Though details are yet available till January, the rearly momentum in FDI and the now value equation in India's Financial Markets has again meant renewed inteerest in India FDi though the buck stops at retroactive amendments and the recent clarifications on FII portfolio investmnets thru P notes a s a measure of investor confidence. int he last three months of November, December and January more than $5 bln in FDI was reported despite the ongoing saga and domestic credit growth also beliew expectations of a slowdown at more than 18% growth. 

January FDI of $2 bln mostly Added to Services sector for $1.3 bln and Infrastructure construction projects of another $600 mln while there was also a solitary software project investment for $100 mln

That means there was no FDI in sectors like Automobiles, Power and Pharmaceuticals / Healthcare unless new projects have been added in February and March buit these sectors will also contribute further in FY2013 alongwith Financial Services and Transportation/Travel and the ongoing impetus in Infraastructure witht hte first two India infra debt funds, one with Citi and another with HSBC in play. 

Ten month FDI totals have hit $37 bln and Feb and March would at least take it to $0 bln for the Fiscal.

India's Fiscal Deficit in the meantime hit a few flood signages on way to INR 4.94 Tln for 11 months in FY12 from a INR3.68 tln for the full year in FY11 which was a humongous 68% of the Budget estimates against this years likely overshooting the Revised Estimates of INR 5.15 Tln 

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Interest in India remains busy though, yet FDI is waiting on the wings, PE tired of being called hot money as new tax provisions cover FIIs and domestic Angel investors for a 30% tax/STCG which ever applies. 

Rupee has correctred sharply by almost 1% and yields are barely holding at above 8.5% but the ?month's IIP numbers are much better with Infra growing 6.8% in Feb and 4.4% in 11 months of the Fiscal. Coal and Electricity production are also back. IIP is due on April 12

The rally is unlikely without Infra and banking stocks but the option of buying banks is somehow adversely related to current economic reports from India

So it seems the rally will be from closer to 5000 on the index, do not be in a hurry to buy that call spread, in fact market looks 9riskily) close to staying in a range so if you go log calls and puts you might lose the premium

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Personal Tax exemptions increased and top slab increased so an Income of INR 1.1 mln now worth INR 163k in Taxes except surcharge with INR 200k-500k taxed at 10% , and above 1 mln at 30%

Corporate Expenditure on Specified list incl Cold Chains etc increased to 150% deduction on basis of expenditure

Corporate R&D Expenditure exempted to 200% till 2017, International Income exempted for one year so it can be declared ( incl incident Indirect Taxes like Service Tax)

Service Tax based on negative list that includes copyright revenue to bollywood ( incl music) Service Tax rate increased to 12%

Share of Services in GDP is 59%

Indirect Taxes:

Diesel Cars - Advalorem rate of 27% from 22%

Excise slab 12% instead of 10%

TAX Collections lower by INR 330 bln in FY12 despite Service Tax collections

Customs: Overall gross increased b y INR 270 bln, INR 50 bln reduced thru exemptions. Net Indirect Tax collections target up INR 420 bln ( so excise up INR 170 bln), and Net Overall Tax target up INR 411 bln

Reduced

Coffee Plantation machinery 10% to 5%

Greenhouses and many other agri and storage machinery from 7.5% to 5% and 5% to 2.5%

SECURITY TRANSACTION TAX incidence reduced to 0.1% for Delivery trades from 0.25%

To encourage Capex  machinery list - Customs decreased by 67%(2 in 3) from 7.5% to 2.5%

BCD on Plant &Machinery for Iron ore also included, Steel Industry on Coating material (7.5% to 2.5%)

Weaving - P&M to 2.5%   and all Textile Machinery to special rate of 5% and many other customs duty reductions in Textiles industry

Part B remains announcer of broad policy stresses thru rate tweaking e.g. Textiles, investment rate

Service tax target increased by 50% (INR 187 bln)

CVD(5%) exemption to life saving drugs

Exemptions on Hybrid Cars ( not even 1000 units sold) extended to battery packs

(iPads and TVs) LCDs and LEDs exempt from customs. Customs on bicycles increased to punitive 30%

(Aviation)Aircraft parts Basic Customs duty exempted

(Cars >1600cc) Duties hiked

(Gold) Customs duty increased. Unbranded jewelry also included in 30% rate on imports

Related articles

• THE INDIA BUDGET 2012 (Pre Budget Speech) INR 1 tln in Service Tax receipts this year? (awardz.wordpress.com)
• INR 1 tln in Service Tax receipts this year? (awardz.wordpress.com)
• 'GST will benefit trade and industry' (thehindu.com)
• Growth in Indirect Taxes - Customs, Excise and Services (awardz.wordpress.com)

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The Current deficit currently pegged to 3.5% includes the impact of the Trade deficit alone yet, while the "unspent surplus" or the net of all current revenues and expenditures will revert from this large deficit number now only on march 31st. At a INR 500 bln that is likely to bring our current Deficit back to 2.6% based on the Eco Survey numbers for the GDP. ..

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Wow O la la la leeeey o! My Kingfisher beer is safe thanks to Heineken getting to buy a13% stake in UB from Vijay Mallya's 24% stake. The other 13% or more stake in the spirits major lies with UB holdings. 

