PINC Infinity.com Financial Services Ltd. said by phone. “Expectations were muted, and given that, the markets should react positively to these outlook numbers.”
The shares rose as much as 5.6 percent to 2,644 rupees, the biggest intraday gain since Sept. 14. It changed hands up 4.9 percent as of 9:21 a.m. in Mumbai trading.
Forecast Raised
Sales in the third quarter may range between $1.80 billion and $1.84 billion, Infosys said in the statement. Sales in the year ending in March may range between $7.08 billion and $7.2 billion, compared with a July forecast for as much as $7.3 billion, it said.
Infosys raised the full year sales guidance in rupee terms to between 335 billion rupees and 340.9 billion rupees from an earlier forecast for between 317.8 billion rupees and 323.1 billion rupees.
“The rupee guidance number for the full year seems to be a pretty strong one,” Sanjeev Prasad, an analyst at Kotak Institutional Equities, told Bloomberg UTV today. “A percentage point change in the dollar guidance doesn’t really mean that the world has changed. A 17 percent to 19 percent growth is still a pretty decent number.”
The Indian code-writer renewed an outsourcing contract with Alcoa Inc. for five more years, and sold its banking software to Philippines-based City Saving Bank.
Revenue in the second quarter totaled 81 billion rupees compared with 69.5 billion rupees a year earlier, Infosys said. The company will pay an interim dividend of 15 rupees a share.
“Some companies are hiking their IT budgets for 2012, and by a substantial number, at that,” said Pralay Kumar Das, an analyst with Elara Securities India Pvt. in Mumbai. He has an “accumulate” rating on Infosys stock. “The American incumbent IT players are doing very well, and in fact are raising their guidance. If there’s no reason for them to say demand in Europe and U.S. is falling off, then I don’t see why it should be the case for Indian vendors.”
To contact the reporters on this story: Ketaki Gokhale in Mumbai kgokhale@bloomberg.net; Shikhar Balwani in Mumbai at sbalwani@bloomberg.net
To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Infosys Ltd., India’s second-largest software exporter, reported second-quarter profit that beat analysts’ estimates as customers raised spending on outsourcing.
Net income rose 9.8 percent to 19.1 billion rupees ($387 million) in the three months ended Sept. 30, or 33.36 rupees a share, from 17.4 billion rupees, or 30.40 rupees, a year earlier, Infosys said in a statement today. That compares with the 18.7 billion rupee median of 35 analysts’ estimates compiled by Bloomberg.
Infosys shares rose the most in a month, leading stocks of Tata Consultancy Services Ltd. (TCS) and Wipro Ltd. (WPRO) higher, after earnings beat expectations for the first time in a year and the company raised full year sales guidance. The Bangalore-based code writer joins Accenture Plc (ACN) in reporting profit that exceeded estimates, as outsourcing demand remains buoyant.
“The dollar revenue outlook for the third quarter and the rupee guidance for the full year are positive,” Rohit Kumar Anand, an analyst at PINC Infinity.com Financial Services Ltd. said by phone. “Expectations were muted, and given that, the markets should react positively to these outlook numbers.”
The shares rose as much as 5.6 percent to 2,644 rupees, the biggest intraday gain since Sept. 14. It changed hands up 4.9 percent as of 9:21 a.m. in Mumbai trading.
Forecast Raised
Sales in the third quarter may range between $1.80 billion and $1.84 billion, Infosys said in the statement. Sales in the year ending in March may range between $7.08 billion and $7.2 billion, compared with a July forecast for as much as $7.3 billion, it said.
Infosys raised the full year sales guidance in rupee terms to between 335 billion rupees and 340.9 billion rupees from an earlier forecast for between 317.8 billion rupees and 323.1 billion rupees.
“The rupee guidance number for the full year seems to be a pretty strong one,” Sanjeev Prasad, an analyst at Kotak Institutional Equities, told Bloomberg UTV today. “A percentage point change in the dollar guidance doesn’t really mean that the world has changed. A 17 percent to 19 percent growth is still a pretty decent number.”
The Indian code-writer renewed an outsourcing contract with Alcoa Inc. for five more years, and sold its banking software to Philippines-based City Saving Bank.
Revenue in the second quarter totaled 81 billion rupees compared with 69.5 billion rupees a year earlier, Infosys said. The company will pay an interim dividend of 15 rupees a share.
“Some companies are hiking their IT budgets for 2012, and by a substantial number, at that,” said Pralay Kumar Das, an analyst with Elara Securities India Pvt. in Mumbai. He has an “accumulate” rating on Infosys stock. “The American incumbent IT players are doing very well, and in fact are raising their guidance. If there’s no reason for them to say demand in Europe and U.S. is falling off, then I don’t see why it should be the case for Indian vendors.”
To contact the reporters on this story: Ketaki Gokhale in Mumbai kgokhale@bloomberg.net; Shikhar Balwani in Mumbai at sbalwani@bloomberg.net
To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Monday, October 10, 2011
AN ENTERPRISING EDUCATION
* Posted: Tue, Oct 11 2011. 1:00 AM IST
Can entrepreneurship be taught? Can an aspiring business leader learn to choose the right plan, take the right risks, select the right team and then navigate all the turbulence that follows?
