Sensex records largest fall in 4 years

Investor concerns soar while Stock Market falls | Image: Blogger.com
Investor concerns soar while Stock Market falls | Image: Blogger.com

BSE Sensex plummeted by 769.41 points on Friday, the largest in 4 years. This caused concerns about the withdrawal of US stimulus from Indian markets and the downfall of the rupee which now stands at 62 per US dollar.
After advancing over 703 points, the Sensex swooped 769.41 points or 3.97 per cent as stocks of Consumer durables and banking sector nose-dived and suffered major losses. The Reserve bank of India (RBI) on Wednesday imposed new restrictions on how much its citizens can bankroll abroad raising concerns amongst foreign investors. The fall in the Sensex also hit the blue chip stocks of HDFC Banks due to fears that the reduction of US stimulus would affect foreign selling.

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[Inputs from Swarnalata Bhattacharjee]

Vodafone sues Telecom Italia

Locking horns in court | Image Source: photoarabia.com
Locking horns in court | Image Source: photoarabia.com

Milan: Vodafone Group, the British telecom provider is suing Telecom Italia for 1 billion Euros. The reason given by the Vodafone group is that, the Telecom Italia has been abusing its dominant position in Italy.

Vodafone spokesperson said in an email on Sunday the civil action in Milan stated that Telecom Italia committed a series of abuses from 2008 to 2013 ‘with the intention and effect of impeding growth in competition in the Italian fixed-line market’. This claim was rejected by Telecom Italia by saying it was confident it would demonstrate the ‘total correctness’ of its behavior.

Vodafone says that they have lost customers because of Telecom Italia, which acting as a hurdle in their ability to grow its fixed-line business, and forced it to pay artificially high cost to complete in the market.

Telecom Italia has decided it would appeal against the antitrust fine, which was decided after a three-year investigation prompted by rivals Wind, Italy’s third-largest mobile operator, and broadband company Fastweb, a unit of Swisscom.

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(With inputs from Ananya Chanda)

Indian Rupee hits all time low at 61.20

indianrupee
Image source: financialexpress.com

The consistent decline in the Indian Rupee has been a cause of great worry for the economic stability of the country. The US Dollar to Indian rupee exchange rate closed at 59.89 on July 15th before the RBI announced its measures the same day. The end of the month oil-demand has added to the pressure on the Indian Rupee. Simultaneously, the Nifty fell for the fifth successive session on Tuesday, the lowest level in over a month, and hitting major oil importing companies such as Hindustan Petroleum, Bharat Petroleum, among others. The rapid fall has forced economists to predict that India is set to face its worst economic crisis yet that may force the Central Government to make do with limited reserves to maintain relationships with foreign investors. On the bright side, the falling rupee has made India a hot tourist destination. After swaying between a little over 60 and 58, the rupee settled at 61.20 as on Wednesday.

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Maruti’s Manesar plant has no plans of closing down now

Safe, for now | Image Courtesy: The Hindu

The Manesar plant, one of Maruti Udyog’s  most modern facilities, which was on the verge of shutting down is finally going to function like before. At a time when Maruti is gearing up for a massive manufacturing unit in Gujarat, the plant at Manesar had a lot of issues.There were plans to close it down as it was facing the prospects of paying an additional amount of over Rs 500 crore for extra piece of land.

The plant sits on a massive piece of land which is around 600-odd acres. The Haryana government had realized that the threat given by the company would turn out to be a problem for the people because not only does the plant manufacture hatchbacks like Swift and sedans like Dzire, but is also the sole base for making engines for all the diesel models. This plant was also a big source of employment for the people out there.

The management is now happy because of the support received from the Haryana government and now that their demands have been met and they have been granted this rebate. Had the plant been closed, there would be around 20,000 workers who would have been jobless and Haryana would have suffered a loss of revenue which would be around Rs.8,000 crore. The Manesar plant is one of the most crucial facilities for the company as well as for the global operations of the Japanese company Suzuki. As compared to Maruti’s first plant in India which is at Gurgaon, Manesar is relatively new but has all the modern methods and techniques of making cars.

 

Calyx-ZTE tie up to boost sales

ZTE Corporation has announced its intent to foray into the Indian open market with its smart phones and tablets by announcing its partnership with Pune-based Calyx Telecommunications (a part of the Calyx Group). In order to bolster a pan-India presence for ZTE, this partnership will see Calyx in charge of distribution, sales and marketing while ZTS will provide ‘best in class’ products and post sales services.

Announcing the tie-up, Xu Dejun, CEO, ZTE India said, “As we foray into the handset open market, we are delighted to partner with Calyx Telecommunications. Backed by our strong portfolio and R&D capabilities supported by Calyx Telecommunications strong financing background and distribution channels, we expect to emerge as a key player in the Indian smartphone arena. Globally, ZTE is the 4th largest handset manufacturer and we are certain to strengthen our position in India, which is a key growth propeller for us, contributing to 10% of our overall revenues. We feel it is a perfect synergy between two companies who share the same vision of empowering the Indian handset market.”

