1. India-GlobalMarketSummary 1-4-2014
• Market logged gains amid volatility on first trading day of financial year ending 31
March 2015 (FY 2015) with investor sentiment boosted by firm Asian and European
stocks. The market sentiment was also boosted by provisional data showing that
foreign institutional investors (FIIs) remained net buyers of Indian stocks on
Monday, 31 March 2014. Sensex, and Nifty, both, attained record closing high.
The market breadth, indicating the overall health of the market, was positive.
Sensex was up 0.27% to 22,446.44 and Nifty was up 0.25% to 6,721.05. Among the
30-share Sensex pack, 15 stocks declined and rest of them rose.
• The Reserve Bank of India (RBI) left its benchmark lending rate unchanged after a
monetary policy review today, 1 April 2014. The RBI kept its main lending rate --
the repo rate -- unchanged at 8% in line with market expectations. The central bank
also left the cash reserve ratio, or the minimum percentage of deposits that lenders
must park with the RBI, unchanged at 4%.
• The Reserve Bank of India today, 1 April 2014, said it will continue to monitor the
liquidity conditions and actively manage liquidity to ensure adequate flow of credit
to the productive sectors. The RBI also said that it has decided to increase the
liquidity provided under 7-day and 14-day term repos from 0.5% of NDTL of the
banking system to 0.75%, and decrease the liquidity provided under overnight repos
under the LAF from 0.5% of bank-wise NDTL to 0.25% with immediate effect.

2. • In pursuance of the Dr. Urjit R. Patel Committee's recommendation to de-emphasise overnight "guaranteed-access" windows for liquidity
management and progressively conduct liquidity management through term repos, the Reserve Bank of India has decided to further
reduce access to overnight repos under the LAF while compensating fully with a commensurate expansion of the market's access to term
repos from the Reserve Bank of India. The primary objective is to improve the transmission of policy impulses across the interest rate
spectrum. The term repo has evolved as a useful indicator of underlying liquidity conditions. It also allows market participants to hold
liquidity for a longer period, thereby providing the impetus for engaging in term transactions in the market, evolving market-based
benchmarks for pricing various financial products and also improving efficiency in cash/treasury management, the RBI said.
• Liquidity conditions have tightened in March, partly on account of year-end 'window dressing' by banks, though an extraordinary infusion
of liquidity by the Reserve Bank of India has mitigated the tightness. The Reserve Bank of India will propose measures to reduce such
practices, the central bank said.
• The Reserve Bank of India said it will be open to banking mergers, provided competition and stability are not compromised. With
competition in the banking sector set to increase, financial markets will play a complementary role, allowing banks to trade their long
term assets and match the maturity profile of assets and liabilities, the RBI said. The Reserve Bank of India will strive to increase the
reach of financial services to everyone, however remote or small, by using technology, new products, and new entities to link people up
to the formal financial system, the RBI said. Priority sector lending will become an effective vehicle to promote greater financial access,
the RBI said.
• The Reserve Bank of India said that on the basis of the recommendations of the Committee on Comprehensive Financial Services for
Small Businesses and Low Income Households (Chairman: Dr. Nachiket Mor) to encourage banks to actively manage their exposures to
various sectors, including priority sectors, it is proposed to prescribe certain additional disclosure requirements in the financial statements
by end-June 2014.
• The Reserve Bank of India also said that it will shortly issue guidelines that would allow banks to offer partial credit enhancements to
corporate bonds.
• Domestically, real GDP growth continued to be modest in Q3 of 2013-14, with some strengthening of activity in services such as trade,
hotels, transport and communication, and financing, real estate and business services. Despite some positive movement in more recent
data, industrial activity continues to be a drag on the economy, with retrenchment in both consumption and investment demand reflected
in the contraction of output of consumer durables as well as capital goods. In the quarters ahead, the boost provided by robust agricultural
production in 2013 may wane, the RBI said. Moreover, the outlook for the 2014 south-west monsoon appears uncertain. Sluggishness in
industrial activity, exports and several categories of services underlines the need to revitalise productivity and competitiveness, the RBI
said.