With most of the West’s major economies showing sluggish growth at best, many in politics and business are keen to find answers because a new wave of energetic entrepreneurs is urgently needed to kick-start trade all over the world, shake up the markets and create jobs.
In my experience, success as an entrepreneur depends upon a fairly unusual combination of personality traits and instinctive skills, most of which can only be honed on the job.
Formal coursework is not enough. Most beginning entrepreneurs need the kind of guidance that only a trusted mentor can provide.
It’s critical that experienced executives and CEOs volunteer to coach young entrepreneurs in their communities: this is one of the most immediately rewarding and concrete way successful business leaders can foster economic growth in their region.
There are many young entrepreneurs who, if they are given the critical boost of great advice as they launch their start-ups, will someday bring in new jobs. To find a mentoring group in your area, consult local universities, industry groups and small-business development centres.
Through our foundation Virgin Unite, and with the sponsorship of Virgin businesses and local companies, our team has set up two Branson centres of entrepreneurship, non-profit organizations where entrepreneurs, mentors, community members and investors can gather to discuss projects, learn practical skills and spread the word about their ideas.
Since we set up the first Branson centre in Johannesburg, South Africa, six years ago, more than 100 entrepreneurs have taken part in our programme; and, at present, 11 of their businesses are in operation, employing many people.
One of our recent “graduates” is Lesego Malatsi, a fashion designer and entrepreneur whose stunning designs were showcased at London Fashion Week in September.
We opened the second school in Jamaica just a few weeks ago. The new class of 15 people is working on launching businesses in industries ranging from hospitality to education services to recycling.
Do you know someone trying to start a business? As a mentor, there are six things you should keep in mind:
1. A good coach tells it straight
Your most important job is to help a beginning entrepreneur cut through confusion and misinformation to the truth. The evaluations may be intensely personal: what sort of leadership style does she have? What can she do to improve? It may be difficult for your mentee to hear your critical comments, but you must explain very clearly what is going wrong.
2. Build a mentoring team
Many entrepreneurs need help in more than one area. My dyslexia made keeping accounts difficult when I was young; so a family friend, who was an accountant, stepped in and helped me. His advice was crucial in helping me to understand how things worked and how to run a business. If you are not able to provide all the advice your mentee needs, help her find someone who can.
3. Teach boldness
When the founders of our centre in Jamaica evaluated prospective students for the current class, they found that all of those who applied identified obtaining better access to capital through our programme as a key goal, but only 14% had asked for a loan.
In different cultures, there are different barriers to approaching prospective investors; almost everyone needs advice and help in this area. Share your experiences, review the pitches and practice approaches.
4. Make the introductions
Start-ups often struggle to attract customers and then to keep costs under control as orders increase. Access to investors makes all the difference for many businesses.
Be prepared to call industry contacts and old friends from university; whatever it takes to help your mentee connect with those who will see the potential of her business, just like you do.
5. Get that message out
When I was just getting started in business, Sir Freddie Laker, the famed British airline founder, advised me to build company promotions around my own personality—a strategy that has worked well for Virgin. He believed that small entrepreneurial businesses could survive and prosper if they were known about and marketed properly. Potential marketing opportunities are often overlooked by newcomers—it may be up to you to point out the possibilities.
6. Persistence is key
Setting up businesses is a risky occupation. It is important that we help newcomers understand that an early venture’s failure is a badge of experience, not the end of one’s career; that the most important thing to do if things go wrong is to bounce back.
BY NYT SYNDICATE
©2011/RICHARD BRANSON
Do you know what it takes to coach an entrepreneur to success? Let’s share more best practices. Please write to me at richard.branson@nytimes.com and let me know how you are helping entrepreneurs in your community.
Richard Branson is the founder of the Virgin Group and companies such as Virgin Atlantic, Virgin America, Virgin Mobile and Virgin Active. He maintains a blog at www.virgin.com/richard-branson/blog
Copyright © 2007 HT Media All Rights Reserved
0312B1AA-C9AD-821F-F68D-0DF87C0B2D21
Can entrepreneurship be taught? Can an aspiring business leader learn to choose the right plan, take the right risks, select the right team and then navigate all the turbulence that follows?
With most of the West’s major economies showing sluggish growth at best, many in politics and business are keen to find answers because a new wave of energetic entrepreneurs is urgently needed to kick-start trade all over the world, shake up the markets and create jobs.
In my experience, success as an entrepreneur depends upon a fairly unusual combination of personality traits and instinctive skills, most of which can only be honed on the job.
Formal coursework is not enough. Most beginning entrepreneurs need the kind of guidance that only a trusted mentor can provide.
It’s critical that experienced executives and CEOs volunteer to coach young entrepreneurs in their communities: this is one of the most immediately rewarding and concrete way successful business leaders can foster economic growth in their region.
There are many young entrepreneurs who, if they are given the critical boost of great advice as they launch their start-ups, will someday bring in new jobs. To find a mentoring group in your area, consult local universities, industry groups and small-business development centres.
