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Current Economic Statistics and Review For the
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Theme
of the week:
Situation Assessment Survey: Some Aspects of Farming 6. Device Used for Irrigation*1.
Introduction Farmer
households who had irrigated their land during kharif and rabi seasons used
different devices to draw water and to irrigate their land through different
sources such as canal, river, spring, reservoir, tank, tube-wells, wells
etc. The main devices used by farmer households are electric pump, diesel
pump, persian wheel and other devices Situation
Assessment Survey of Farmers conducted along with AIDIS Survey and Land
Holding Survey by NSSO in their 59th round during January –
December 2003 gave some insight into certain aspects of devices of
irrigation. This
note, sixth in the series, attempts to review briefly various aspects of the
devices of irrigation during the survey year period based on the data
published by the NSSO in their report no. 496 titled ‘Some Aspects of
Farming’. The
definitions and concept of different terms used are given in the Annexure. 2. Prevalence of Use of Different Devices At
all- To
draw water from the sources of irrigation, three major devices viz.,
electric pumps, diesel pump and Persian wheel have been used by the farmer
households. The proportion of farmer households using different devices for
irrigation from different sources are presented in Table 1.
It may be seen from the Table that 94 to 97 per cent of farmer households do not use any device for irrigation for drawing water from tanks, tube-wells, wells and other sources at all-India level. Thus only 3 to 6 per cent of farming households use some device for irrigation affected through above sources, in both seasons. Only 20-25 per cent of farmer households using river/spring and canals as sources of irrigation did not adopts any device in kharif season while the share in rabi season was 25 per cent. This share was higher at 53 per cent in respect of farmer households using reservoirs as source of irrigation Farmer
households using Persian wheels were almost nil and only 0.3-0.5
per cent of them used them to draw water from river/springs and
canals and to some extent from reservoir and tank in rabi season. Usage of
Persian wheels was generally seen in a few states like, Kerala, Tamil Nadu,
(for river/spring); for irrigation from canals in Haryana, Madhya Pradesh
and Tripura and in Diesel pump followed by electric pumps were the two important devices used to draw water from river/spring, canal and reservoir. Among households irrigating their land from rivers/springs, 25 per cent has adopted diesel pumps during kharif season and 31 per cent during rabi season. Usage of diesel pump by more than all-India proportion was seen among farmer households in Assam, Bihar, Gujarat, Jharkhand, Madhya Pradesh, Orissa, Tamil Nadu, Tripura, Uttar Pradesh and West Bengal for River/spring irrigation in kharif season and similarly for farmer households in Assam, Gujarat, Jharkhand, Madhya Pradesh, Rajasthan, Uttar Pradesh and West Bengal in rabi season. For irrigation from canals, 15 per cent used diesel pumps during kharif season and about 18 per cent during rabi season. More than 50 per cent of farmer households in Gujarat, Jharkhand and Tripura irrigating their land from canals during kharif season and in rabi season canal irrigation in Jharkhand, Meghalaya 75 per cent of farmer households adopted diesel pumps. Diesel pumps were used for irrigtion from reservoirs to the extent of 14 per cent farmer households during kharif season and about 50 per cent during rabi season. Diesel pumps were used for irrigation from tube-wells to the extent of 3 per cent farmer households during kharif and 2 per cent during rabi. A small per cent of farmer households used diesel pumps for irrigation from wells in each season. Electric
pumps were used by about 18 per cent of farmer households for irrigation
from rivers/springs in both seasons. More than 25 per cent of farmer
households in Andhra Pradesh, Karnatka, Madhya Pradesh, Maharashtra, and 3.
Relative Extent of Use of Different Devices in Terms of Irrigated Area
It
can be seen from Table 2 that about 31 millon hectares out of 39 million
hectares of gross irrigated area in kharif season and 30 million hectares
out of 37 million hectares of gross irrigated area were irrigated without
using any device to draw water for the purpose. Thus, about 8 million
hectares or 20 per cent of gross irrigated area) in kharif season and 7
million hectares (19 per cent) in rabi season were irrigated by using some
kind of device at all-India level. However,
at the all-India level the data are inconclusive on the point at issue, as
‘other device’ account for a larger proportion of gross irrigated area
(10.9 per cent in kharif season and 8.5 per cent in rabi season out of 20
per cent and 19 per cent irrigated area using some kind of device) than any
of the explicitly recorded devices – diesel pump’ electrical pump and
persian wheels. The
diesel pumps were adopted as a device under irrigation in respect of 5.5 per
cent of gross irrigated area in kharif season and 4.8 per cent in rabi
season. A little more than 4 per cent and 3.7 per cent of gross irrigated
area in kharif season and rabi
season respectively, have been irrigated using electric pumps on a device
under irrigation. The usage of ‘persian wheel’. It
may be seen from the Appendix
that in north-eastern region states viz., Arunachal Pradesh, Assam, Manipur,
Megalaya, Mizoram, Nagaland and Tripura, 0.35 million hectares in kharif
season and 0.31 million hectares in rabi season were irrigated. Out of this
total GIA; an area of 0.2 million hectares or 62.0 per cent in kharif season
and 0.23 million hectares or 73.5 per cent in rabi season was irrigated
without using any device. Similarly, the share of area irrigated by using
other devices works out to 29.3
per cent in kharif season and
22.6 per cent in rabi season. Only, about 8 per cent in kharif season and 4
per cent in rabi season were irrigated by using electric or diesel pump. A
small area were irrigated by persian wheels. About
80 per cent of the gross irrigated area in northern region was irrigated
without using any device in both seasons. And about 11 to 12 per cent of the
area are irrigated by some other device. Only 3.5 per cent of the area was
irrigated by using electric or diesel pumps as devices to draw water. In
eastern region, though about 75 per cent of gross irrigated area in kharif
season and 82 per cent in rabi season wase irrigated without using any
device, the usage of diesel pumps were better. In all the states in this
region, except Usage
of electric pump for irrigation was prevalent in *
This note has been prepared by R.Krishnaswamy
Annexure Concept
and Definitions Farmer
is person who operated some land and was engaged in agricultural activities
on any part of that land during the 365 days preceding the date of survey. Farmer
households
were defined as one, which had at least one farmer. Agricultural
activities
include cultivation of field and horticultural crops, growing of trees or
plants such as rubber, cashew, coconut, pepper, coffee, tea, etc., animal
husbandry, fishery, bee-keeping, vermiculture, sericulture, etc. Crop
seasons
are generally identified by the months of harvesting of a crop during a
normal year. Kharif season includes both autumn kharif or early kharif and
winter kharif or late kharif. Generally, harvesting months of the early
kharif and the late kharif season extend over August to October and November
to January, respectively. Hence in general, the crops, which are harvested
during August to January, were considered as crops of kharif season.
