Business This Week: Markets Look Positive Ahead of Union Budget

Buiness this week - WPI inflation dips further

Buiness this week - WPI inflation dips furtherMarkets This Week

The equity markets of India seem quite cheery in the run up to the Union Budget 2015. Positive global cues have added on to expectations of strong reforms, egging the equity markets up. While the end of the week did see some profit booking due to the worsening scenario in Greece and oil prices, overall the week was a heartening one.

The benchmark 30 stock S&P BSE Sensitive Index (Sensex) closed the week ending February 20 at 29,231.41 points – an increase of 136.48 points or 0.46 percent over last week’s closing. The 50 scrip CNX Nifty also closed the week in the green with a move up of 28.10 points, or 0.32 percent. Nifty closed the week at 8,833.60 point. The CNX Midcap index closed at 13200.40 points while the BSE Small Cap ended at 11426.24 points. HUL, Bharati Airtel, HDFC, and SBI were the top gainers at the Sensex, gaining between 4.99 percent and 2.45 percent this week.

The IISL (India Index Services & Products Ltd) which reviews indices such as the Nifty has announced that effective 27 March 2015, telecom services operator Idea Cellular and private sector lender Yes Bank shall be replacing DLF and Jindal Steel & Power (JSPL) in the CNX Nifty.

The yellow metal closed the week after a second straight day of losses and ended at INR 27,190 per ten grams at the bullion market. A decrease in demand from retailers and jewellers coupled with weak global cues is to be blamed for the drop, experts believe. Silver also slipped following a slackening demand from industrial buyers and coin makers. Silver closed the week at INR 36,885 per kg. The domestic currency closed the week at 62.22 to the US dollar. With the Union Budget to be declared on 28 February 2015, it may well be worth keeping a close watch at the movement of the markets this week.

Corporate Espionage Stirs Controversy

Top executives from five leading Indian energy companies and two other people were arrested this week in what could be an INR 10,000 crore corporate espionage scam. In all 12 people have been arrested in connection with the alleged leak of the Petroleum Ministry’s official documents. It seems that official documents from the Coal and Power ministries may have also been leaked. The involvement of senior ministry officials is also being investigated. Those arrested on Friday include Shailesh Saxena (Manager, Corporate Affairs, Reliance Industries Limited) , Vinay Kumar (Deputy General Manager, Essar), K K Naik (General Manager, Cairns India), Subhash Chandra (Senior Executive, Jubilant Energy), and Rishi Anand (Deputy General Manager, Reliance ADAG).

The scam came to light on Thursday when two employees from the Oil Ministry and three other middlemen were arrested. The following day two journalists were also arrested. The papers that are reportedly leaked include notes on FM’s Budget speech pertaining to the national gas grid, a communication to the ministry from the principal secretary to the PM, Mr. Nipendra Misra, a confidential ONGC Videsh document, and some reports from the ministry’s exploration division. The five corporate officials have been arrested and booked under the IPC for receipt of stolen property (Section 411) and criminal conspiracy (Section 120B).

The Home Minister, Mr. Rajnath Singh has promised a thorough investigation and has assured the nation that offenders, both ministry officials and corporate entities, will not be spared. Reliance has denied involvement in any unlawful pursuits.

PSU Banks May Go On Strike

PSU banks threatened to go on a strike for four days, affecting the banking system across the nation. Mr. C H Venkatachalam, the General Secretary of the All India Bank Employees’ Association announced that the strike would commence on February 25, if the association’s demand for a hike in salaries was not addressed satisfactorily. The association had initially demanded a 19.5 percent raise in the salaries of all bank employees while the Indian Banks’ Association (IBA) had agreed to only 13 percent or about INR 4,095 crore. A meeting between the two associations is scheduled for Monday; the outcome of this meeting is likely to decide if bank employees will proceed with the strike. Nine all-India unions – AIBEA, AIBOA, AIBOC, BEFI, INBEF, INBOC, NCBE, NOBW, and NOBO – shall be participating in the strike. Fears are that they may follow up with an indefinite strike from March 16 if their objectives are not achieved this month.

WPI Inflation Dips Further

The Wholesale Prices Index (WPI) for January 2015 dipped further, going into negative figures. Estimates released this week showed the country’s WPI inflation at -0.39 percent, stressing that the economy’s potential for inflationary growth is dying down. The WPI inflation reading for December 2015 was 0.11 percent. This is the second WPI based inflation dip in the past three months. In the month prior to that, in November 2015, the WPI Inflation had achieved a perfect zero level. Consumer price inflation (CPI) for January was reported at 5.11 percent. The dip in the WPI has been attributed to falling oil prices and the dip in manufacturing. Economists believe that the conditions are now ideal for the Finance Minister, Mr. Arun Jaitley, to deliver a union budget that shall go after strong growth commitments.