Through our foundation Virgin Unite, and with the sponsorship of Virgin businesses and local companies, our team has set up two Branson centres of entrepreneurship, non-profit organizations where entrepreneurs, mentors, community members and investors can gather to discuss projects, learn practical skills and spread the word about their ideas.
Since we set up the first Branson centre in Johannesburg, South Africa, six years ago, more than 100 entrepreneurs have taken part in our programme; and, at present, 11 of their businesses are in operation, employing many people.
One of our recent “graduates” is Lesego Malatsi, a fashion designer and entrepreneur whose stunning designs were showcased at London Fashion Week in September.
We opened the second school in Jamaica just a few weeks ago. The new class of 15 people is working on launching businesses in industries ranging from hospitality to education services to recycling.
Do you know someone trying to start a business? As a mentor, there are six things you should keep in mind:
1. A good coach tells it straight
Your most important job is to help a beginning entrepreneur cut through confusion and misinformation to the truth. The evaluations may be intensely personal: what sort of leadership style does she have? What can she do to improve? It may be difficult for your mentee to hear your critical comments, but you must explain very clearly what is going wrong.
2. Build a mentoring team
Many entrepreneurs need help in more than one area. My dyslexia made keeping accounts difficult when I was young; so a family friend, who was an accountant, stepped in and helped me. His advice was crucial in helping me to understand how things worked and how to run a business. If you are not able to provide all the advice your mentee needs, help her find someone who can.
3. Teach boldness
When the founders of our centre in Jamaica evaluated prospective students for the current class, they found that all of those who applied identified obtaining better access to capital through our programme as a key goal, but only 14% had asked for a loan.
In different cultures, there are different barriers to approaching prospective investors; almost everyone needs advice and help in this area. Share your experiences, review the pitches and practice approaches.
4. Make the introductions
Start-ups often struggle to attract customers and then to keep costs under control as orders increase. Access to investors makes all the difference for many businesses.
Be prepared to call industry contacts and old friends from university; whatever it takes to help your mentee connect with those who will see the potential of her business, just like you do.
5. Get that message out
When I was just getting started in business, Sir Freddie Laker, the famed British airline founder, advised me to build company promotions around my own personality—a strategy that has worked well for Virgin. He believed that small entrepreneurial businesses could survive and prosper if they were known about and marketed properly. Potential marketing opportunities are often overlooked by newcomers—it may be up to you to point out the possibilities.
6. Persistence is key
Setting up businesses is a risky occupation. It is important that we help newcomers understand that an early venture’s failure is a badge of experience, not the end of one’s career; that the most important thing to do if things go wrong is to bounce back.
BY NYT SYNDICATE
©2011/RICHARD BRANSON
Do you know what it takes to coach an entrepreneur to success? Let’s share more best practices. Please write to me at richard.branson@nytimes.com and let me know how you are helping entrepreneurs in your community.
Richard Branson is the founder of the Virgin Group and companies such as Virgin Atlantic, Virgin America, Virgin Mobile and Virgin Active. He maintains a blog at www.virgin.com/richard-branson/blog
Copyright © 2007 HT Media All Rights Reserved
0312B1AA-C9AD-821F-F68D-0DF87C0B2D21
Friday, October 7, 2011
India’s Sensex Index Climbs to One-Week High on Exports Outlook By Santanu Chakraborty - Oct 7, 2011
India’s benchmark stock index rose to its highest level in a week as the outlook for Indian exporters improved and after Citigroup Inc. raised the rating for the country’s equities.
Infosys Ltd., the second-largest software maker, paced gains among exporters. Sterlite Industries (India) Ltd., the country’s largest copper producer, rose 8.6 percent after prices of the metal rallied on the London Stock Exchange. State Bank of India (SBIN) Ltd., the nation’s largest lender, rebounded 2 percent from a two-year low after an Economic Times report cited Chairman Pratip Chaudhuri as saying the bank will cut its holdings of government bonds and boost lending to companies.
The BSE India Sensitive Index, or Sensex, rose 2.8 percent to 16,232.54 at the 3:30 p.m. close in Mumbai. The volume of Sensex shares traded was 58 percent higher than the six-month daily average. The gauge has dropped 13 percent in the three months to Sept. 30, the worst performance since the last quarter of 2008, amid concern record interest-rate increases by the central bank will hurt growth as Europe’s debt crisis worsens and the U.S. economy slows.
The S&P CNX Nifty Index on the National Stock Exchange of India gained 2.9 percent to 4,888.05. Indian markets were closed for a holiday yesterday.
India may introduce incentives for exporters to cushion them from a slowdown in developed markets, the Press Trust of India reported. Citigroup raised its rating on Indian stocks to “neutral” based on a decline in global commodity prices, lower share valuations and a short-term peak in borrowing costs, according to a report dated yesterday.
Exporter Incentives
“India has underperformed too much relative to developed markets in the last 20 to 30 days and the wide gap has to narrow,” Samir Arora, founder of hedge fund Helios Capital Management Pte, said in a Bloomberg UTV interview today. “If the world calms down, India could have a decent rally.”
Global stocks climbed after European Central Bank President Jean-Claude Trichet said yesterday the ECB will resume covered- bond purchases and reintroduce yearlong loans for banks. The European Commission is pushing for a coordinated capital injection for banks to shield them from the fallout of a potential Greek default.