Similarly, the rabi season includes both rabi and zaid rabi or summer rabi
and the crops are harvested during February –April and May-June,
respectively. Thus, a crop harvested during February to June was treated as
crop of rabi season. However, there are departures from this general rule in
the case of some crops grown in certain region. For example, rice in Tamil
Nadu is harvested thrice and the 3 harvests are termed as autumn, winter and
summer crops. Respective harvesting period of 3 crops is September to
February, January to April and May to June. Hence autumn and winter paddy
were taken as the kharif crop. Similarly, in Karnataka autumn and winter
paddy harvested in September to December and November to March are
considered as kharif crops. Generally, kharif rice, jowar, bajra,maize,ragi, sugarcane, kharif sesamum, groundnut, castor seed, cotton seed tobacco and jute are termed as kharif crops and wheat, rabi jowar, barley, gram, rabi sesamum and linseed are termed as rabi crops. Since most of the principal crops are grown in only one season, there is little difficulty in ascertaining the crop season of a particular agricultural operation. Hence, crop season of such a crop determined on the basis of its month of harvesting. Owned
Land: A
plot of land is considered to be owned by the household if the right of
permanent heritable possession with or without the right to transfer of
title, is vested in a member or members of the household. Land held in
owner-like possession under long term lease or assignment is also
considered, as land owned. Leased
Land:
Land given to others on rent or free by owner of the land without
surrendering the right of permanent heritable title is defined as land
leased out. All private land encroached upon by household is treated as
leased in land. Otherwise
Here
possession is without the consent of the owner. Orchards:
A
piece of land put to production of horticultural crops is regarded as
orchard; if it is at-least 0.10 hectare or having at least 12 trees planted
on it.
A
plot is considered exclusively for an orchard or plantation, if it is being
operated in both seasons provided some trees/plants remain standing on the
land for the major part of each season, even though the perennial
orchard/plant crop usually harvested in only one season. A
plot engaged in other activities, other than crop production, like
livestock, poultry, pisciculture, etc., is treated as being operated for as
long as it continued to carry out the activity. Hence, a plot used for
livestock is considered as being operated in both seasons provided some
livestock is maintained in the major part of each season. * This
note has been prepared by R. Krishnaswamy
Highlights of Current Economic Scene AGRICULTURE According
to latest Crop Weather Watch Report published by Ministry of Agriculture
as on January 21, 2008, rabi sowings have seen a drop in coverage of major
crops due to dry weather residing
in entire central and north-west Indian region, receiving hardly any
rainfall since August. The
wheat plantation, so far during this year, has covered 274.40
lakh hectares, as against 280.26 lakh hectares during the corresponding
period of 2006-07. Total
area sown under rabi oilseeds has touched 85.51 lakh hectares, around 9
lakh hectares lower than that from last year’s 94.95 lakh hectares. Progressive
area reported under the most important rabi oilseed, rapeseed and mustard,
has shrunk at 58.84
lakh hectares over last
year cumulative figure of 66.37 lakh hectares. Besides,
acreages for sunflower have declined from 11.12 lakh hectares to 9.63 lakh
hectares, for groundnut from 6.68 to 6.53 lakh hectares, for safflower
from 3.41 to 3.12 lakh hectares and for linseed from 5.09 to 4.75 lakh
hectares. While sown acreages covered under gram have fallen from 82.46
lakh hectares to 79.07 lakh hectares, the
total area sown under all the rabi pulses has dipped from 136.58
lakh hectares to 129.80 lakh hectares. However,
area under the plantation of lathyrus has gone up from 4.42 lakh hectares
to 5.15 lakh hectares. On the other hand, area
under coarse cereals like jowar has touched 46.46 lakh hectares as against
47.34 lakh hectares of the corresponding period of 2006; while acreage
under maize has risen from 8.14 lakh hectares to 8.96 lakh hectares and
that of barley from 6.49 lakh hectares to 7.25 lakh hectares. The
state owned trading company PEC has invited the bids for the sale of 2,360
tonnes of imported pulses in the domestic market, which include 1,200
tonnes of moong, 600 tonnes of tur, 360 tonnes of urad and 200 tonnes of
chickpeas. The last date for submitting was January 28, 2008 and the
decision regarding contracting the tender would be taken on February 4,
2008. State
Trading Corporation (STC) has
floated a tender to import 90,000 tonnes of Canadian yellow peas, to be
delivered before March 15, 2008 and April 15, 2008, with an option to
discharge the commodity at Mumbai,
According
to market sources, According
to the Cashew Export Promotion Council of India (CEPC), exports of cashew
kernels has fallen substantially during April–December 2007, with the
total shipments of cashew kernels touching 86,312 tonnes valued at Rs
1,671.95 crore against that of 89,585 tonnes worth Rs 1,866.64 crore
exported in the corresponding period last year. The average unit value
during April–December 2007 has been Rs 193.71 per kg against Rs 208.37.