And of course lot of leis from the Hawaii layover ( just la la !)being added to my map but then Heineken had been trying for 5 years now or am I a little tipsy! There is no aloha here in India, desh even in New York or anywhere else except Hawaii! Maybe Vijay Mallya and Lalit Modi can set up a new League there and let it be! Mallya's KFA is unlikely to survive with anluy 20 planes and now half the operations shut down. 

Similarily, another indian experiment lying low, on a series of bad puns, is Tata Motors with Landrover sales obviating sales figures of any Jaguar models or cars back home even though the new Nano is selling nearly 6000 units a month and has a 800cc version in the works

The "sell out" (OUCH!) gives majority control to Heineken and access to 66% of india's beers and probably more share of its Whiskies and other white & colored liquors capacity 

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And like the jumbpo jackpot in the sweepstakes, the CAG report choose to value the losses as every penny of extractable reserves from the Coal field allocations with 33000 MM Tonnes of coal realising a INR 10 tln loss to the exchequer or whatever new price is assumed. That is a bit like charging L&T INR 100 bln for the INR 100 bln of assets Fidelity sold to them, much to Fidelity's delight!

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The unlikely bidder and a past promoter of UTI, L&T thru its Finance arm L&T Finance Holdings bought up Fidelity earlier yesterday. However Fidelity MF in India is just $2 bln Assets under Management so I don't know why they wanted to move from INR 35 bln to INR 135 bln making them #13 if ET is believed. AMFI India apparently has reduced the frequency of AUM data updates a s have multifarious departments as India realises the direct investment options to foreigners are not just achieved by allowing them legally inside and FDI figures look like that of neighbouring Pakistan as mauch as us and behind Sri lanka and Bangladesh.

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An interesting chapter to showcase how India is losing FDI in the last 10 months is the case of the Telenor litigation Telenor is using the Norwegian or Singapore treaties due to the feature of the "best available facilities between any two countries' clause we use in our DTAA which is fair. Also Telenor wants to be reimbursed for the pain it has suffered, and very frankly it is more than reasonable even as the Government toys with the Idea of reallocating spectrum in a new auction. It is important that someone like Telenor stay around and auctions are done at market prices. However we will have to chosose wisely as to how much we negotiate and how fast and simply we can review the issues and churn out a non befuddled  rules and big business friendly ruling from the government offices involved on this

Telenor owns 66% of Uninor, in the midst of finding another partner and handsome Indian suitors busy finding a low price which Telenor is not interested in. Also Telenor wants to keep all its sunk costs safe but will have to likely participate in an auction as of now..No, this ship could trunaround without docking at that pole. 

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Well, i understood it thus. There were first the Anti avoidance rules called the GAAr rules which were intended to catch those who benefit from the treaty in Mauritius without belonging to Mauritius per se , with a token presence ntot bavcke d by assets or business i.e. Offshore investors. These offhore investors have been targeted. Two, in the clarification on Overseas M&A transaction involving india assets, the intention is not to cover P Notes because underlying equities are Indian Assets. So that piece was unnecessary walk in the park whil ethe trucks were running up and down and you could have all avoided the noise. The real rule details would thus clarify how Portfolio and FDI investor would be welcomed and how revenue leakage from Maurtitus a s a treaty participant, which remains the key example, would be taken care of now that the new treaty signed has included only token changes at the behest of the Mauritius government. And no clarifications are available yet. We are looking. 

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Unless of course there is more news to follow, nothing is news and that means around 5150 Bears should have had enough, just thinking loud. 

Inflation CPI was 8.8% and WPI in March should be more than 7% Glad to see the 8.5% yield levels are an upward target for the brokerages as well, with rate cuts not the best on the charts for the APril Policy, IIP, Q4 GDP and Services data are unlikely to be a big positive for the markets either but a few birds that do no tbelong to the Aviation industry could flyt to eas the turnaround day rally. Unfortunately the indian meling Pot has quite a lot of political pickle thrown in and that could (sic!) again throw off the cooking a little bit.

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India's FX reserves dipped below $300 bln in the last week of CY 2011/ first week of CY 2012 to INR 15.8 tln or $296.688 bln and are now hovering near the INR 14.67 tln or $294 bln mark for 09-Mar. 

Weekly SGL transactions have peaked near INR 2.5 tln and were INR 1.2 tln for the week of 16 March with another $4-5 bln in short term T Bills

O/N borrowing from the RBI window had peaked earlier last month at INR 1.6 Tln

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Bank Credit has grown to a steady 16% rate all year, though the rate was higher than 20% till as late as September with year end 31-Dec Stock of INR 43.67 Tln or $0.91 Tln from below INR 41 tln in the first week of September on 09-Sep to a net INR 44.87 tln $0.935 tln in the week before the budget on 09-Mar. Deposits are up to INR 58.5 tln or $1.22 tln.  Deposits are up 14% for the year and Investments in bonds and Fixed Income 18% 

HDFC Bank recently announced more than 6,200,000 new rural customers thru loan festivals organised by the bank in ruralheartlands leveraging its distribution and plans to hold 500 such "Grameen Mega" next fiscal reaching 10 mln families with CV / Tractor / Auto loans to direct Agricultural loans for crop maintenance under viable financing (ET  03/19)