India’s economy may expand 7.9 percent in the year ending March 31, lower than the 8.2 percent growth estimated in April, the Asian Development Bank said in a report on Sept. 14.
Shares of exporters rallied after the Press Trust of India cited an unidentified official as saying India may introduce measures including interest subsidies to protect them from the impact of faltering markets. Commerce and Industry Minister Anand Sharma will likely announce the steps on Oct. 13, the report said.
‘Real Risk’
Infosys jumped 2.5 percent to 2,508.7 rupees. Wipro Ltd. (WPRO), the third biggest software exporter, rallied 1.8 percent to 333.8 rupees.
“It certainly sounds like policy makers in Europe are understanding the situation with the banking system and it looks like they are getting more willing to recapitalize the banks,” said Belinda Allen, a senior investment analyst at Colonial First State Global Asset Management in Sydney, which oversees about $145 billion. “That has been a positive step, but we haven’t seen that yet. I think it is a real risk until we see an announcement.”
Sugar Exports
Shree Renuka Sugars Ltd. (SHRS) paced gains among makers of the sweetener after Food Minister K.V. Thomas said Oct. 5 that the government may allow 500,000 metric tons of exports by the end of this month and a similar quantity by Nov. 30. Shree Renuka jumped 3.3 percent to 52.10 rupees and Balrampur Chini Mills Ltd. (BRCM), the country’s second-biggest maker, climbed 2.7 percent to 45.80 rupees.
Sterlite Industries rose to 113.5 rupees while Hindalco Industries Ltd. (HNDL), the second-biggest copper maker, increased 4.8 percent to 125.9 rupees.
Copper traders and analysts are the most bullish since August on speculation prices at a one-year low will spur China, the world’s largest buyer, to build stockpiles. Ten of 15 respondents surveyed by Bloomberg expect copper to rise next week and 5 predicted a drop.
State Bank of India gained to 1,752.3 rupees. The bank will also insure trade credit given to exporters, the Economic Times report said. Moody’s Investors Service cut Mumbai-based State Bank’s financial-strength rating this week, saying the highest interest rates among Asia’s biggest economies and slowing growth may make it harder for people to repay loans.
Among other lenders, ICICI Bank Ltd. (ICICIBC) jumped 5.8 percent to 824.45 rupees while HDFC Bank Ltd. (HDFCB) rose 2.6 percent to 450 rupees.
Default Risk
The risk of holding India’s debt is rising the most in two years amid concern higher borrowing costs will spur an increase in bad loans, credit-default swaps on bonds of the nation’s largest state-run bank show.
Bharti Airtel Ltd. (BHARTI), the country’s biggest mobile services company, fell 3.1 percent to 354.8 rupees after Goldman Sachs Group Inc.’s local brokerage unit, in a research note dated Oct. 6, cut its share price estimates by 2 percent, citing anticipated higher foreign-exchange losses.
Central bank Governor Duvvuri Subbarao has increased the repurchase rate by a total of 350 basis points starting mid- March 2010, the fastest round of increases since the central bank was set up in 1935, to contain prices that are rising the fastest among the BRICS nations of Brazil, Russia, India, China and South Africa.
The Reserve Bank of India last raised its repurchase rate on Sept. 16 to 8.25 percent from 8 percent, after India’s inflation climbed to a 13-month high of 9.78 percent in August. The RBI meets Oct. 25 for its next policy review.
Food Inflation
India’s food inflation accelerated to a three-week high, maintaining pressure on the central bank to raise interest rates further.
An index measuring wholesale prices of agricultural products gained 9.41 percent in the week ended Sept. 24 from a year earlier, the commerce ministry said in a statement in New Delhi today. It rose 9.13 percent the previous week.
Manufacturing expanded in September at the slowest pace in 2 1/2 years, a report showed on Oct. 3, a sign that higher borrowing costs are cooling demand. The Purchasing Managers’ Index was at 50.4 last month from 52.6 in August, HSBC Holdings and Markit Economics said in the report. That’s the weakest reading since March 2009. A number above 50 indicates expansion.
The Sensex has retreated 21 percent this year amid concern the European crisis and slowing U.S. economic growth may compound the effects of record rate increases on corporate profits. Companies in the Sensex trade at 13.7 times estimated profits, down from 21.5 times in March 2010. The MSCI Emerging Markets Index is valued at 9.4 times.
Earnings for 47 percent of Sensex companies lagged behind analysts’ estimates in the quarter ended June, compared with about 33 percent in the previous three months.
Overseas investors sold a net 9.66 billion rupees ($196 million) of Indian equities on Oct. 4, taking their outflow this year to 23.5 billion rupees, according to data on the website of the Securities and Exchange Board of India.
To contact the reporter on this story: Santanu Chakraborty in Mumbai at schakrabor11@bloomberg.net
To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Infosys Ltd., the second-largest software maker, paced gains among exporters. Sterlite Industries (India) Ltd., the country’s largest copper producer, rose 8.6 percent after prices of the metal rallied on the London Stock Exchange. State Bank of India (SBIN) Ltd., the nation’s largest lender, rebounded 2 percent from a two-year low after an Economic Times report cited Chairman Pratip Chaudhuri as saying the bank will cut its holdings of government bonds and boost lending to companies.