The fall in exports is attributed due to continuous appreciation of rupee
against dollar and competition from other producers in the international
market in terms of value. On the other hand, shortfall of indigenously
produced raw cashew nuts in the domestic market has pushed up imports to
4,72,558 tonnes of raw nuts valued at Rs 1,201.59 crore during the
April–December 2007, from 4,65,707 tonnes (valued at Rs 1,432.64 crore)
exported in the same period during 2006-07. The average unit value of
imported raw nuts during the same period was Rs 25.43 per kg where as it
was Rs 30.76 per kg a year ago. The
state government of Uttar Pradesh has asked sugar mills to clear cane dues
from the 2006-07 season by February 10, 2008, as cane arrears of some of
the sugar mills have mounted to Rs 800 crore, which have remained unpaid
from the last sugar season that ended in September 2007. In addition to
it, the Supreme Court has stayed the order of the Allahabhad High Court
that had invalidated the state advised price of Rs 125 per quintal as
payment for last season’s cane arrears and restored the state government
power to seize sugar stocks as well as machinery equipment of mills that
have defaulted on cane payment and to sell them to make payments to
farmers. The
Allahabad High Court has directed the sugar mills in Uttar Pradesh not to
deduct transportation cost of Rs 5.75 per quintal, from the interim
sugarcane price of Rs 110 per quintal, for the sugarcane delivered at
their purchase centers from the farmers. It is expected that this would
translate into additional burden of Rs 260 crore on sugar millers. According
to International Coffee Organisation (ICO), global coffee production in
2008-09 is expected to be around 126 million bags up by 8.5 per cent as
against that of 116 million bags in 2007-08. Although, in the crop year of
2007-08, coffee production had been estimated to be around 116 million
bags representing a decline of 7.4 per cent over the crop year 2006-07. As
for global consumption, it is expected that 123 million bags would be
consumed in 2007 against 120.4 million bags previous year. The consumption
in exporting countries is estimated to be at 13.3 million bags, while in
importing countries it would be around 89 million bags. Maize
consuming industries, namely, poultry industry and starch industry have
expressed their disappointment over the central government’s stand of
not banning maize
exports, in the backdrop of rising demand for maize in domestic market and
reported scarcity of maize in international market. According
to the Southern India Mills Association (SIMA), bumper cotton crop
realised this year has not helped the domestic spinning industry to
recover from recession, due to rupee appreciation. The cotton Advisory
Board has estimated a whooping 310-lakh bales of cotton production for the
current season, pegging exports at around 65 lakh bales. Despite the
higher cotton output, the textile mills are not in a position to buy
cotton, due to high prices of cotton and lower realisation of yarn prices.
Cotton prices have been higher by 20 per cent in January 2007 from last
year, whereas the yarn price has fallen down by 10 per cent as compared to
January 2007. Overall, textile exports growth has declined from 12 per
cent to 5 per cent during the last one year. The
National Small Industries Corporation (NSIC) has signed a memorandum of
understanding with the Tamilnadu Foodgrains Marketing Yard (TFMY) for the
establishment of a milling cluster worth Rs 40 crore, which would be
coming up on a 30 acre- site near Koodal Nagar Railway Station. This would
upgrade the activities of micro and small enterprises engaged in grain
processing sector in the region. It is expected that it would enable the
members to market their products directly. This common branding would help
in getting special discount from the rating agencies, for term-loan banks
and take-over of liabilities through NSIC tie-up banks, through loans for
procurement from governments and public sector agencies, in import of raw
materials and machineries, strengthen
the infrastructural facilities by providing technology upgradation. Gujarat
Cooperative Milk Marketing Federation (GCMMF) has launched new product
namely Amul Calci+ (high calcium milk. This new product would be priced at
Rs 35 per litre, containing 100 per cent natural milk calcium and would
not contain any preservatives. This packed product would be made available
at all Amul Preferred Outlets (APOs), super markets and major A-class
outlets across Industry The
slow down in the growth of all the three sector pushed down the index of
industrial production to 5.3 per cent in November 2007, a 13 month low as
compared to 9.2 per cent last year.. Mining sector and electricity sector
grew by 3.5 per cent and 5.8 per cent during the month. Slow down in the
growth of manufacturing sector is almost one third recorded in November
2006. Out of the 17 industries, four industries declined and four
industries registered double digit growth.. As per use-based
classification, the sect oral growth rates in November 2007 over November
2006 are 4.8 per cent in basic goods industries, 24.5 per cent in capital
goods and 7.3 per cent in intermediate goods. Consumer goods decline by
2.6 per cent due to substantial fall in the production of consumer
durables and consumer non-durables. Infrastructure The
index of six core infrastructure industries having a combined weight of
26.7 per cent in the index of industrial production registered a slower
growth of 5.3 per cent as compared to 9.6 per cent in November 2007. The
dismal performance of crude petroleum rose only by 0.3 per cent as against
a growth of 9.8 per cent last year, and comparatively lower growth
performance of refinery products, electricity, cement, steel all
contributed for the lower rate of growth. However, coal production for the
third month in succession registered a faster growth with its production
rate registering a growth of 7.7 per cent in November 2007 as against a
low growth of 4.9 per cent in November 2006 Inflation The
annual rate of inflation calculated on a point to point basis, rose by
3.83 per cent for the week ended January 12,2008 as compared 6.15 per cent
as on January 13.2007. Primary
Articles group declined marginally to 222.1 from 222.2 for the previous
week. Food articles group declined due to lower price of gram, fish-marine,jowar,
condiments and spices and masur. In non-food articles group, which moved
up by 04 per cent ; prices of tobacco, soyabean,sunflower, copra and raw
rubber had gone up. The
index for the major group Fuel, Power, Light and Lubricants remained
stationary at its previous week’s level of 334.1. The
index of manufactured products rose by 0.1 per cent due to higher prices
of many edible oils and sugar. The
final WPI for all commodities had been revised upward from 215.7 to 216.0
for the week ended November 17, 2007. As a result the rate of inflation
calculated on a point to point basis stood at 3.35 per cent as compared to
3.21 per cent provisional. Banking The
RBI has proposed a modification in its guidelines for Mortgage Guarantee
Companies. The RBI has said that a mortgage guarantee company would have a
minimum net-owned-fund of Rs 100 crore at the time of commencement of
business. The issue of enhancement would be reviewed after three years.
