X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Food prices, 1-lakh car, US subprime and more... - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Jan 11, 2008

    Food prices, 1-lakh car, US subprime and more...

    • Headline inflation (Wholesale Price Index) rose to 3.5% during the week ended December 22 2007, from the low of 3.0% during the week ended November 10, 2007. Food imports have increased by 56.5% YoY - a key contributor to this acceleration being wheat and pulses imports. The prime reason for the imports has been the stagnation in agricultural productivity growth. On a trailing five-year basis, yield per hectare for major crops such as rice has increased by only 0.1%, while for wheat, it has declined at an average rate of 1.1% (source: RBI). The most important factor behind the current state has been low spending by the government on agriculture-related infrastructure services. Public investment in agriculture has only recently picked up to 0.5% of GDP in FY07 after averaging 0.4% of GDP in the preceding three years. Spending on irrigation has also been negligible with only 40.3% of the farming land being irrigated. Meanwhile, India has recently allowed export of 17,000 tonnes of wheat flour to Maldives, an exception from the current prohibition on exports of wheat and wheat products. India is a net wheat importer and does not allow export of wheat and wheat products.

      The risk of higher food prices is constraining monetary policy management. Even as consumption growth has slowed meaningfully, the RBI is deferring policy rate cuts. It is concerned about higher food and energy prices weighing on inflationary expectations. The rise in international food prices, in addition to the rise in oil prices, has also revived inflation concerns.


    • Tata Motors' much-awaited Rs 1 lakh car 'Nano' was launched amidst much fanfare yesterday and is said to have the potential for revolutionising the small car market in the country.

      Meanwhile foreign carmakers are also finding the Indian automobile market very enticing. Germany's Volkswagen hopes to sell 110,000 cars a year in India starting 2009 and plans to launch two models new to the country's market this year, including the Jetta. Annual passenger vehicle sales in India are forecasted to nearly double to 2 m units by 2010 and Volkswagen aims to cut its traditional reliance on European drivers by focusing on emerging markets like India. Volkswagen will be investing about US$ 530 m to set up a plant near Pune to achieve its sales target. Rising incomes and new models are boosting sales of cars in India where only 8 people in every 1,000 own a car, compared to 300-500 in many western nations. Almost all major global carmakers are either expanding in India or setting up plants. General Motors is also building its second plant in India and rival Ford Motor has recently announced a US$ 500 m investment in India.


    • Credit-default swaps, used to help protect against the risk of a company's debt default, may cause losses of US$ 250 bn this year, helping send the U.S. economy into a recession as corporate defaults rise. Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on a company's ability to repay debt. They pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. The sub-prime losses and the repercussions thereof are expected to trigger the credit default losses this year. Meanwhile, Citigroup Inc., the biggest bank in the US, is expected to write down US$ 16 bn of subprime assets in 4QFY08 and post a larger loss than previously estimated.


    • Amid soaring valuations for recently listed Indian brokerages, the largest private sector banking entity, ICICI Bank, is planning to list its brokerage arm ICICI Securities in 1QFY09. ICICI Securities will be the first subsidiary of ICICI to get listed. This will be followed by the bank's other three unlisted subsidiaries - ICICI Prudential Asset Management, ICICI Prudential Life Insurance and ICICI Lombard General Insurance. ICICI Securities houses the investment banking, institutional equity and debt broking and ICICIdirect.com - the retail broking business. Being an early starter in the business, ICICIdirect.com is a dominant market player in the online retail broking space and is said to have maximum number of online retail investors. It has 1.4 m customers and handles on an average at least 350,000 trades on a daily basis. The stock of ICICI Bank has gained over 32% in the past 3 months.

     

     

    Equitymaster requests your view! Post a comment on "Food prices, 1-lakh car, US subprime and more...". Click here!

      
     

    More Views on News

    How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

    Jun 10, 2017

    Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.

    Will They Haul Off Trump's Statue, Too? (Vivek Kaul's Diary)

    Aug 16, 2017

    All across the country, the old gods become devils. New, gluten-free gods take their places...

    This Company Beat the Business World's 'Three Killer Cs' (The 5 Minute Wrapup)

    Aug 16, 2017

    And what it has in common with beating the stock market too.

    5 Steps To Become Financially Independent (Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Let's Hope This Correction Continues (The 5 Minute Wrapup)

    Aug 14, 2017

    Last week's correction is making a number of Super Investor stocks look a lot more attractive...

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE SENSEX


    Aug 16, 2017 (Close)

    MARKET STATS