The BSE India Sensitive Index, or Sensex, rose 2.8 percent to 16,232.54 at the 3:30 p.m. close in Mumbai. The volume of Sensex shares traded was 58 percent higher than the six-month daily average. The gauge has dropped 13 percent in the three months to Sept. 30, the worst performance since the last quarter of 2008, amid concern record interest-rate increases by the central bank will hurt growth as Europe’s debt crisis worsens and the U.S. economy slows.
The S&P CNX Nifty Index on the National Stock Exchange of India gained 2.9 percent to 4,888.05. Indian markets were closed for a holiday yesterday.
India may introduce incentives for exporters to cushion them from a slowdown in developed markets, the Press Trust of India reported. Citigroup raised its rating on Indian stocks to “neutral” based on a decline in global commodity prices, lower share valuations and a short-term peak in borrowing costs, according to a report dated yesterday.
Exporter Incentives
“India has underperformed too much relative to developed markets in the last 20 to 30 days and the wide gap has to narrow,” Samir Arora, founder of hedge fund Helios Capital Management Pte, said in a Bloomberg UTV interview today. “If the world calms down, India could have a decent rally.”
Global stocks climbed after European Central Bank President Jean-Claude Trichet said yesterday the ECB will resume covered- bond purchases and reintroduce yearlong loans for banks. The European Commission is pushing for a coordinated capital injection for banks to shield them from the fallout of a potential Greek default.
India’s economy may expand 7.9 percent in the year ending March 31, lower than the 8.2 percent growth estimated in April, the Asian Development Bank said in a report on Sept. 14.
Shares of exporters rallied after the Press Trust of India cited an unidentified official as saying India may introduce measures including interest subsidies to protect them from the impact of faltering markets. Commerce and Industry Minister Anand Sharma will likely announce the steps on Oct. 13, the report said.
‘Real Risk’
Infosys jumped 2.5 percent to 2,508.7 rupees. Wipro Ltd. (WPRO), the third biggest software exporter, rallied 1.8 percent to 333.8 rupees.
“It certainly sounds like policy makers in Europe are understanding the situation with the banking system and it looks like they are getting more willing to recapitalize the banks,” said Belinda Allen, a senior investment analyst at Colonial First State Global Asset Management in Sydney, which oversees about $145 billion. “That has been a positive step, but we haven’t seen that yet. I think it is a real risk until we see an announcement.”
Sugar Exports
Shree Renuka Sugars Ltd. (SHRS) paced gains among makers of the sweetener after Food Minister K.V. Thomas said Oct. 5 that the government may allow 500,000 metric tons of exports by the end of this month and a similar quantity by Nov. 30. Shree Renuka jumped 3.3 percent to 52.10 rupees and Balrampur Chini Mills Ltd. (BRCM), the country’s second-biggest maker, climbed 2.7 percent to 45.80 rupees.
Sterlite Industries rose to 113.5 rupees while Hindalco Industries Ltd. (HNDL), the second-biggest copper maker, increased 4.8 percent to 125.9 rupees.
Copper traders and analysts are the most bullish since August on speculation prices at a one-year low will spur China, the world’s largest buyer, to build stockpiles. Ten of 15 respondents surveyed by Bloomberg expect copper to rise next week and 5 predicted a drop.
State Bank of India gained to 1,752.3 rupees. The bank will also insure trade credit given to exporters, the Economic Times report said. Moody’s Investors Service cut Mumbai-based State Bank’s financial-strength rating this week, saying the highest interest rates among Asia’s biggest economies and slowing growth may make it harder for people to repay loans.
Among other lenders, ICICI Bank Ltd. (ICICIBC) jumped 5.8 percent to 824.45 rupees while HDFC Bank Ltd. (HDFCB) rose 2.6 percent to 450 rupees.
Default Risk
The risk of holding India’s debt is rising the most in two years amid concern higher borrowing costs will spur an increase in bad loans, credit-default swaps on bonds of the nation’s largest state-run bank show.
Bharti Airtel Ltd. (BHARTI), the country’s biggest mobile services company, fell 3.1 percent to 354.8 rupees after Goldman Sachs Group Inc.’s local brokerage unit, in a research note dated Oct. 6, cut its share price estimates by 2 percent, citing anticipated higher foreign-exchange losses.
Central bank Governor Duvvuri Subbarao has increased the repurchase rate by a total of 350 basis points starting mid- March 2010, the fastest round of increases since the central bank was set up in 1935, to contain prices that are rising the fastest among the BRICS nations of Brazil, Russia, India, China and South Africa.
The Reserve Bank of India last raised its repurchase rate on Sept. 16 to 8.25 percent from 8 percent, after India’s inflation climbed to a 13-month high of 9.78 percent in August. The RBI meets Oct. 25 for its next policy review.
Food Inflation
India’s food inflation accelerated to a three-week high, maintaining pressure on the central bank to raise interest rates further.
An index measuring wholesale prices of agricultural products gained 9.41 percent in the week ended Sept. 24 from a year earlier, the commerce ministry said in a statement in New Delhi today. It rose 9.13 percent the previous week.