Canara
Bank has posted a net profit of Rs 459 crore for the third quarter ended
December 2007, a growth of 26.4 per cent compared to Rs 363 crore reported
in the same period last fiscal. Dena
Bank has registered a net profit of 43.3 per cent at Rs 249 crore during
the third quarter ending December 2007 against the mark of Rs 158 crore
during the same period a year ago. Bank
of Maharashtra’s net profit for the quarter ended December 2007,
increased to Rs 100 crore as against the mark of Rs 74 crore for the
corresponding period of the previous year, registering growth of 35 per
cent. The
improvement in interest margins, sale of equity, recoveries and commission
helped Bank of India to post a 101 per cent growth in its net profit for
the third quarter ended December 31, 2007 at Rs 512 crore as against Rs
255 crore in same period last year. Vijaya
Bank reported a 36.8 per cent rise in net profit to Rs 127 crore during
the third quarter ended December 31, 2007 on a y-o-y basis. The bank is
plans to open 42 new branches in addition to the current 1008 branches
before the end of this financial year. Union
Bank of Dena
Bank has posted a 43 per cent rise in its October-December net profit due
to robust growth in net interest income. The net profit for the quarter
was Rs 101 crore compared with Rs 71 crore during the same quarter a year
earlier. State
Bank of India (SBI) has bought a 91 per cent stake in Global Trade Finance
(GTF), a factoring company, for Rs 525 crore. SBI acquired the stake from
three of the four promoter shareholders of GTF at a price of Rs 75 per
share. The three promoters who sold their stakes are EXIM Bank (40 per
cent), International Finance Corporation (12.5 per cent) and FIM Bank, Financial
Market Capital
Markets Primary
Market
Photon Infotech, a California based information technology company
with operations in Chennai, plans to come out with its initial public
offering (IPO), to raise about Rs 150 crore. The company will file a draft
red herring prospectus with the Securities and Exchange Board of India (Sebi)
next week. Funds raised will be used to expand its presence in other
countries, besides setting up a second development centre at Emaar
MGF Land Ltd, a joint venture between one of the world’s leading real
estate companies Emaar Properties PJSC of Dubai, and MGF Development Ltd
of India, is entering the capital market with an IPO of 102,570,623 equity
shares of face value Rs 10 each for cash at a price to be determined
through a 100 per cent book-building issue. The issue will open for
subscription from February 1 to February 6. The price band has been fixed
between Rs 610 and Rs 690. Bang
Overseas Ltd, a provider of fashion fabrics and ready-to-wear requirements
in apparel, textile and retail segment, is entering the capital market
with an IPO of 35 lakh equity
shares of face value of Rs 10 each at a price to be decided through a 100
per cent book-building process. The issue opened for subscription from
January 28 to January 31. The price band has been fixed between Rs 200 and
Rs 207. Crisil
has assigned a Crisil IPO Grade ‘5/5’ to the proposed initial public
offering of Acme Tele Power Ltd (ATPL). This is the highest grading given
by Crisil. This grade indicates that the fundamentals of the issue are
strong compared with other listed companies in State-run
Rural Electrification Corporation (REC) is expected to launch its initial
public offer (IPO) on February 14. The offer will close on February 18.
The company, which is a nodal agency for rural electrification and also
provides funds for distribution reforms in states, plans to file its draft
red herring prospectus (DRHP) with Sebi this week. REC
expects to raise up to Rs 1,200 crore from the IPO comprising fresh issue
of 10 per cent or up to Rs 7.8 crore and an offer for sale by the
government of an equal number of shares. Secondary
Market It
was the worst times of Indian stock markets with key indices recording the
historic losses. At the beginning of the week the country’s stock
markets were hit by a tsunami wave of selling that saw the benchmark index
of the BSE shed 2,000 points intra-day before rallying marginally later in
the afternoon on Monday, January 21. Market men put it down to a
combination of weaker global economic outlook, liquidity sucked out by a
couple of recently launched IPOs and forcible liquidation of securities
pledged by investors who were unable to meet the margin on their
outstanding loans. According to the provisional data with the exchange,
the foreign institutional investors sold shares worth Rs 3,297 crore worth
of shares, while the domestic investors were net buyers to the tune of Rs
3,399 crore. Retail investors also bought shares worth Rs 421 crore even
as proprietary trading offloaded shares worth Rs 534 crore. While
according to Mr Anil Advani, Head of Research, SBI Capital Securities, it
is a cascading effect of a combination of global factors where FIIs have
been selling, money sucked out by the two IPOs of Reliance Power and
Future Capital and margin selling that brought down the market. There was
a pullback towards the close. BSE sensex finally closed 1,408 points down
at 17,605 suffering a 7.40 per cent loss. NSE’s CNX S&P Nifty was
down even further closing 8.70 per cent lower — a loss of 496.50 points
at 5,208.