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We as india writers have pushed out everything with insight in the last three four years, Short of  the unworthy Indian infrastructure which could not attract even $100 bln in Gross investment s yet with two debt funds of $3 bln each and some older established Pes like Macquarie and 3i and the Govt of India grants of INR 750 bln. Short because Indian Infrastructure sector with all the public enterprises involved is very short on the details and as it works without meaningful graft like the Telecoms, the Roads, Power, Aviation and Ports infrastructure continue to work with construction companies like our FMCG sector works with $500 mln brands from HUL, P&G and ITC and we are the wrong ones because we criticise something as if it was the end of the road for the sectors in each case and nothing welse going to happen because it is not. At least that is also what the Dy Governor of the RBI feels if we read into his new timetable to plan out Capital Convertibility for India. FDI in India has always been able to attract the bigger dollars irrespective of investors' fascination with issues like the retroactive introduction of taxability of transactions and the impossibility of investing more than tokens of currency in our banking sector with restrictions of M&A or the recent failure of FDI in multi brand retail/ defence, healthcare and aviation.

The true problem comes in India's cultural intractability compared to China or Signapore or others total rolling out of the Carpet for the bbigger dollar inclusing the State sponsorship of the project, and not an immobilised set of half dozen land reform and Tax reform bills, and the Private state and comsumer acceptance of that way f life that the investment unwittingly imports itself with. Being open to cultural transfusion, this is a real anachronism always heaped on  the middling old politicians who could not run coalitions but it runs deper as the next few geenerations will find out.

Probably what we need to bring in each sector is like the perfect storm, at least two representative investor in each such sector, like probably Yum with KFC and Pizza Hut and Tata Global - Starbucks and or Dominos with th Bhartiyas where there are unlikely to be any hiccups with all three biting the bullet and all government departments, consumers and politicians able to sell and compare. I would even aver that the 2g  experiment is still very much a success for the FDI story right now. A similar base exists in Banking where the world's Top Banks are increasingly looking to Asia nand India in particular to roll out bigger base staff or the magic wands that the local anfd global Harry Potters need to win the magical sorcerers over at state and center. 

Whether it is International Quality standaards for Highways or structured products in Banking, Indians more than other s are Comparison shoppers who like to think their pov is appreciated andpart and parcel of the product/standard unlike others who let FDI build a parallel Eco system, much like empty highways and cities outside Bejing while the Eastern corridor esp  around Beijing keeps cars stuck in Traffic queues that take three days to move from end to end, or even more

The simplification stated in that, is to be taken with the usual detailed quid pro quos and the details of a contract like brining the capabilities to service rural consumers becoming a new reality for banks, auto and credit card and durables/discretionary sector plays from Pizza to That larger personal loan than the $500 on my Kissan Credit Card.

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Bangladesh's victory to be in th eAsia cup finals at home was no fluke,  and thssat the country continues to do well after making a few lists like Goldman Sachs' for investment priority, have done relatively well economically in the last 2-3 years too, Cricket being a rich game for the Economy too.

India's IPL continues in its 5th edition in a couple of weeks and sponsor spend will keep up with new reack rates, which if used for PPP computations to the Superbowl's $5 mln for 30 seconds  will give a new satisfaction to those who know it is not the current exchange rate as it comes to about INR 1 = $3.33 , as the Mac index loses its value this side of the Himalayas and Economists return without making the necessary trek, given the easy pickings outside without investing in office staff and the local economy.

That is true in the sense that US FDI outside India comes directly to global trade sensitives and not for the domestic consumption, unlike in India and in bigger success terms China ( with local demand outstripping supply of Mac Burgers, Starbucks coffees and the latest BMW and Mercedes. 

India's budget did not get too much global attention this time, and much as people would like to believe it was much more than Vodafone taxation circa 1962 on the hotline from investors..Kingfisher a bad bag of nuts, and delirious roll her overs online and in the privacuy of your homes causing every Indian more heartburn than a hope for cool evenings with delicious Pizza and Vidya Balan's latest Sexy on the telly! 

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The IDBI and CITI investments in the Infra Fund may attract add on investment from SBI while SBI concedes news on NPAs getting out of control, rewriting the unwritten Indian constitution on never writing off int ot the new era with systemization

LIC Housing continues to grow manifold with good income spreads and asset base likely growing at 50% from the INR 330 bln this year across Apr-Dec 2012

REC and IDFC come backa s the season's top picks. Hopefully ICICI Bank and SBIO will come bakck in tandem for good trading vibes and the new rally, hoping for it beginning before the weekend 

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Not that anything was completed with NHAI and other government arms unable to pu tup more than 10% of India's highways ( existing and new) on bidding due to funding constraints despite the attractive PPP nature of the projects having started with a 20 km per day, achieved around 7 and now trying a new target of 13-15 km per day

However a recent in-depth exclusive by Business Week proffers theat the government has been happy with investor/builder interest in the fiscal with contractors bidding 23 out of 35 projects to a premium based on revenues likely from the mostly BOT projects. NHAI awarding $112 bln this year for 7.5 k kms and 9000 kms next year of likely INR $16 bln matching the furious pace desirted in recovering growth in the power sector

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Apparently a new Capital raising exercise that is due for the Krishna Garh - Hyderabad highway project is being confused with the companny trying to sell sa stake in its Roads projects.