Manufacturing expanded in September at the slowest pace in 2 1/2 years, a report showed on Oct. 3, a sign that higher borrowing costs are cooling demand. The Purchasing Managers’ Index was at 50.4 last month from 52.6 in August, HSBC Holdings and Markit Economics said in the report. That’s the weakest reading since March 2009. A number above 50 indicates expansion.
The Sensex has retreated 21 percent this year amid concern the European crisis and slowing U.S. economic growth may compound the effects of record rate increases on corporate profits. Companies in the Sensex trade at 13.7 times estimated profits, down from 21.5 times in March 2010. The MSCI Emerging Markets Index is valued at 9.4 times.
Earnings for 47 percent of Sensex companies lagged behind analysts’ estimates in the quarter ended June, compared with about 33 percent in the previous three months.
Overseas investors sold a net 9.66 billion rupees ($196 million) of Indian equities on Oct. 4, taking their outflow this year to 23.5 billion rupees, according to data on the website of the Securities and Exchange Board of India.
To contact the reporter on this story: Santanu Chakraborty in Mumbai at schakrabor11@bloomberg.net
To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Thursday, October 6, 2011
Stocks, Euro Advance as Treasuries Drop By Michael P. Regan and Rita Nazareth - Oct 6, 2011
U.S. stocks rallied for a third day, commodities gained and Treasuries slid as European officials detailed plans to tame the sovereign debt crisis and reports on retail sales and jobless claims bolstered optimism in the economy. The euro reversed an earlier drop versus the dollar.
The Standard & Poor’s 500 Index gained 1.8 percent to 1,164.97 at 4 p.m. in New York. The Russell 2000 Index of smaller U.S. stocks extended a three-day advance to 11 percent, its best since 2009. The Stoxx Europe 600 Index surged 2.7 percent. Ten-year Treasury yields added 10 basis points to 1.99 percent. The euro rose 0.7 percent to $1.3439 after losing 0.8 percent. The S&P GSCI Index of commodities jumped 2.5 percent as oil increased 3.7 percent to $82.59 a barrel.
American equities extended a global rally after European Central Bank President Jean-Claude Trichet said the ECB will resume covered-bond purchases and reintroduce yearlong loans for banks, while defying calls for an interest-rate cut and acknowledging “downside risks” to the economy have intensified. The European Commission is pushing for a coordinated capital injection for banks to shield them from the fallout of a potential Greek default.
“People have priced in a Lehman II type of situation,” Brian Barish, Denver-based president of Cambiar Investors LLC, which oversees about $8 billion, said in a telephone interview. “You start to hear some credible stuff on European bank recapitalization. They will do what they’ve got to do to prevent a Lehman from happening. There’s a good chance we might’ve had a bottom in stocks.”
Covered Bonds
The 2.5 trillion-euro market for covered bonds -- assets backed by mortgages or public-sector loans -- underpins much of Europe’s real estate lending, which almost ground to a halt in the wake of Lehman Brothers Holdings Inc.’s collapse in September 2008.
U.S. stocks also climbed after claims for unemployment benefits rose less than forecast last week to a level that shows the pace of dismissals may be slowing. Applications for jobless benefits climbed by 6,000 to 401,000, Labor Department figures showed. Economists projected 410,000 claims, according to the median estimate in a Bloomberg News survey. The monthly average dropped to the lowest level since the end of August.
Government data tomorrow are forecast to show employers added 55,000 jobs last month and the unemployment rate held at 9.1 percent, according to the median estimates.
Bear Market Averted
The S&P 500 has rebounded 6 percent since Oct. 3, when it closed within 1 percent of a level that would have marked a bear-market plunge of 20 percent from its April peak. The S&P GSCI commodities gauge is up 5.3 percent in two days, its best back-to-back advance since May, and has trimmed its drop from this year’s high to 20 percent. Treasury yields have increased after demand for safer assets dragged the 10-year note’s rate to a record low of 1.67 percent on Sept. 23. The Dollar Index has slipped about 1.1 percent since Oct. 4, when it reached the highest level since January.
Indexes of financial, commodity and consumer companies rose at least 2.2 percent today to lead gains in all 10 industry groups in the S&P 500. Bank of America Corp. jumped 8.8 percent and Alcoa Inc. rallied 5.4 percent for the top gains in the Dow Jones Industrial Average.
The S&P 500 Financials Index has rallied 8.8 percent in three days, its steepest advance since July 2009, to trim its year-to-date loss to 23 percent. U.S. Treasury Secretary Timothy F. Geithner told the Senate Banking Committee today that there is “absolutely” no chance of another U.S. financial institution collapsing like Lehman Brothers.
Retail Sales, Apple
Target Corp. climbed 4.3 percent today and Limited Brands Inc. and Saks Inc. also rose after reporting September sales that surpassed analysts’ projections. Apple Inc. shares slipped 0.2 percent after co-founder Steve Jobs died.
The cost to protect the debt of Morgan Stanley and Citigroup Inc. declined amid growing speculation Europe’s leaders will be able to prevent the debt crisis from infecting bank balance sheets.