It
was mayhem on the stock market for the second day running, forcing the
exchanges to halt trading within seconds of opening, and sending the BSE
sensex to its biggest two-day decline in almost four years. Domestic
shares took cues from falling Asian markets, where the region's benchmark
Hang Seng had its biggest decline since April 1990 on concern that the
global economy is slowing. It
was a day of fast-changing developments, beginning with the trading halt
due to the 10 per cent fall in the benchmarks immediately on opening,
followed by Finance Minister P Chidambaram’s attempt to sooth investor
sentiment, big buying by domestic insurance companies and higher sales by
foreign funds. On
a drama-filled day, which saw investors rushing to issue stop cheque
instructions to banks on their applications for Reliance Powers initial
public offering (IPO), the BSE sensex crashed below the 16,000-mark the
first time since 17 September, before the relief rally helped the market
to recover most of the losses. At one point, the Sensex plunged by massive
2,272.93 points, or 12.91 per cent, to the lowest level of 15,332.42.
(This time the circuit was not triggered as the rules states that for a
second halt in trades, the benchmarks should move 15 per cent.)
NSE’s
S&P CNX Nifty ended down 309.5 points, or 5.94 per cent, to 4899.30,
the lowest since last September. The biggest losers on Tuesday was the
small and mid-cap stocks, which have come down by nearly 30 per cent from
the peak on 4 January this year a massive loss in 13 sessions. Among
sectoral indices - realty (down 30.24 per cent), power (down 26.16 per
cent) and metals (down 30.46 per cent), are the other biggest losers in
the fall since early this month. On
Tuesday, January 22, 2008 Finance Minister P Chidambaram, called for
market players to take informed and matured decisions and not give any
room to unwarranted apprehensions and market rumours, on sought to calm
panicked investors after BSE Sensex nosedived over 2,000 points in early
Tuesday trade, after the BSE authorities suspended trading within minutes
of witnessing a sharp plunge. Initially
the stock market seemed to respond favourably to Chidambaram’s words,
however, the downturn continued subsequently.
Tuesday was the second consecutive intervention by the finance
minister to calm investors’ nerves.
On Monday also, after the BSE Sensex fell over 1408 points, P
Chidambaram given a late evening statement, as the fundamentals in the
domestic economy are quite strong. Tuesdays market fall reflects the
continuing uncertainties in the global economy and not any change in the
fundamentals of the Indian economy. Our economy is on a very different
level from some economies of developed countries. There is no reason to
allow the worries of the western world to overwhelm us. Ours is a strong
economy and corporate sector is very strong and will grow at 9 per cent
this year. He also pointed
that even Rangarajan Committee (Prime Minister’s Economic Advisory
Council) has said we will grow at 8.5 per cent next year. Chidambaram also
said that there is no liquidity crunch in the economy.
He said that, he was assured by RBI and all the banks, that enough
liquidity will be provided to brokers and market players as liquidity will
not be an issue and banks have reported that investments in the economy
are running very high, as the demand for credit is strong.
The
75 basis-point rate cut by Federal Reserve on Tuesday showed good impact
on the Indian equity and financial Markets. There was some respite for
investors on Wednesday as the Indian markets recovered from the heavy
losses suffered over the first two days of the week to post a modest gain
of five to six per cent. The BSE Sensex opened with a gain of 685 points
taking a cue from the Asian markets and went up by 1,046 points in the
intra-day trading but the gains were narrowed down towards the close and
the BSE Sensex settled at 17,594 with a 5.17 per cent gain of 864 points.
Realty sector gained the maximum of 11 per cent, followed by power sector
gained 9.81 per cent and oil and gas gained 8.73 per cent. The midcap
companies came back strongly, with the BSE midcap index showing a gain of
8.15 per cent while the small cap index underperformed the market with a
gain of just 4 per cent. Renewed
worries about the health of global banks hit the market's fragile
confidence on Thursday, with the Sensex falling 2.12 per cent after a
brave start. The immediate trigger for the concern was French bank Societe
Generale statement that fraud by a single trader had caused it a $7.1
billion loss and that would seek emergency funds as a result.
The Sensex fell 372.3 points to 17,221.74 points, with 24
components in the red. The index closed almost 19 per cent below a life
high of 21,206.77 points hit on January 10. In morning trade, hopes of the
Reserve Bank of The
markets rallied to their biggest single-day gains on Friday, in line with
Asian exchanges, after the US government formulated a plan to boost
economic growth With yesterday’s gain, the widely tracked BSE Sensex,
which crashed 2,284 points (12 per cent) in the first two days of this
week, has recovered 1,631.72 points in the last three days a phenomenal
turnaround given the sentiment just three days back.
On
the last trading session of the week, the BSE Sensex climbed 1,139.92
points to 18,361.66 still 2,514 points away from the all-time high close
recorded on January 8. The broader S&P CNX Nifty added 350 points
(6.95 per cent) to close the week at 5,383.35 points. Real estate (the BSE
Realty Index was up 10.41 per cent) stocks were the major gainers among
sectoral indices. Metal and banking indices rallied 9.73 per cent and 7.53
per cent, respectively. The
Nifty hit a low of 4448 before pulling back to 5383 with a week-on-week
loss of 5.81 per cent. The Sensex bottomed at 15332 before closing at
18361 for a weekly loss of 3.42 per cent.