“We are delighted in partnering with ZTE which is one of the most reputed players in the telecom sector. This partnership will substantially help us broaden our portfolio into the telecom sector. We are also sure that ZTE will find immense benefits with this relationship, which will help both the companies, emerge as strong players in the Indian market.” Executive Director of Calyx Telecommunications, Dr. Gaurav Somani said. He went on to add that the distribution network would initially focus on five states, i.e., Maharashtra, Goa, Madhya Pradesh, Chattisgarh and Gujarat with 60 cities and towns connected through 7000 touch points. However ZTE products in all major states would be available by the end of October 2013.

ZTE’s initial portfolio in the Indian market will comprise five types of smartphone models ranging from Rs 5799 to Rs 14,999. It will be followed with the introduction of Tablet PCs.

The fall and fall of the Indian rupee

Image source: postnoon.com

 

There was a time when a thousand rupees were enough to buy all your furniture, when a rupee was enough for a month’s pocket money and 25 paise coins were still in existence. We now live in a time where the ten rupee note has been converted to a coin, a ‘chillar’, something of almost no value in colloquial terms, and where prices seem to escalate to no end.

The rupee fell to a new low of 59.92 per dollar yesterday. Though it has been persistently declining against the dollar since the global financial crisis, the sharp fall is one of the major ones in the last four years. The rupee has also dipped against the euro which currently stands at 77.98 and the Singaporean dollar at 46.49.

This has led to a weakening of the rupee which has resulted in a price rise in petroleum products, oil, food, foreign trips and the overall monthly expenditure of the Indian consumer. The imports, mainly of crude oil, fertilizers and iron ore have become costlier. An ASSOCHAM study has revealed that monthly expenses have risen by 15% to 20%. 49% of the people have had to cut back the amount they spend on electronics, home appliances and automobiles. Apart from the air fares going up and foreign education fees increasing, even the cost of FMCGs and medicines are likely to rise.

The dollar’s strength seems to have been bolstered by a statement by the US Federal Reserve that signals that their policy of quantitative easing (QE) is coming to an end. This policy had made a lot of cheap money available in the US by printing more money, making some of it flow into countries like India. Now that the US economy is gaining strength, the capital flows will go back to the US to aid its revival.

Apart from this, the structural weakness of the rupee due to a high current account deficit (CAD) makes it very vulnerable to outside shocks. One major reason of the widening of the CAD is gold imports, as the government has to provide for dollars for the gold purchased. Another factor is the import of oil, as India imports more than 75% of its total oil requirement. There are very less foreign investors in India as they are wary of the depreciating value of the rupee. A country with a high CAD is likely to depreciate, which is what happened with the rupee.

The current forex reserves stand at $290 billion, which are just enough to cover imports for the next seven months. Judging by the present economic condition, the inflow of dollars is likely to be very low.

Raghuram Rajan, Chief Economic Advisor to the Finance Ministry said today that the government is not short of options to tackle the fall and will take necessary actions. The RBI will take measures to bring the rupee back to life by restricting imports, attracting foreign fund inflows and supplying dollars in the market.

However, according to some experts, our economy needs better macroeconomic management, and not just regulations on imports. Along with this, importance should be given to increase FDI inflows and keeping interest rates unchanged. Extremely judicious measures have to be taken to save the drowning rupee in the existing economic conditions, or we might soon face a day when the brand new ten rupee coin goes out of circulation when the rupee hits a yet another ‘all-time low’.

Mobile services market to reach 1.2 trillion: Gartner

India’s mobile services market will reach Rs 1.2 trillion in 2013, an 8% increase from its Rs 1.1 trillion in 2012. However it accounts to only 2% of the global mobile services revenue even though India makes up for about 12% of worldwide mobile users. Active mobile connections will grow to 770 million in 2013 an 11% increase from 712 million in 2012.

“The mobile market in India will continue to face challenges if average revenue per unit (ARPU) does not grow significantly,” said Shalini Verma, principal research analyst at Gartner. “If the prevailing conditions do not change in the Indian telecom market, India will account for 12 percent worldwide mobile connections, but just 2 percent of worldwide mobile services revenue (in constant USD) in 2013.”

 

Competing against over-the-top service providers such as Facebook and Whatsapp and increasing their profit margin in the face of intense competition are the two major challenges faced by Indian telecom operators.

“As mobile voice services continue to get commoditized in the country with the increased use of voice over IP (VoIP) and the probable termination of national roaming charges, mobile broadband is the area of opportunity for operators,” Verma said. She went on to add that India has a phenomenal demand for mobile broadband and apps to solve everyday problems for consumers and that its sachet-style usage pattern is appealing to the consumers.

As India tries to catch up with the world in terms of mobile broadband adoption, telecom operators need to think of growing the top line through innovative services. She added that even though rural expansion will come at a cost, innovation in utility apps would help bring in sustained revenue to add to the efficiency it will provide to its consumer.

‘While social and video apps are doing extremely well in India,’ Verma said, ‘it is time to look beyond these and deliver apps that can have a sustained business model. Operators need to insert themselves into the value chain of these new apps and services.’