Credit-default swaps on Morgan Stanley, the owner of the world’s biggest retail brokerage, fell 55 basis points to 475, the biggest decline since May 2009, and those on Citigroup slid 40.5 basis points to 304.57, the largest drop since Nov. 24, 2008, according to data provider CMA. Swaps on Goldman Sachs Group Inc. eased 25 basis points to 371, the data show.
Wall Street strategists say the S&P 500 will post the biggest fourth-quarter rally in 13 years even after they cut forecasts at a rate exceeded only during the credit crisis.
The benchmark index for U.S. stocks will climb 14 percent from yesterday to end 2011 at 1,300, according to the average estimate of 12 strategists surveyed by Bloomberg. The last time they were this bullish in October was 2008, when the group predicted a 27 percent gain and the index lost 18 percent.
Trading Range
Excluding its dip to a 13-month closing low of 1,099.23 on Oct. 3, the S&P 500 has mostly traded between about 1,120 and 1,220 for the past two months. Following 14 periods since 1990 when the index was stuck in a range, more than 75 percent resulted in gains in the next one, three and six months, according to Birinyi Associates Inc., the Westport, Connecticut- based money management and research firm. The average trading range studied lasted about seven months, with the shortest beginning in March 1998 and lasting three months, Birinyi data show.
“We’ll need clear economic data or policy movements out of Europe to break out of that range,” Wasif Latif, vice president of equity investments at USAA Investment Management Co. in San Antonio, which oversees about $50 billion, said in a telephone interview.
Earnings Season
Alcoa Inc., the largest U.S. aluminum producer, will mark the unofficial start of the earnings-reporting season when it reports results on Oct. 11. Third-quarter profits for S&P 500 companies are projected to have grown 13 percent, according to analyst forecast compiled by Bloomberg, down from an estimate of 17 percent when the index traded at a three-year high at the end of April.
Among European stocks, BNP Paribas SA, Credit Agricole SA and Natixis surged at least 5.3 percent after Le Figaro said the French government is working on a contingency plan to take stakes in the country’s lenders. BHP Billiton Ltd., the world’s biggest mining company, rallied 5.9 percent as metal prices increased. SABMiller Plc surged 7 percent after a report by Brazilian news website IG said the brewer is in talks to be bought by Anheuser-Busch InBev NV. Spokespeople for both companies declined to comment.
Bonds, Currencies
Ten-year Spanish and Italian bond yields decreased seven basis points each, while rates on U.K., French and German debt rose at least four points.
The dollar weakened against 14 of 16 major peers today, with the Brazilian real surging 2.7 percent to lead gains after higher-than-forecast inflation spurred bets the central bank may slow the pace of interest-rate cuts.
The euro strengthened versus 10 of 16 major peers. The pound slid against all 16 major peers after the Bank of England expanded its bond-purchase program. The Australian and New Zealand currencies strengthened against most peers.
Copper futures climbed 4.5 percent to $3.2465 a pound in New York and rallied 5.9 percent in London to lead gains in 19 of 24 commodities tracked by the S&P GSCI Index.
The MSCI Emerging Markets Index of stocks surged 3.7 percent, extending its rebound from a two-year low on Oct. 4. Benchmark indexes in South Korea, Brazil and Chile climbed at least 2.5 percent.
To contact the reporters on this story: Michael P. Regan in New York at mregan12@bloomberg.net; Rita Nazareth in New York at rnazareth@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
The Standard & Poor’s 500 Index gained 1.8 percent to 1,164.97 at 4 p.m. in New York. The Russell 2000 Index of smaller U.S. stocks extended a three-day advance to 11 percent, its best since 2009. The Stoxx Europe 600 Index surged 2.7 percent. Ten-year Treasury yields added 10 basis points to 1.99 percent. The euro rose 0.7 percent to $1.3439 after losing 0.8 percent. The S&P GSCI Index of commodities jumped 2.5 percent as oil increased 3.7 percent to $82.59 a barrel.
American equities extended a global rally after European Central Bank President Jean-Claude Trichet said the ECB will resume covered-bond purchases and reintroduce yearlong loans for banks, while defying calls for an interest-rate cut and acknowledging “downside risks” to the economy have intensified. The European Commission is pushing for a coordinated capital injection for banks to shield them from the fallout of a potential Greek default.
“People have priced in a Lehman II type of situation,” Brian Barish, Denver-based president of Cambiar Investors LLC, which oversees about $8 billion, said in a telephone interview. “You start to hear some credible stuff on European bank recapitalization. They will do what they’ve got to do to prevent a Lehman from happening. There’s a good chance we might’ve had a bottom in stocks.”
Covered Bonds
The 2.5 trillion-euro market for covered bonds -- assets backed by mortgages or public-sector loans -- underpins much of Europe’s real estate lending, which almost ground to a halt in the wake of Lehman Brothers Holdings Inc.’s collapse in September 2008.
U.S. stocks also climbed after claims for unemployment benefits rose less than forecast last week to a level that shows the pace of dismissals may be slowing. Applications for jobless benefits climbed by 6,000 to 401,000, Labor Department figures showed. Economists projected 410,000 claims, according to the median estimate in a Bloomberg News survey. The monthly average dropped to the lowest level since the end of August.