Participatory
note (P-note) holders investing in Derivatives Volumes
in the F&O segment have dipped in the first two trading session amid
high volatility in the cash market. Against the normal turnover in the
F&O segment of around Rs 70,000 crore to Rs 80,000 crore a week ago,
the turnover in NSE's derivatives segment stood at Rs 36,073 crore on
Wednesday, compared to Rs 44,307.58 crore on Tuesday. The Nifty January
futures, after witnessing high volatility, gyrated in the range of 407
points before settling at 5,164 points, a rise of 269.40 points from its
previous close on January 22 and at a discount of 39 points from its spot
price. The open interest reduced by around 2 per cent at 30.37 million. The
sell-off witnessed in Indian stocks over the two trading sessions of the
week, much like the correction in 2006, has its genesis in the excessive
build-up in the futures and options section. The open interest on NSE has
been recording new highs ever since the beginning of this year. Investor
confidence has been very high ever since the stock markets recovered from
the October 2007 correction. The strength in that rebound spurred
investors to roll over their leveraged positions in the expectation of
windfall gains once the markets moved higher. The daily average open
interest has been above Rs 1,00,000 crore ever since November
2007.The-disturbing feature in this increase in open interest is the
predominance of stock futures. While Indian investors hedge through index
futures and options, they prefer to buy stock futures mainly for
speculation. Moreover, in a booming stock market, these positions tend to
be mainly long positions. Holders of these long positions, rushing towards
the exit door appear to have caused the exaggerated fall on Monday. New
products such as the mini Sensex and Nifty future and futures on various
indices such as junior Nifty and CNX 100 and the additions to single stock
futures may have also encouraged retail investors’ participation in the
derivatives segment. The newly introduced stocks in the future and options
(F&O) segment bore the brunt of the carnage on the bourses, declining
anywhere between 5 and 54 per cent from January 9 to January 23, 2008.
All the 29 stocks added in the derivatives segment by the NSE over
the last five months beginning September 2007 are trading below the levels
attained six months back. A
majority of stockbrokers has unwound their leveraged positions in the
futures and options segment. The total leveraged position (in excess of Rs
1 lakh crore) contributed heavily to the stock market crash
.The unwinding of leveraged positions saw the overall market open
interest (OI) on the NSE come down by 17 per cent on Monday at Rs 1,05,880
crore from Rs 1,26,000 crore. The OI further fell 15 per cent on Tuesday
to Rs 89,307 crore. If
the current rollover of 18.5 per cent across markets is any indication,
rollovers for the February series are heading for an all-time low.
Only four days are remaining for the expiry of the January
contracts and futures worth only Rs 12,143 crore have been rolled over so
far out of the total open interest of Rs 65,521 crore.
The
rollover in Nifty futures has been at an all-time low of Rs 5,600 crore,
or 27.8 per cent, of the total open interest of Rs 20,158 crore. The
rollover in stocks futures have been at Rs 6,453 crore, or 14.4 per cent,
out of the total outstanding open position of Rs 44,831 crore.
After
the market mayhem, institutional fund houses have started building their
new portfolios and, consequently, delivery-based transactions have shot up
substantially. The delivery volume on the NSE rose to 37 per cent on
January 24 from 30.35 per cent on January 23 and 25.29 per cent on January
22. Provisional stock exchange figures show domestic institutional
investors have bought equity worth Rs 8,835.07 crore since January
21,2008. As per Yogesh Radke, Derivatives analyst at Edelweiss Capital,
the rise in the delivery volume is mainly because of those investors that
have started accumulating stocks that were battered heavily during the
recent fall. Positional buyers, mainly fund houses with a long-term view,
are entering the market, with investments being made at every level. This
is creating a new investment portfolio. Earlier, a higher level of
speculative activity on the bourses had resulted in a low delivery volume
during the first half of January, when the market was hovering around its
historic high. The average daily delivery-based volume was 23.64 per cent
in the first week of January, which further dipped to 22.27 per cent
during the second week of January. The lowest delivery percentage was
reported on January 11 at 20.47 per cent, a day before the market started
sliding. Still, a clear picture would emerge only after the January
derivatives contracts expire on January 31,2008 and, until then, the
Markets are likely to remain highly volatile. Government
Securities Market Primary
Market RBI
re-issued 6.57 per cent 2011 and 12.25 per cent 2010 for Rs.3,000 crore
each on January 23, 2008 at the cut-off yields of 7.36 per cent and 7.41
per cent, respectively under market stabilisation scheme.
On
January 23, 2008, RBI auctioned 91-day and 182-day T-bills for the
notified amounts of Rs.3,500 crore(out of which Rs. 3,000 crore under MSS)
and Rs.2,500 crore(out of which Rs. 2,000 crore under MSS), respectively.
The cut-off yields for 91-day and 364-day T-bills were 7.19 per cent and
7.25 per cent respectively. Twelve
state governments auctioned 10-year paper maturing in 2018, through an
yield based auction using multiple price auction method on January 24,
2008 at cut-off yields ranging from 7.84-7.98 with the lowest for
Rajasthan and the highest for Secondary
Market Inter-bank
call money rates moved in the range of 6 per cent-8 per cent before ending
at 6 per cent-6.10 per cent. At the end of the week, the RBI mopped up Rs
11,650 crore from four bidders, mostly state-owned banks. However, there
were also bids for liquidity support from some private sector banks for Rs
10,665 crore. The bids from the repurchase window for liquidity support
were largely on account of huge sell-out by foreign institutional
investors (FII). The trend suggested that though there was no scarcity of
liquidity, surplus cash was concentrated with some banks. Cash infusions
through the repo window helped call rates to cool off. The cumulative CBLO
volumes for the week rose to Rs 2,01,318 crore from Rs 188,086 crore. The
overnight weighted average yield was lower at 6.0261 per cent as against
6.3031 per cent in the previous week. Call rates could edge up to 7 per
cent until liquidity becomes accessible uniformly to all the market
participants. The
country's largest provident fund organisation, Employees Provident Fund
Organisation (EPFO), on Thursday decided to keep the interest rate on the
payouts unchanged from 2006-07 at 8.5 per cent. A meeting of the central
board of trustees (CBT), the policy making body of the EPFO, however,
decided to remove the monopoly of the State Bank of India (SBI) to manage
the fund to the tune of Rs 2,00,000 crore. The rate is, however, more than
the 8.25 per cent recommended by the investment committee of the EPF. At
the proposed rate, the EPF would have a deficit of Rs 263.78 crore. The
meeting also took up the issue of investing 5 per cent
of the EPF money in the capital markets, but no decision was taken. Bond
Market Finance
ministry wants nationalized banks to look into various options, including
qualified institutional placements(QIP) to raise tier II norms which will
be implemented from April 2008 for banks having overseas branches. The
finance ministry approval to Bank of India stipulates that the QIP
placement be made only with public sector enterprises and mutual funds.