The 20 odd road projects for the company have quite a few revenue bearing projects now but the new projects need to be funded independently and run as SPVs so whatever that plan was, it won;t be for financing of projects while the road based portfolio for both Reliance Infra and GMR Infra is increasingly being watch for extra debt overhang from the road projects as the situation has not been resolved for both infracos while they continue bagging new projects in fresh SPVs

Today's TV18 interview with the CFO followed last week's review where Subba Rao had iterated how only limited help could be provided by the government in the Power sector. It has added INR 75 bln or $1.5 bln worth of projects in the last three - six months

The company's attempts at innovative structures to sell stakes to PE without diluting equity seem to have not borne fruit leadin git to more QIPS to manage the cost of funding across road power and airport projects 

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UB Group gets slammed for playing around with expensive Capital and a business model that couldn't fly. The Airline with more than 400 routes three months ago, is close to shutting down with the Government revoking its Commercial Licence. 

Posted via email from The India Investment Post

Like all things on the middle path, neither strong enough nor weak, Pranab Da's battered budget train whole last week, got a sum total of zero in appreciation orcriticism scores with talking points like spends on welfare new taxes without overburdening the customer overshadowed by the CPI number at 8.8% and the retroactive 1962 amendment that allows the government to meaningfully stop drainage of revenues by allowing it to Tax Capital gains on any overseas transaction related to business /.business prfits booked in India affecting both Vodafone and Bharti Airtel for overseas services int he latter case and the $2 bln tax bill the govrernment unsuccessfully fought for in the Supremen Court.

The boomerang on the Vodafone transaction undermines the faith in the judiciary coming so close to the judgment and heightens south Asia's inability to live with a competent democracy, India having been the only proof the working propositions live within a democracy in the region.

The Judiciary does not have a clean bill of health of course, but seeking their advice on future decisions in one case ( for overriding the FCFS Auctions in telecom) and passing a new retroactive law in the second . In the Vodafone cse too, the government could have easily avoided the retroactive effect but it seems to be a thorn in the flesh of the government that is sunk litigation costs into a bid to regain $2 bln in lost revenue and that judgment has obviously made international headlines. Of course I do not really know my reader profile but I suspected it has been going away from Internet marketing / content watchdogs and Financial Advisors to current and future management professionals in various industries and they would all in their working life have either felt it or arefeeling so that the entire exercise is a waste of time and breath despitre all the optimism on India, much like the Housing recovery in the US

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Banks slide in face of credit deterioration statement pending from rating agencies and international banking waiting on budget not helped by coninuing concerns over fiscal discipline post budget, Mean expectation will likely move to a position that without measures Fisc not 5.1% but 6.1%. bank shit hard include PSE banks and SBI on NPA concerns.

However trading momentum on downside can help investors get in as banks remain stars in the coming 8% growth binge once the fisc charter adjusts to the new gap , and no inflation overruns helps us crosss the hump in the first 6 months

Esp HDFC Bank and ICICI Bank among the larger banks and mid cap banks post results for Q! But downtrend may not be stemmed immediately , buy in small quantities.

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Deautche Bank head for Asia Pacific, a certain Rob Rankin, moves to London, and co head corporate banking and securities as Anshu Jain steps into his new role. Mean while as a probable Apac CEO Loh Boon Chye leaves the bank Chadha and Coete a Global Finance head move in as Co CEOs of the Asia Pacific operation and the Executive committee expands from 12 to 18 including Chadha as one of the members. Loh was on eof the movers behind the banks expansion in Asian flow trading. Apac revenues were $5 bln in 2011 and profits have troipled int he last three years (Finance Asia)

Meanwhile ET reports that Deutsche Bank India has filed in more Capital for its branches excluding its brokerages and other businesses adding a third or fourth tranche since the bank exited the credit cards portfolio as local operations have grown 18% in 2011 itself

Gunit Chadha joined from IDBI Bank in 2003. Cloete joined from Lehman in 1997. Another Asia chief, Colin grassie is also joining the Executive Committee . Loh a local MAS inductee probably stays ion in Singapore after he leaves the bank. 

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The Finance Secy/Revenue Secy has made a post announcement that overseas M&A transactions like Vodafone can be retroactively targeted via the budget

Also Healthcare services are in the Service tax net as expected

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ONGC is obviously been caught paying for the oil deficit of this government, but ITC is up sas it is increasingly identified with the increase in consumption and retail than the continuing cash cow profits from tobacco where tax ha s been increased.

Equities up overall because the budget did not screw around much and may tank later when they realise what bond markets are saying in terms of Fiscal non management

Esp right now equities want to celebrate the lower STT and direct intervention thru exemptions ontretail investment in equities

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The instinct is to laud the report card but the chink in financing is obvious and yields are already moving up in a bid to force a rate cut this tim ebyu april. . yield now at 8.41 % Bonds could be a great investment if youy were sure of a peak but I am sure investors have started buying again in small quantities. Tax revenue increases are fair, the subsidy bill seems to be an adhoc set of assumptions currently with no reform in sight and diesel pricing or any other real decisions no ttaken and not likely to be taken in which case yields could continue rising for some more time before important investments are made in the bond market.

