Market indices closed on a positive note for a second consecutive week. The 30-share BSE Sensex closed the week at 28,879.38 points, a gain of about 619.2 points (2.19 percent) over the previous weekly close of 28,260.14 points. Nifty, the other market index, similarly ended the week in the green at 8,780.35 points, a rise of 194.1 points (2.26 percent) over last week’s closing of 8,586.25 points. Top Nifty gainers during the week include Reliance Industries, Punjab National Bank, Dr Reddy’s Ltd, Coal India, Mahindra & Mahindra, Sesa Sterlite, and Tata Steel. Mid-cap stocks did exceptionally well this week. The CNX mid-cap index gained about 3.5 percent to reach its all-time high this week. Investors are now looking forward to the declaration of Q4 results of most companies.
The declaration of IIP (Index of Industrial Production) data by the Central Statistics Office this week came as a pleasant surprise. Industrial output seems to have grown five percent during February, the strongest growth recorded in the past three quarters. A distinct growth in the demand for consumer goods and capital goods seems to have egged the IIP to these heights. The growth of the IIP from a 2.8 percent increase in January has brought much cheer to the manufacturing sector. Industrial recovery and increased investor appetite is on the cards, market experts said. In first bi-monthly monetary policy for 2015-16, RBI left key rates unchanged and pegged the GDP growth estimate for FY 16 at 7.8 percent.
According to news reports this week, India’s gold imports for the month of March were estimated at about 125 tonnes. This is over double the March 2014 imports, which were pegged at 60 tonnes. The NaMo government is now working on a scheme that will encourage Indian temples with huge gold treasuries to deposit them in banks in exchange for interest payments.
Verdict on Satyam, Ramalinga Raju
It did take a good six years for a Hyderabad Special Court to sentence Satyam Computer Services founder B Ramalinga Raju and his brother, former Managing Director of Satyam, Rama Raju, to a seven-year prison term and an INR 5 crore fine each, but the verdict was ultimately served this week. Eight others, including former CFO, Vadlamani Srinivas, and former Satyam officials G Venkatapathi Raju, B Suryanarayana Raju, G Ramakrishna, VSP Gupta, and C Srisailam were also handed seven-year jail terms. Raju and the others seem geared up for further appeals at higher courts.
Investors do not seem satisfied with the magnitude of punishment meted out. The accounting fraud at Satyam Computers is estimated to be to the tune of INR 7000 crore, causing a loss of over INR 14000 crore to investors. Raju and others stood to gain about INR 19000 crore in what is now deemed the worst accounting fraud till date. Ramalinga Raju was arrested in early 2009 and the Central Bureau of Investigation has been following up on the case ever since. Satyam was acquired by Tech Mahindra, later in 2009, after the company’s stock crashed about 78 percent.
Top Private Banks’ Credit Rating Downgraded
Moody’s, the international credit rating agency, downgraded the local currency bank deposit ratings and the senior unsecured ratings of a number of leading Indian private sector banks and lenders including ICICI Bank, HDFC Bank, and Axis Bank. The ratings were downgraded from Baa2/P-2 to Baa3/P-3. “The downgrade is driven by the change in Moody’s view that the capacity for government support is limited to a government’s bond rating”, said Moody’s about the move. The state-owned banks and financial institutions such as State Bank of India, Canara Bank, Punjab National Bank, Bank of Baroda, Bank of India, Oriental Bank of Commerce, Power Finance Corp, and Rural Electrification Corp, however, fared well with Moody’s revising their outlook to ‘positive’ from ‘stable’.
Moody’s kept India’s sovereign rating unchanged at Baa3 though the outlook was deemed ‘positive’ instead of ‘stable’. The credit rating organisation said that an improvement in India’s sovereign creditworthiness meant that the government was capable of coming to the aid of PSUs and providing support in times of stress. This led to the change in outlook for state-owned financial institutions and banks. In a very welcome announcement, Moody’s also indicated that India could expect an upgrade in its sovereign rating within a year or two.
Flipkart Experiments with Dabbawalas for Delivery
Indian e-commerce giant, Flipkart, has tied up with the famous Mumbai Dabbawalas for last-mile delivery of products to their customers. Dabbawalas are well-known for their perfect delivery model and Flipkart is set to take advantage of their skills. The initial batch of Dabbawalas to be used by Flipkart is currently undergoing training with a paper-based tracking system and are soon to be trained in the use of mobile devices and apps. “Dabbawalas are famous the world over and it’s great if a company like Flipkart can also benefit associating with us”, said the president of the Dabbawala Association.
PM on Three-Nation Trip to Promote ‘Make in India’
This week, Prime Minister Narendra Modi left on a three-nation tour to France, Germany, and Canada to consolidate economic ties with the G7 industrialised nations. High on the Prime Minister’s agenda is pushing the Make in India scheme and inviting these countries to invest in India’s growth. In the first leg of the tour, PM Modi held talks with the French President Francois Hollande and met other business leaders of the country. Apart from economic ties, the PM also plans to discuss defense ties and chances are that there may be a breakthrough in the Rafale deal.