Business This Week – Dhanteras And Diwali Expectations
Markets retain volatility
On Friday, the S&P BSE Sensex closed what is now being called the “most turbulent market week in years” at 26,109 points, down 188 points from last week’s closing. CNX Nifty similarly ended Friday at 7780, down over 79 points from last week’s end score. Volatility has now become a constant and unpredictability the only predictable call. What emerged through most of the trading sessions this past week was directionless trading. The outcome of the Haryana and Maharashtra assembly polls (both states went to polls on October 15) are also likely to considerably add to the uncertainties of the market swings. Equity, currency, debt, and commodity markets were closed on October 15 on account of the assembly elections in Maharashtra.
In an effort to revive the economy and initiate growth the NDA government scrapped controls over the price of diesel and enhanced tariff on natural gas. This means that diesel prices are free from the restrictions of the government and will attune to international rates. The move has been seen as an attempt to cut down on subsidies and to correct the booming budget deficit scenario. The decline of Brent crude from a record high of USD 147 a barrel in 2008 has reached about 38 percent, leading up to such a move.
Gold prices announce Dhanteras
With Dhanteras and Diwali just around the corner all eyes in the Indian markets are set on the prices of the yellow metal. Through most of the week gold prices rallied owing in no small measure to the fall of stock prices. On Wednesday, gold prices zoomed up by about INR 70 to reach a one-month high level of INR 27,650 per 10 grams (in the NCR region). Though the festive season seems to have driven up gold demand among both retailers and jewelers, profits seem to be pretty low due to weak global trends. India is currently the largest importer of gold and in September 2014 gold imports were pegged at USD 3.75 billion – a 16 month high. After a sharp 3 day rally, gold prices fell by INR 160 on October 18 to reach the INR 27700 per ten gram mark. Despite the rally in gold silver has seen a dip over the past week. Saturday silver prices closed at about INR 38,625 a kilogram. The dip in silver prices is attributed to low demand among silver coin manufacturers and by the industries that use silver. The upcoming week shall however, see a huge rise in gold and silver sales due to the tradition of buying precious metals on Dhanteras
Diwali spurs deep discounts
The e-retail business in India has seen an unprecedented boom this holiday season. Diwali is India’s biggest festival and all major e-commerce sites have been running great discounts and promotional offers over the past week in an effort to woo shoppers across the country. Amazon, the e-retail giant has been offering between 16 percent and 50 percent discounts, and Snapdeal has been running a 1+1 offer this week. After the major debacle of the big billion sale, Flipkart is sticking to a few well-chosen offers. The sales figures are yet to be revealed but with Dhanteras and Diwali coming up this week seems to be crucial for e-commerce sites.
New Team Economy
The NDA government filled in two key vacancies – Arvind Subramanian is the new Chief Economic Advisor and Rajiv Mehrishi is the new Secretary, Department of Economic Affairs of India. The Chief Economic Advisor’s position was vacant since Raghuram Rajan was appointed Governor of the RBI. Arvind Subramanian had served as the assistant director in the International Monetary Fund’s Research Department. He was also named one of the world’s top 100 global thinkers by the Foreign Policy magazine in 2011. Despite his criticism of Jaitley’s maiden Union Budget and the NaMo administration’s stand against the WTO deal that was aimed at streamlining trade processes, Subramanian was chosen due to his reputation as a leading global economist and due to his close association with Raghuram Rajan.
Arvind Mayaram became the second secretary-rank officer after revenue secretary Rajeev Takru to be shifted out of the finance ministry with the NDA taking charge of the center in May. The new team is expected to be instrumental in guiding Finance Minister Mr. Jaitley in preparing the Union Budget for the next fiscal year. Mehrishi who has had previous experience working with Mr. Jaitley and Subramanian are both believed to have a strong pro-reforms approach.
On October, 2014, Prime Minister Mr. Narendra Modi unveiled long-awaited labour reforms. The Union Labour Ministry organized the Pt. Deendayal Upadhyay Shramev Jayate Karyakram which was inaugurated by the PM and where he launched the Shramev Jayate Yojna – a number of labour reforms aimed at complementing the Make In India campaign. Mr. Modi announced the launch of Shram Suvidha, a Unified Labour Portal that is to hold a database and information system to manage the Labour Inspection Scheme. The process shall herald the end of the arbitrary and oppressive ‘inspector raj’, said the PM. The government introduced a set of centrally generated criteria that would remove any subjective bias with regard to inspection of industrial units.
Apart from raising the minimum wage ceiling to INR 15000 a month from INR 6500, the reforms also include a pension scheme for superannuated labourers and a portable Universal Account Number for Provident Fund accounts that will allow employees portability in case of change of employers. Almost 6 lakh to 7 lakh industrial units in India are about to be codified by a unique Labour Identification Number, or LIN to create an inspection database and to help resolve labour issues.
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Dhanteras And Diwali Expectations