Posted via email from The India Investment Post

Spectrum Auctions INR 400 bln

Other Telecom Auctions and revenue INR 582.17 bln

Food Subsidy INR 750 bln

Fuel Subsidy a new low of INR 435 bln ( frm 33% -50% fdrop on 2012?>achieveved no ttargeted???)

Disinvestment Revenues INR 300 bln

Fetiliser Subsidy INR 605 bln

Reactions: Pie in the sky except spectrum and divestment

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70,000 habitations have been covered successfully in Swabhimaan. to be extended to all habitations of Pop>1000 in NE and hilly states and Pop>2000 else where

PPP investment reliance to continue , INR250 bln of INR 500 bln expected from Private Sector. Irrigation, Dams, Fertilisers , Oil &Gas, LNG Storage, Telecom Towers and Eqpt all added to list of items for Viability Gap Funding of Projects

Self Reliance in the Defence Sector

Reaction: Where will the money come from

INR 100 bln for NHAI, and IRDL, INR 100 BLN for Power Sector and INR 50 Bln for Small sscale and other institutions

Propose INR 600 bln of infrastructure Bonds

IIFCL - Credit Enhancements and Takeout Finance provision, PPP projects. 

NMP for 10 crore Jobs and 25% of GDP contribution

Reaction: Pie in the sky

Some longwinded comment on Coal provision, FM hurring thru. 

MoST to award 7000 kms under NHDP , 40% higher from 5000 kms last year

PPP in Road construction

FDI of 50% in Air Transport and MRO under active consideration

Central Assistance on INR 185 bln and Japanese $4.5 bln  for DMIC projects

National Housing Fund to INR 40 bln. Interest subvention of 1% extended for affordable housing

Posted via email from The India Investment Post

70,000 habitations have been covered successfully in Swabhimaan. to be extended to all habitations of Pop>1000 in NE and hilly states and Pop>2000 else where

PPP investment reliance to continue , INR250 bln of INR 500 bln expected from Private Sector. Irrigation, Dams, Fertilisers , Oil &Gas, LNG Storage, Telecom Towers and Eqpt all added to list of items for Viability Gap Funding of Projects

Self Reliance in the Defence Sector

Reaction: Where will the money come from

INR 100 bln for NHAI, and IRDL, INR 100 BLN for Power Sector and INR 50 Bln for Small sscale and other institutions

Propose INR 600 bln of infrastructure Bonds

IIFCL - Credit Enhancements and Takeout Finance provision, PPP projects. 

NMP for 10 crore Jobs and 25% of GDP contribution

Reaction: Pie in the sky

Some longwinded comment on Coal provision, FM hurring thru. 

MoST to award 7000 kms under NHDP , 40% higher from 5000 kms last year

PPP in Road construction

FDI of 50% in Air Transport and MRO under active consideration

Central Assistance on INR 185 bln and Japanese $4.5 bln  for DMIC projects

National Housing Fund to INR 40 bln. Interest subvention of 1% extended for affordable housing

Posted via email from The India Investment Post

70,000 habitations have been covered successfully in Swabhimaan. to be extended to all habitations of Pop>1000 in NE and hilly states and Pop>2000 else where

PPP investment reliance to continue , INR250 bln of INR 500 bln expected from Private Sector. Irrigation, Dams, Fertilisers , Oil &Gas, LNG Storage, Telecom Towers and Eqpt all added to list of items for Viability Gap Funding of Projects

Self Reliance in the Defence Sector

Reaction: Where will the money come from

INR 100 bln for NHAI, and IRDL, INR 100 BLN for Power Sector and INR 50 Bln for Small sscale and other institutions

Propose INR 600 bln of infrastructure Bonds

IIFCL - Credit Enhancements and Takeout Finance provision, PPP projects. 

NMP for 10 crore Jobs and 25% of GDP contribution

Reaction: Pie in the sky

Some longwinded comment on Coal provision, FM hurring thru. 

MoST to award 7000 kms under NHDP , 40% higher from 5000 kms last year

PPP in Road construction

FDI of 50% in Air Transport and MRO under active consideration

Central Assistance on INR 185 bln and Japanese $4.5 bln  for DMIC projects

National Housing Fund to INR 40 bln. Interest subvention of 1% extended for affordable housing

Posted via email from The India Investment Post

Food subsidies will be provided for in full. Other subsidies will be provided to the extent the ecnomy can bear the impact.

Services growth in the year highest at near 9% , Industry less than 4%

Need to address Black money not explained yet. 

Mysore (Cash instead of LPG subsidy to account) Alwar and North East (Aadhaar) pilots mentioned for change in subsidy transmission mechanism

Propose to restrict subsidies to 2% of GDP

Reactions: Maruti down on expectations of Diesel SAD/ Excise increase of 10%

Reactions: Banks up on services performance, once tax proposals cleared banks will lead big rally

GST mooted for August 2012

DTC will come. (when!)