3. • The RBI said that India's exports growth has slowed recently, partly because of slowdown in demand in partner countries as well as a
softening of prices of exports of petroleum products and gems and jewellery (offset by a reduction in the prices of oil and gold imports).
Whether the export slowdown persists as global growth picks up once again remains to be seen, the RBI said.
• Retail inflation measured by the consumer price index (CPI) moderated for the third month in succession in February 2014, driven lower
by the sharp disinflation in food prices, although prices of fruits, milk and products have started to firm up. Excluding food and fuel,
however, retail inflation remained sticky at around 8%. This suggests that some demand pressures are still at play, the RBI said. Since
December 2013, the sharper than expected disinflation in vegetable prices has enabled a sizable fall in headline inflation. Looking ahead,
vegetable prices have entered their seasonal trough and further softening is unlikely, the RBI said.
• Meanwhile, CPI inflation excluding food and fuel has remained flat. There are risks to the central forecast of 8% CPI inflation by January
2015 stemming from a less-than-normal monsoon due to possible El Nino effects; uncertainty on the setting of minimum support prices
for agricultural commodities and the setting of other administered prices, especially of fuel, fertiliser and electricity; the outlook for fiscal
policy; geo-political developments and their impact on international commodity prices. There will also be a downward statistical pull on
CPI inflation exerted by base effects of high inflation during June-November 2013. It is critical to look through any transient effects,
including these base effects, which could temporarily soften headline inflation during 2014, the RBI said.
• The Reserve Bank of India's policy stance will be firmly focussed on keeping the economy on a disinflationary glide path that is intended
to hit 8% CPI inflation by January 2015 and 6% by January 2016, the RBI said. At the current juncture, it is appropriate to hold the policy
rate, while allowing the rate increases undertaken during September 2013-January 2014 to work their way through the economy, the RBI
said. If inflation continues along the intended glide path, further policy tightening in the near term is not anticipated at this juncture, the
RBI said.
• Contingent upon the desired inflation outcome, real GDP growth is projected to pick up from a little below 5% in 2013-14 to a range of
5% to 6% in 2014-15 albeit with downside risks to the central estimate of 5.5%, the RBI said. Lead indicators do not point to any
sustained revival in industry and services as yet, and the outlook for the agricultural sector is contingent upon the timely arrival and
spread of the monsoon. Easing of domestic supply bottlenecks and progress on the implementation of stalled projects already cleared
should brighten up the growth outlook, as would stronger anticipated export growth as the world economy picks up, the RBI said.
• Some of the recommendations of the Expert Committee to Revise and Strengthen the Monetary Policy Framework (Chairman: Dr. Urjit
R. Patel) have been implemented including adoption of the new CPI (combined) as the key measure of inflation, explicit recognition of
the glide path for disinflation, transition to a bi-monthly monetary policy cycle, progressive reduction in access to overnight liquidity
under the LAF at the fixed repo rate and corresponding increase in access to liquidity through term repos, and introduction of longer tenor
term repos, the RBI said.

4. • The Reserve Bank of India said it will continue to work to ease entry while reducing risk to foreign investors from the volatility of flows.
The modalities for allowing FIIs to hedge their currency risk by using exchange traded currency futures in the domestic exchanges are
being finalised in consultation with the Securities and Exchange Board of India (Sebi), the RBI said. In order to enhance hedging
facilities for foreign investors in debt instruments, it is proposed to allow them to hedge the coupon receipts falling due during the next 12
months, the RBI said. Rebooking of cancelled contracts in case of contracted exposures has been fully restored, the central bank said. It is
further proposed to allow all resident individuals, firms and companies with actual foreign exchange exposures to book foreign exchange
derivative contracts up to $250,000 on declaration, subject to certain conditions, the RBI said.
• The Reserve Bank of India has also been rationalising and expanding limits for FPI investments in debt markets. As a further step
towards encouraging longer-term flows, investments by FPIs in G-Secs shall henceforth be permitted only in dated securities of residual
maturity of one year and above, and existing investment in Treasury Bills will be allowed to taper off on maturity/sale, the RBI said. The
overall limit for FPI investment in G-Secs will, however, remain unchanged at $30 billion, so the investment limits vacated at the shorter
end will be available at longer maturities.
• As regards foreign direct investment (FDI), it has been decided to withdraw all the existing guidelines relating to valuation in case of any
acquisition/sale of shares and accordingly, such transactions will henceforth be based on acceptable market practices, the RBI said.
Operating guidelines will be notified separately.
• The Bharatiya Janata Party (BJP) on Monday, 31 March 2014, said that if it wins national elections set to begin next week, its first
priority would be to revive investment in the country's slowing economy. "We'll have to reestablish confidence of both Indian and
international investors in the Indian economy," said Arun Jaitley, a senior BJP leader. But, he added, "our policy will also have a social
conscience," a signal that welfare programs for the country's poor would also be a priority. Mr. Jaitley said that in the last decade,
Congress had halted the liberal approach it had adopted in 1991, and he said his party would work to make sure "India once again is a
great place for doing business." At the same time, Mr. Jaitley said, his party wouldn't rely on the benefits of growth to trickle down to the
poor. "India will always need, at least for the foreseeable future, a state intervention for poverty alleviation," he said, a message aimed at
India's millions of poor.
• The BJP's prime ministerial candidate, Narendra Modi, has campaigned on pledges to spur development, create jobs and boost
manufacturing. In a televised interview on Monday, 31 March 2014, Mr. Modi spoke about removing bureaucratic hurdles, bringing
predictability to tax policies and creating jobs by encouraging new industries like agro-based ventures, ship building and defense
manufacturing. "Today, vote-bank-oriented programs that are bankrupting our treasury are being called economic reforms. Economic
reforms are those that breathe new life into a system and create opportunities for people," Modi said.
• Congress has criticized Mr. Modi for being too close to big business. "His brand of liberalism is crony capitalism," India's finance
minister P. Chidambaram said on Monday, 31 March 2014.