Government data tomorrow are forecast to show employers added 55,000 jobs last month and the unemployment rate held at 9.1 percent, according to the median estimates.
Bear Market Averted
The S&P 500 has rebounded 6 percent since Oct. 3, when it closed within 1 percent of a level that would have marked a bear-market plunge of 20 percent from its April peak. The S&P GSCI commodities gauge is up 5.3 percent in two days, its best back-to-back advance since May, and has trimmed its drop from this year’s high to 20 percent. Treasury yields have increased after demand for safer assets dragged the 10-year note’s rate to a record low of 1.67 percent on Sept. 23. The Dollar Index has slipped about 1.1 percent since Oct. 4, when it reached the highest level since January.
Indexes of financial, commodity and consumer companies rose at least 2.2 percent today to lead gains in all 10 industry groups in the S&P 500. Bank of America Corp. jumped 8.8 percent and Alcoa Inc. rallied 5.4 percent for the top gains in the Dow Jones Industrial Average.
The S&P 500 Financials Index has rallied 8.8 percent in three days, its steepest advance since July 2009, to trim its year-to-date loss to 23 percent. U.S. Treasury Secretary Timothy F. Geithner told the Senate Banking Committee today that there is “absolutely” no chance of another U.S. financial institution collapsing like Lehman Brothers.
Retail Sales, Apple
Target Corp. climbed 4.3 percent today and Limited Brands Inc. and Saks Inc. also rose after reporting September sales that surpassed analysts’ projections. Apple Inc. shares slipped 0.2 percent after co-founder Steve Jobs died.
The cost to protect the debt of Morgan Stanley and Citigroup Inc. declined amid growing speculation Europe’s leaders will be able to prevent the debt crisis from infecting bank balance sheets.
Credit-default swaps on Morgan Stanley, the owner of the world’s biggest retail brokerage, fell 55 basis points to 475, the biggest decline since May 2009, and those on Citigroup slid 40.5 basis points to 304.57, the largest drop since Nov. 24, 2008, according to data provider CMA. Swaps on Goldman Sachs Group Inc. eased 25 basis points to 371, the data show.
Wall Street strategists say the S&P 500 will post the biggest fourth-quarter rally in 13 years even after they cut forecasts at a rate exceeded only during the credit crisis.
The benchmark index for U.S. stocks will climb 14 percent from yesterday to end 2011 at 1,300, according to the average estimate of 12 strategists surveyed by Bloomberg. The last time they were this bullish in October was 2008, when the group predicted a 27 percent gain and the index lost 18 percent.
Trading Range
Excluding its dip to a 13-month closing low of 1,099.23 on Oct. 3, the S&P 500 has mostly traded between about 1,120 and 1,220 for the past two months. Following 14 periods since 1990 when the index was stuck in a range, more than 75 percent resulted in gains in the next one, three and six months, according to Birinyi Associates Inc., the Westport, Connecticut- based money management and research firm. The average trading range studied lasted about seven months, with the shortest beginning in March 1998 and lasting three months, Birinyi data show.
“We’ll need clear economic data or policy movements out of Europe to break out of that range,” Wasif Latif, vice president of equity investments at USAA Investment Management Co. in San Antonio, which oversees about $50 billion, said in a telephone interview.
Earnings Season
Alcoa Inc., the largest U.S. aluminum producer, will mark the unofficial start of the earnings-reporting season when it reports results on Oct. 11. Third-quarter profits for S&P 500 companies are projected to have grown 13 percent, according to analyst forecast compiled by Bloomberg, down from an estimate of 17 percent when the index traded at a three-year high at the end of April.
Among European stocks, BNP Paribas SA, Credit Agricole SA and Natixis surged at least 5.3 percent after Le Figaro said the French government is working on a contingency plan to take stakes in the country’s lenders. BHP Billiton Ltd., the world’s biggest mining company, rallied 5.9 percent as metal prices increased. SABMiller Plc surged 7 percent after a report by Brazilian news website IG said the brewer is in talks to be bought by Anheuser-Busch InBev NV. Spokespeople for both companies declined to comment.
Bonds, Currencies
Ten-year Spanish and Italian bond yields decreased seven basis points each, while rates on U.K., French and German debt rose at least four points.
The dollar weakened against 14 of 16 major peers today, with the Brazilian real surging 2.7 percent to lead gains after higher-than-forecast inflation spurred bets the central bank may slow the pace of interest-rate cuts.
The euro strengthened versus 10 of 16 major peers. The pound slid against all 16 major peers after the Bank of England expanded its bond-purchase program. The Australian and New Zealand currencies strengthened against most peers.
Copper futures climbed 4.5 percent to $3.2465 a pound in New York and rallied 5.9 percent in London to lead gains in 19 of 24 commodities tracked by the S&P GSCI Index.
The MSCI Emerging Markets Index of stocks surged 3.7 percent, extending its rebound from a two-year low on Oct. 4. Benchmark indexes in South Korea, Brazil and Chile climbed at least 2.5 percent.
To contact the reporters on this story: Michael P. Regan in New York at mregan12@bloomberg.net; Rita Nazareth in New York at rnazareth@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
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