Divestment of $3 bln ach vs target of $8 bln in FY12. New TGT $6 Bln (INR 300 bln)

PSE government stake limit set at 51%

(I think Times Now will be carried by Reuters globally for Budget statement)

RG Equity Saving Scheme deduction of 50% upto 50000k investment in Direct Equities upto Salary of 3 Lacs

Qualified Foreign investors to be allowed access to bond markets ddirectly. Electronic voting for shareholders at exchanges , no tlimited to AGMs but for all decision making

PFRDA , Banking laws Amnd , and insurance Bill will be moved in this session

MFI Bill, NHB Bill, SIDBI Bill, NABARD 2012, Regional Banks 2012, Public Debt Management bill 2012 also to be moved this year

INR 154.88 bln for PSE Banks and NABARD

Posted via email from The India Investment Post

The negative list implementation itself adds $ 3 bln to the kitty and receipts are close to $12 bln so the Service Tax receipts in FY 2013 could easily be $20 bln or INR 1 Lakh Crores and allow Pranab da to get away with only 10% subsidy reduction in Diesel ($3 bln), Fertilisers ($1.4 bln) 

Also Divestment will be a thick program to $10 bln again and other taxes will contribute INR 4 lakh crores despite removal of STT!

Posted via email from The India Investment Post

The negative list implementation itself adds $ 3 bln to the kitty and receipts are close to $12 bln so the Service Tax receipts in FY 2013 could easily be $20 bln or INR 1 Lakh Crores and allow Pranab da to get away with only 10% subsidy reduction in Diesel ($3 bln), Fertilisers ($1.4 bln) 

Also Divestment will be a thick program to $10 bln again and other taxes will contribute INR 4 lakh crores despite removal of STT!

Posted via email from The India Investment Post

..if only for the small personal things to look forward to , on the weekend even for a guy without income, running thought leadership on Finance and Economy on India and the US and biting himself to get to a place he can get out of his home parking slot and get into a economically remunerative job.

..if only for a repetition of the constraints of global oil and local inflation on the Indian Economy, a weak currency destroing the PPP power bit by bit into a decade full of political chicanery

..if only for a tired market that has seemingly achieved all it can in two months and all for less than $3 bln dollars in investments into the markets and $1 bln in FDI at a tenth the rate of neighbours and not just China anymore, elsewhere in Asia the Resource rich FDI mandates are big and furious. 

..If only for my job consultant with my new focus on Singapore and banks in GIR, if only I had an idea why they are not looking for me already..

Posted via email from The India Investment Post

Inflation 6.5-7 % by March

Recommends Fixed rate of Diesel subsidy /Litre 

FY12 Growth at 6.9% ( as per Advance Estimates , GDP to INR 52.5Tln )

Survey projects 7.6% +/- 0.25% for FY2013

FY14 Growth seen at 8.6% 

Inflation may fall even below 6.5% in FY13 but Monetary policy needs to adjust to fluctuationsin Oil and adjust prices regularly

Again in repeat from last year, Petrol pricing neds to be based on a transparent formula.

India needs fiscal consolidation and spending curbs in 2013 >> ..and inflation may tick down further does not match again and no investment in the Economy right now

Sustained high rates may hurt reality,and services sector

Inflationary forecasts at elevated levels building on the reverse base effect probably from FY12 to FY13 but that is slower demand led lower tack for inflation at its worst

Trade Deficit of 8% a matter of concern and FDI in retail important ( Multi Brand without local sourcing restrictions - Our additions in bold/italics) 

Bravo: We are moving forward on Direct transfers of Subsidies for Food and kerosene (sorry AAdhar)

See slippage in FY!2 Fiscal Deficit Target - 

WHILE Proceed without MidTerm

DO 

Murder;

Mayhem;

Fiscal Profligacy

REPEAT 

Fiscal + Fiscal +1

UNTIL DEficit = 8% and Mamta = Laloo = Nitish/50 (2%) - NAMO*3/2 

(***FOR NEW TARGET OF FISC = 4%***)

Verdict: Why is growth back when we are in fiscal profligacy without investment

more special duties and fine tweaking of excise rates tomorrow instead of tackling reform in budget yet striving for stretched revenues

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Inflation 6.5-7 % by March

Recommends Fixed rate of Diesel subsidy /Litre 

FY12 Growth at 6.9% ( as per Advance Estimates , GDP to INR 52.5Tln )

Survey projects 7.6% +/- 0.25% for FY2013

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With Mamata not piping down and Pranab Da declaring the Rail Minister need not resign, the republic may be better off with immediate mid term elections with a sunny side of a full mandate than this dismissive hurt spreading from the coalition government. BJP will likely  be decimated best right now, right here incl NaMo himelf that he is no longer welcome outside Gujarat and a Non congress Thiurd Front is a real possibe outcome int he scenario. the best thing the Congress can do right now is kill the coalition partners that are threatening the peace and quiet required for reform to proceed. 

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Economic Survey remains to come later in the day as the reserve Bank reiterates that Fiscal Deficit needs to be watched and current account deficit remains high. RBI has also not made it clear any rate cuts are coming in the April meet a month away, markets taking it as a nbegative despite the consisteny of RBI and Government stance over 2012.

Bonds have ticked down to keep yields on target for a stab at 8.5% before the liquidiyty situation becomes clear. Policy speak includes a confirmatory nod on Economic improements in the US and a recognition of "SUPPRESSED INFLATION" in fuel and Food  ( Read our Indian Inflation REport for details) Suppressed Infltn remains high in Power and Fertiliser and a recgnition of the downtick in Global commodities. 