Indian banks are estimated to require Rs.50,000 crore to meet the stiff
capital requirements under Basel- II rules. Under the new guidelines,
banks have to provide for operational risks. The
primary market for both long term and short term papers will wait till RBI
announces its monetary policy on January 29,2008. In the primary long-term
market, Food Corporation of Foreign
Exchange Market The
rupee finished weaker at 39.37 per dollar from 39.30 per dollar albeit
much stronger than intra-week lows. The rupee dropped to Rs 39.40 against
the dollar from last week’s Rs 39.18 after some of the foreign
institutional investors and participatory note holders with FIIs sold out.
Extreme volatility in stocks markets along with FII selling put the rupee
under the pressure in the first half of the week. The rupee however staged
a comeback from 39.60 per dollar once a semblance of calm returned to
financial markets. Forward premia showed no immediate reaction to the Fed
rate cut. Amid short-covering pressure in the spot, annualised premiums
eased. According
to traders, some of the exporters also hedged at current exchange rates to
defend their exchange rate gains. As a result, forward premia dropped
sharply during the week. One month forward premia dropped to 0.30 per cent
(1.07 per cent). Three, six and 12 months also softened to 0.91 per cent
(1.84 per cent), 1.73 per cent (1.89) and 1.55 per cent (1.63 per cent)
respectively. But the Reserve Bank of India (RBI) did not intervene in the
foreign exchange markets. Instead, intervention focused towards containing
the liquidity impact. Commodities
Futures derivatives The
proposed fourth commodity exchange, planned by Indiabulls and MMTC, in the
country is likely to start functioning by November this year. As per
Indiabulls CEO Gagan Banga, the commodity exchange should happen by middle
to end of this year and will focus on all commodities, including
agriculture and are hoping to get licence within the next 3-4 months and
trading will start in 3-6 months thereafter. Apart from futures trading,
the joint venture of Indiabulls and MMTC also intends to launch spot
trading of commodities in the country. The
Cabinet, on Thursday January 24, 2008, cleared the proposal to issue an
Ordinance for empowering the commodity markets regulator, the Forward
Markets Commission (FMC). The Ordinance will expedite the amendment in the
Forward Contract Regulation Act. It will also pave way for introducing
options trading in commodities and index-based futures and options as is
being done in securities. The
Ordinance will empower the FMC to prepare a regulatory framework for
commodity markets and impose stringent penalty on violators. Owing to low
penalty, violators flout norms to earn more profits.
Experts see the Ordinance as a precursor to the Bill for the
amendment of the Forward Contracts (Regulation) Act, 1952. The Bill is
pending before Parliament for the last two years, and is likely to be
introduced in the Budget session of Parliament. According to Joseph
Massey, deputy-managing director, MCX, the Ordinance will empower the
consumer affairs ministry to notify such trading. An amendment in the
definition of goods and new concept of commodity derivatives will be
introduced. This means derivative contracts for weather; carbon credits
and indices may be introduced. The ministry will have to notify that such
contracts can be introduced. The new-age exchanges, which have been
expecting the launch of these intangible products for the last two years,
are hopeful that the Ordinance will be issued by the president within
seven days. On
Monday, January 21, 2008 Multi Commodity Exchange (MCX), launched futures
trading in carbon credits. On the first day of trading, the exchange
received good response (till 5 pm) in the first session with the total
trading volume of all the contracts reached at 9,600 tonne (48 lots) and
open interest 8,000 tonne (40 lots). Concurrently five contracts of carbon
credits are available on the exchange platform with expiry in December
2008. The trading unit of carbon credits is 200 tonne where each tonne of
carbon credit (carbon dioxide emission allowance) being an entitlement to
emit one tonne of carbon dioxide equivalent gases. On Monday, the December
2008 contract was opened at Rs 1,280 per tonne on weak note but it reached
to a day’s high of Rs 1,333 and finally settled at Rs 1280 per tonne (at
5.00 pm). With
The
Centre’s decision to amend the Forward Contract (Regulation) Act, 1952 (FCRA)
comes at a time when it has been projected that trading volumes will reach
a record level of Rs 74 lakh crore by 2010 from the present level of Rs 36
lakh crore on the commodity exchanges. About 100 commodities are traded on
three national and 20 regional exchanges all over the country. The
distribution of volume of trade is 50 per cent in bullion (gold &
silver), 20 per cent in other metals and commodities like copper, zinc,
crude oil and about 30 per cent in agricultural commodities, including
food grains and essential commodities. The decision to issue an ordinance
in this regard is also important when the financial investors have
recently started showing interest towards the commodity exchanges.
According to a senior UPA government functionary, these financial
investors are increasing their stake in these Markets, stating that
trading in agricultural futures has boomed in the recent years. Thus, the
amendments to the FCRA becomes necessary to give more autonomy to the
Forward Markets Commission (FMC) to manage and regulate such a growth. On
Monday, January 22, 2008, pepper futures market, which has been moving up
during the past couple of weeks, witnessed a sharp fall following the
major crash in the share markets. The influence has been such that the
prices fell by Rs 306 to Rs 744 on NCDEX and by Rs 85 to Rs 622 on NMCE.
This has brought down the Indian parity to $3,925 a tonne (c&f),
almost on par with that of other origins. February contract on NCDEX fell
by Rs 611 a quintal on Monday to Rs 14,665. The drop in other contracts
was from Rs 306 to Rs 744 a quintal. On NMCE, February contract dropped by
Rs 597 a quintal to Rs 14,470. The fall in other contracts was from Rs 85
to Rs 622 a quintal. Total turnover on NCDEX increased by 9,880 tonnes to
23,440 tonnes, while on NMCE it went up by 856 tonnes to 2,484 tonnes.
