India Economic Scan | 5 May 2009

5-May-2009

India Economic Scan

In this edition: Indian economy to grow 6.1-6.5%, India still looks strong - Motley Fool, Housing Development Finance profit falls 4.6%, Indian bonds drop, Indian stocks rally 5-6% on monday.

Top headlines

Economy will grow between 6.1-6.5%: CII

• The Indian economy is expected to grow by 6.1-6.5% during 2009-10 owing to high growth in key sectors like agriculture and services, according to an industry lobby study.
• "We are factoring in GDP (gross domestic product) growth of 6.1-6.5% in 2009-10, based on sectoral growth rates of 2.8-3%, 5-5.5% and 7.5-8%, respectively for agriculture, industry and services," the report by the Confederation of Indian Industry (CII) said.
• According to the advanced estimate figures of the Central Statistical Organisation, the economy grew by 7.1% in 2008-09 after the expansion rate dipped to 5.3 per cent in the third quarter.

India Still Looks Strong

• India doesn't rely on exports as much as some other emerging markets, for instance in 2008 the export-to-GDP ratio for singapore was 96% versus India's 15%.
• When the Sensex bottomed out in March, the exchange traded at 9.2 times earnings, the lowest since 1996. Even after its recent rally, its P/E ratio is still near five-year lows.
• Unfortunately, even with expected economic growth in the neighborhood of 5%, Morgan Stanley estimates that earnings at Indian companies will decline 16% in 2009, compared with a 25% decline for emerging markets as a whole.

Housing Development Finance Profit Declines 4.6%

• Housing Development Finance Corp, India’s biggest mortgage lender, said Q4 profit declined 4.6% to 7.33 billion rupees ($148 million) in the three months to March 31 from 7.68 billion rupees a year earlier, the company said in a statement to the Bombay Stock Exchange.
• Profit in the year-earlier quarter included a one-time gain of 2.02 billion rupees from the sale of a 26% stake in HDFC General Insurance Co. to a unit of Munich Re.
• Shares of Housing Development rose 14% to 1,965.05 rupees at the close of Mumbai trading. They have climbed 32% this year.

Indian Bonds Drop on Speculation Investors Sold Before Auction

• Yields on benchmark notes due 2019 climbed to a two-week high as the government prepared to offer 120 billion rupees ($2.4 billion) of bonds.
• The sale is part of the record 2.41 trillion rupees India plans to raise in the first half of the fiscal year that started April 1 to help fund stimulus spending.
• The yield on the 6.05% note due February 2019 jumped 15 basis points to 6.37% at the 5:30 p.m. close in Mumbai, according to the central bank’s trading system. The price declined 1.05 per 100-rupee face amount to 97.67. A basis point is 0.01 percentage point.

Indian Stocks Advance to Seven-Month High, Led by Sterlite

• The BSE’s Sensitive Index, or Sensex, jumped +6.4% to 12,134.75. Markets were closed on April 30 and May 1 for holidays. The S&P CNX Nifty Index on the NSX gained 5.2% to 3,654. The BSE 200 Index advanced 5.7% to 1,415.13. Nifty futures for May delivery added 4.9% to 3,652.35.
• Overseas investors bought stocks worth 65.08 billion rupees ($1.3 billion) in April, the most since October 2007, according to the nation’s market regulator.
• ICICI Bank +11% to 529.90 rupees, State Bank of India +6.9% to 1,366.25 rupees, Tata Consultancy +6.9% to 666.40 rupees, Allahabad Bank +8.8% to 56.90 rupees.