Rates remain unchanged in the 7.5 - 8.5 - 9.5 Corridor with MLF at 9.5 and rEverse Repors at 7.5

Other Economists consensus seems to indicate the 8.5 ratemay not go below 7-7.5% in the FY 2013 confirming that RBI can ill afford to disregard new minimums in global oil as Indian demand is inelastic to price straining government commitments to subsidy but not more than the fractured polity refusing exit from subsidies for the investment led return of infrastructure and GDP growth. 

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Today is Policy day, with the India Economic Survey following the Bank Credit Policy annoucement before Budget day tomorrow. Policy rates aree likely unchanged at all time highs as CRR cuts mitigate tight liquidity and RBI MLF borrowing worth more than INR 1.2 tln overnight ( 2.5% of the Indian Bank Deposits overall and 0.75% immediately provided by CRR likely having a cascading effect will more than ease it in normal times, but some of it becomes a factor of bearish expectations esp with hiccups on an intermediate top in the markets)

On the inflation dots, a 6.95% was the overall WPI rate before the new CPI series reports next week. CPI was 7.5% last month and WPI 6.5%. A rise in CPI is unlikely  and any rise next week will reallly weaken india's case internationally more than just the case for rate cut this afternoon, which is an unlikely event

Non Food manufactured Inflation in the Primary Articless basket and Basic goods are down to 5.7% and inequities in Agri supplies make the food part very weak if Food inflation indeed goes down. Thenature of the beast demands that Policy and reporm be supported by a higher consistent level of food inflation after the base effect wears off. Fuel inflation has not been showing in this release and is likely near the 14% rate it was running.

Of course Shubada and YES have booked their additional goodwill and incremental deposits by AM today as no one will consider rate cut from here for today till after the gloom and doom emerging from the Economic survey is shored up. 

Est. economists feel the non food price levels being up in 7 of the 11 baskets are the hint for Oil to pose a threat because of the multiplication factor from producers passi g on prices but OIl threat has subsided and any further threat in this or the next quarter are likely to leave India to destability unless price increases are passed on in toto to industry and retail with a INR 3.5 Tln subsidy bill set to increase otherwise. (With a reduced threat of Oil, Oil's minimum has been redefined however near the $115 levels in Brent)

WSJ mentions the price of dairy and poultry on the way to higher inflation with th e sub index making a comeback to 20% as vegetables and cereals continue on low and/or negative rates

Advance GDP estimates were duly revised upward earlier this week to INR 52 Tln. The Economic Survey later in the day notes the pitfalls and unevenness of welfare led growth this year as India battles the Fiscal bill and a divided polity. 

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And I do not refer to the ministers, Trivedi or Mamata, I refer to Rishad Sembhalan and otherwise insightful Asia commentary that fails at knowing India or its concerns,. Rarely has something so pathetic been allowed by the Channle as its commentary on India as the lady with the rose for India's Railway budget ( It was an obituary rose, and this is an emotionally charged comment, bu tyet I seem to have hi t the nail ont he head more than anyone else for the last 4 years and this is another from that cartel of 100% tricks, that Bkloombewrg Asiaor anyone in Singapore not be allowed to speak on the subjectof India.

ont he flip side, the entire SE Asia seems to come out trumops always with that cliched view odf an incomeptent India and its incompetent ministeers everyday and we know it is that Economic growth continues to happen despite plicy not with new  policy by now. . ( and this time Pictures of Mumbai laborers...1!! )

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Mutual Funds were this week relieved when a stay was granted against the IT Department notice pending decision on the Mutual Funds' appeal against the IT Order asking 16 mutual funds to pay  upto INR 5 bln in taxes. Mutual Funds include UTI and SBI MF 

Seemingly interest earned on Pass thru Certificates traded with the IL&FS as trustee have not been incuded in income assessments. interest earned for AYs 2008-09, 2009-20 and 2010-11 were claimed to be subject to taxes. A appeal against the CBDT order is pending with Commisioner IT,. Till the appeal is disposed off , the MF accounts will also be release, attached under the tax notice earlier. 

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The promoter Azim Premji is selling a portion of his holdings directly iin secondary market auctioning process to reduce his stake int he company. Suitabley we c ottoned on to another Bulk deal in LIVC instead last week, which was a fund being set up from existing holdings of Bank muscat

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Internal funds /revenues of INR 2 tln

Extra budgetary support of INR 2.5 tln

Dividend ploughback ( if accepted) INR 200 bln

and small rail funds contribution of INR 8 bln

and no funds left for modernisation and safety.. Stocks like KAlindee Rail and BEML react unfavorably even as 19000 kms renewal and upgradation is again put on the table! 

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In a case full of twists and turns, the High Court has simply directed SEBI to take another decision on the MCX application, seemingly a rescingd order leaving SEBI no option to go to other courts before making a ruling . The High Court's rulin gin the meanwhil upheald the choice of buyback options by the promoters while selling down their 51-489 structure stakes in the exchange to financial institutions, and all other objections listed by SEBI in their rejection of MCX stock exchange application, including MCX request to trade in equities , having never been a mutual exchange. the 200 page order has been a boon to the new listing and to the promoters' scrips on the exchange too. 