5. • Indian manufacturing activity grew at a slower pace in March as weaker domestic demand dragged on output growth. The
HSBC Manufacturing Purchasing Managers' Index (PMI), which gauges business activity in Indian factories but not its
utilities, fell to 51.3 in March after surging to a one-year high of 52.5 in February.
• March data highlighted a further improvement in business conditions across India's manufacturing economy. Nonetheless, the
headline PMI dipped lower, as output and new orders increased at weaker rates. Encouragingly, growth of new export orders
picked up pace over the month.
• Down from February's one-year high of 52.5 to 51.3 in March, the seasonally adjusted HSBC India Purchasing Managers'
Index (PMI) signalled a slight and weaker improvement of business conditions across the country's goods producing sector.
Nonetheless, the PMI average for Jan-Mar 2014 (51.7) was the highest since the same period in 2013.
• Consumer goods continued to outperform the other two market groups, with robust increases in output and new orders
registered in March. Operating conditions also improved at intermediate goods companies, but deteriorated in the capital
goods category.
• Manufacturing production growth across India eased from February's one-year high and was modest overall. While panellists
reported higher levels of incoming new work, there was evidence suggesting that competitive pressures and shortages of
some raw materials hampered growth.
• Similarly, new orders rose at a weaker clip in March, with the respective index dropping since February and being below the
long-run series average. Survey participants commented on higher underlying demand, but indicated that increased
competition for new work and the elections had weighed on growth.
• Indian manufacturers reported higher new export orders in March, stretching the current period of growth to six months. The
latest increase in new work from abroad was marked and the strongest since April 2011. Anecdotal evidence highlighted
improved demand conditions in key export markets.
• Manufacturing employment increased in March, marking a six-month sequence of expansion. Nonetheless, the rate of job
creation remained marginal as around 98% of panellists reported unchanged workforce numbers.
• Inflationary pressures eased in March. Input costs rose at the weakest rate in nine months and one that was below the series
average. Similarly, output prices increased at the slowest pace since last June.
• Purchasing activity increased further in March, though moderately and at a weaker rate than that recorded one month
previously. Survey members reporting a higher quantity of purchases commented on rising production requirements.

6. • Reliance Industries (RIL) edged higher in volatile trade. ITC recovered from lower level. Auto stocks were mixed. Mahindra
& Mahindra (M&M) rose after reporting sales volume data for March 2014. Maruti Suzuki India declined on weak sales in
March. Banking and realty stocks declined. Capital goods stocks declined on profit booking after recent strong upmove.
Sugar shares rallied on expectations of higher demand during the summer season from bulk consumers such as ice-cream
makers in the spot market.
• PSU OMCs fell as petrol prices were reduced by 75 paise a litre (excluding state levies) effective 1 April 2014. Diesel prices,
however, remained untouched. BPCL (down 3.18%), HPCL (down 2.47%) and Indian Oil Corporation (down 1.94%)
declined.
• Bank stocks declined after the Reserve Bank of India left key policy rates unchanged after monetary policy review today, 1
April 2014. Among private sector banks, ICICI Bank (down 1.76%), Federal Bank (down 2.15%), Kotak Mahindra Bank
(down 1.03%) and HDFC Bank (down 1.3%), declined. Axis Bank rose 0.65%.
• Yes Bank said the bank has recently raised additional $34 million from DEG, through a long term senior loan agreement for a
tenor of 6 years.
• Punjab National Bank said that after regulatory approvals, the bank has sold its entire 30% stake in India Factoring &
Financial Solutions (IFFSL) to an FII (FIM Bank (Malta) and realized Rs 107.83 crore.
• Maruti Suzuki India said its total sales fell 5.5% to 1.13 lakh units in March 2014 over March 2013.
• M&M's total tractor sales rose 2% to 17,673 units in March 2014 over March 2013. Tractor sales in India rose 6.55% to
16,571 units in March 2014 over March 2013.
• TVS Motor Company declined 1.59% after it reported 17% rise in total sales to 1.96 lakh units in March 2014 over March
2013.
• Kalpataru Power Transmission rose 2.14% after the company said it has secured new orders worth over Rs 700 crore.
• KEC International rose 1.26% after the company said it has entered into an agreement to sell over 7.3 acres of land to a Tata
Group subsidiary for about Rs 212 crore.
• Jindal Steel & Power said that Jindal Power has commissioned the second unit of 600 megawatts (MW) of the 4x600 MW
expansion project at Tamnar in Raigarh district of Chattisgarh
• Jindal Steel & Power informed that the third unit of 600 MW is completed and ready for synchronization, while the company
plans to commission its fourth unit of 600MW by October 2014.
• Sugar shares rallied on expectations of higher demand during the summer season from bulk consumers such as ice-cream
makers in the spot market.
• Reliance Power dropped 0.57% after it said that the company's total operational capacity has reached nearly 4,000
megawatts (MW). Butibori Power Plant (2 x 300 MW) developed by Vidarbha Industries Power is fully operational.