Total open interest on NCDEX fell by 821 tonnes to 24,253 tonnes. February
and March positions dropped by 25 per cent and 58 per cent respectively
while April moved up by 12 per cent. On NMCE, total open interest went up
by 17 tonnes to 1,652 tonnes. Spot prices in tandem with the futures
market trend fell by Rs 200 a quintal on Monday to close at Rs 13,800
(un-garbled) and Rs 14,400 (MG 1). The market for white pepper also firmed
up. Prices at most origin as well as at European market increased up to 3
per cent Futures
trading in agriculture commodities on NCDEX followed the stock market
downhill, but recovered at the later session. Pep talk by the FMC
Chairman, Mr B.C. Khatua, and the Government decision to consider autonomy
to FMC also boosted sentiments. Soyabean, barley and jeera futures hit the
lower circuit, while maize was close to the lower circuit. Soyabean hit
the lower circuit of 6 per cent, but recovered marginally to close with a
loss of 3 per cent at Rs 1,960 per quintal, while soya oil futures, which
was down 2 per cent, trimmed loses to close lower by 0.87 per cent at Rs
581 per 10 kg. Jeera
for February delivery fell 1.59 per cent to Rs 10,615 per quintal on weak
demand. Barley for May delivery lost 1.82 per cent to Rs 992 per quintal
on profit booking. Among gainer, chana futures was up 1.27 per cent to Rs
2,319 after the Mr Khatua said that FMC will urge the government to lift
the ban on urad, tur and wheat. After
gaining by Rs 250 in the last 3-4 session, turmeric gained 2.96 per cent
to Rs 2,820 per quintal on buying interest at lower levels. Fresh buying
was also witnessed in maize which rose 1.24 per cent to Rs 785 per
quintal. Potato was up 1.39 per cent to Rs 588 per quintal. On MCX,
cardamom lost 1.63 per cent to Rs 694 per kg, while potato gained 2.18 per
cent to Rs 515 per quintal. MCX recorded a turnover of Rs 8,380 crore up
to 5 pm, while it was Rs 3,937 crore on NCDEX. Pepper
futures market witnessed a sharp fall during the week, resulting in the
Indian parity becoming competitive with other origins at $3,900-3,950 a
tonne (c&f). However, On
Saturday total open interest on NCDEX fell
by 2,026 tonnes to 23,048 tonnes. February and March positions declined by
1,814 tonnes and 356 tonnes respectively, while April position moved up by
86 tonnes. However, on NMCE it moved up by 89 tonnes to 1,724 tonnes. Spot
prices, in tandem with the futures market trend, dropped by Rs 300 a
quintal to close at Rs 13,700 (un-garbled) and Rs 14,300 (MG 1). According
to the International Pepper Community (IPC) report for the week, situation
in the source markets showed a mixed trend. In Poor
demand in the domestic market is expected to keep cumin seed (jeera)
prices at lower levels. The near-month contract for jeera has already
witnessed a free fall of over Rs 1,100 a quintal in the last eight trading
sessions. Market men and commodity analysts said the market could drop
further. According to Faiyaz Hudani, a commodity analyst with Kotak
Commodities, the market could not sustain at higher levels. If the
near-month contract breaks the support of Rs 10,300 a quintal, the prices
could go all the way down to Rs 10,000 a quintal mark. The
country’s chana output may fall short of the earlier estimates by 10 per
cent for the current calender year. According to market sources, the drop
will be mainly because of decline in acreage and poor rainfall in the
major producing regions of the country.
Madhya Pradesh, the largest producer of chana, is expected to see a
drop of over 20 per cent at less than 2 million tonnes against the average
2.4 million tonnes. Similarly, states such as Rajasthan, Corporate
Sector In
a private equity (PE) deal, the SBI has picked up 7.79 per cent equity in
the Orissa-based ARSS Infrastructure Projects Ltd. The deal was for 10
lakh shares out of the company’s total equity base of 1,25,54,000 shares
of Rs 10 each. CapitaLand,
Southeast Asia’s largest developer, will work with Advance India
Projects and the Prestige Group to develop 15 malls in Leading
textile manufacturer and retailer Arvind Mills has chalked out an
investment budget of Rs 400 crore to open eight Megamart Outlet Centres
– large format value stores and increase the number of small stores
called Megamart stores by 50 over the next two years. Grasim
Industries Ltd, the country’s third-biggest cement maker which also
produces viscose-staple yarn, has posted a 29 per cent gain in its
third-quarter consolidated net profit, at Rs 722 crore on account of
higher cement and fibre prices. Lupin
has posted a three-fold increase in consolidated net profit at Rs 181
crore for the third quarter ended December 31, 2007 as against Rs 62 crore
during the corresponding period of the previous year. In
order to expand its presence in the television entertainment space, NDTV
has sold 26 per cent stake in NDTV Networks to NBC Universal for $150
million (about Rs 200 crore). NBC is a leading international media and
entertainment company. Telecom Bharti
Airtel has signed a $150 million six-year agreement with global IT major
IBM for implementation of IT systems to launch differentiated services in
broadband, media, IP-TV and DTH segments. As well, IBM will enhance the
delivery of value-added products and services to the prepaid segments. In a desperate attempt to obtain spectrum allocation and start operations in new circles ahead of rivals, leading GSM operators have informed the government that they are willing to start services with less than 4.4 Mhz spectrum. Vodafone Essar has intimated its willingness to start operations in new circles. According to telecom analysts, with less than 4.4 Mhz spectrum the mobile service provider would also compromise the quality of their services. The initiative comes at a time when the TRAI is looking at ways to improve the quality of mobile telephone services in the country.
*These statistics and the accompanying review are a product arising from the work undertaken under the joint ICICI research centre.org-EPWRF Data Base Project. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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