7. Global news
• European stocks edged higher Tuesday, 1 April 2014, after the latest data showed growth in euro-area manufacturing stayed close to
the highest level in almost three years in March. Asian stocks edged higher on Tuesday, 1 April 2014, after China's official PMI
survey showed manufacturing managed to continue expanding in March, and dovish comments from Federal Reserve Chair Janet
Yellen. Trading in US index futures indicated that the Dow could advance 28 points at the opening bell on Tuesday, 1 April 2014.
US stocks edged higher on the final trading day of the quarter on Monday, 31 March 2014, after Federal Reserve Chair Janet Yellen
said the economy will need stimulus for some time.
• Growth in euro-area manufacturing stayed close to the highest level in almost three years in March, adding to signs the region's
recovery is gathering pace. An index based on a survey of purchasing managers slipped to 53 from 53.2 February, matching an initial
estimate released last week, London-based Markit Economics said in a statement today. The index has been above 50, indicating
expansion, since July. Gauges for the region's four largest economies all indicated growth.
• Euro-area output prices contracted in March for the first time since August, with the index dropping to 49.3 from 50.5 in February,
Markit said. Manufacturing growth in Germany, Europe's largest economy, slowed to 53.7 in March from 54.8. In France,
manufacturing returned to growth for the first time in two years. The factory gauge increased to 52.1 from 49.7 in February. In Italy,
the index rose to 52.4 from 52.3, while it advanced to 52.8 from 52.5 in Spain. Greek manufacturing contracted in March after
expanding for the previous two months.
• UK manufacturing grew less than economists forecast in March as export demand fell to its weakest level in 10 months. A
Purchasing Managers' Index declined to 55.3, the lowest since July, from a revised 56.2 in February, Markit Economics said in a
statement in London today.
• German unemployment fell for a fourth month in March as companies became more confident in the health of Europe's largest
economy. The number of people out of work decreased by a seasonally-adjusted 12,000 to 2.9 million, after falling a revised 15,000
the previous month, the Nuremberg-based Federal Labor Agency said today.
• A policy meeting of the Governing Council of the European Central Bank (ECB) will be held on Thursday, 3 April 2014, in
Frankfurt to decide euro zone interest rates. ECB President Mario Draghi has consistently reassured listeners that the euro zone isn't
heading for deflation, but that the central bank stands ready to act if needed.
• China's official Purchasing Managers' Index (PMI) increased to 50.3 in March from February's 50.2. Above 50 indicates expansion,
below 50 signifies contraction. A separate PMI HSBC Holdings Plc and Markit Economics pointed to weakness in the world's
second-biggest economy. Chinese Purchasing Managers' Index fell to 48 in March, the lowest reading since July, from 48.5, HSBC
Holdings Plc and Markit Economics said today, 1 April 2014.
• The Tankan index of sentiment among large Japanese manufacturers was at 17 in March, climbing from 16 in December, a Bank of
Japan report showed today, 1 April 2014.
• Australia's central bank left its benchmark interest rate unchanged at a record low and said the recent climb in the local dollar will
reduce the stimulus provided by the currency. Governor Glenn Stevens kept the overnight cash-rate target at 2.5%, as forecast.
• Yellen said on Monday the Fed hasn't done enough to combat unemployment even after holding interest rates near zero for more
than five years and pumping up its balance sheet to $4.23 trillion with bond purchases. "This extraordinary commitment is still
needed and will be for some time, and I believe that view is widely shared by my fellow policy makers," Yellen said at a community
development conference in Chicago. "The scars from the Great Recession remain, and reaching our goals will take time."

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