Clarity helps.

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Twitter is consolidating events and social media platforms with an even paced almost methodical madness without revenues having jumped , showing faith int he free Web 2.0 has some institutional backing yet. Location, multi user and social blogs all done with alacrity. If you missed the news, posterous founders have sold the platform to twitter and move on.

Also Second market is not but sharespost and the guy sending you Twitter shares on offer email are close to settling with the SEC / being charged shortly for having solicited from domestic US consumers for privately held equity and probably a few counts related to how many shareholders a private company can have. Goldman Sachs if you remember sold the shares to everyoneo outside the US instead of at home to skip troubles with the 500 shareholder limit

Also in Social media , PE star Peter thiel moves to a University to teach CS 183 , entering Start Ups as a elective for Comp Science majors designed as "the last course you will ever need"

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Biocon correction of today is likely to be a potential big upside customer. only the lay would have assumed Pfizer's marketing tie up will actually amount to anything ansd prices had anyway been subdued. the 5% drop is a bonus. Similarily can expect to add positions in SPARC after a break up is announced in due course. till then one can buy smaller lots. obne feels both Pfizer and SPARC have what i t takes to propagate indian small company strengths while capable of handling bigger budgets and thus tag into "Total outsourcing" deals in the area in a few. Also Indian domestic pharma expansio n may be a matter of one stable government like the one in UP this year.

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Sector rating likely being reviewd and I just caught the natter, Don't believe it when they say margin impact is a -20 bps, if it is this quarter will likely be a margin impact of -60-80 bps and the expected 16-17% credit growth similarly only expected from afew like HDFC Bank,. For the Apr - June Q! most private and public banks will get margin expansion with a 1 tln almost off the SLR securities rate of 0.25%

Also FY13 credit growhtth is likely to be rerated upward later. 

S&P is focsing public comments on Asset quality for Indian Banking sector, that likely means focus remains ofn if government owned banks can manage

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LIC has been growing at afairly steady rate and not long ago their portfolio was hardly INR 330 bln equal to ING an d now Indus Ind bank but while smaller banks have been stuck on the assets front NBFC loans have allowed NBFCs to grow their developer portfolios while LIC has been able to focus on real housing loansa book of INR 59000 crores or $12 bln allowing it a assured income of almost $360 mln ata moderate NIM of 3% esp as the lender maintains tight control over NPAs

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Unmindful of the gross excesses reported by falling revenue and growing imports, the large $50 bln subsidy bill in FY2012, the uncouth handling of the elections by the incumbent government hitting chances of a reform friendly budget and the low scratching IIP ( irrespective of statistical aberrations) the pre Budget rally started at an equitable 5300, not waiting for a lower tab, allowing reasonable hopi chatter on the networks and making budget experts out of such midcap CEOs that are rarely heard, the mdeia will get the maximum mileage out of this pre rally as the content is mostly fit for filibuster with an insipid agenda ensuring that budget day will find everything on a bullish cndlestick.

I expect today and tomorrow to be more about finding the right mid Caps for a good bang for the buck for India Funds which remain few and far in between, a random occurence in between US entries and exits, European analysis and Scaremongering about China with every $! bln of the $10 bln reaching the middle kingdom every month, while India fights for every cent of interest 

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The LIC housing fin shares reporterd on Friday were a fund buy from the Muscat India fund along with M&M financial and DLF as portfolio buys. That's 2.3 mln LIC Hsg, 0.5 mln M&M financial, 1.4 mln India infoline and 0.6 mln DLF Taib Securities Mauritius was a portfolio seller in each case and all mid caps surged though it just seems refashioning of the midcaps into a designated Bank Muscat India Fund by Taib Securities (M) or at best a Secondary sell down by Taib which bought these for the investing fund. 

Meanwhile Malaysian Khazanah followed its Singapore role models in exiting banks on a priftable tap out of Yes Bank for its entire 4.2 percent. The portfolio item got Khazanah a 250% exit price which makes buy in at nearly INR 135 ( are they making those new Rupee keyboard layouts in Windows 8) 

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Earlier Kalyani grp's one of its kind BOOT vehicle for Bangalore Mysore NICE corridor got a JP Morgan investment of 10% in 2010 after the corridor was finally completed on Phase I and started collecting toll revenues. Today's reports confirm that JP Morgan bought 8% out of the 11% billionaire Anil Ambani picked u[p in the Corridor before embarking on successful metro/Airport Link and INR 200 bln in highway projects nationally in 2004. At that time Anil Ambani valued the corridor at $15 mln for a 11% stake or less than $140 mln.

The 8% stake sale today on the other hand valued NICE at $812.5 mln and cost Airro Mauritius, one of JP Morgan's offshore domiciled fund $65 mln 

Dealcurry also mentions other projects like 800 mln from Motilal Oswal's PE unit for Udaipur's (NH8) GR Infra and Hybrid Infra Portfolio of IDFC PE incl the Shillong bypass and other projects

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Growth on Consumer staples (nin durable ) shot to an aberrant 42% fuelled by growth in some categories of groceries like Vanaspati while the most dangerous degrowth was led by electricity at 3.5% and Capital Goods at -1.5% from 10.7% and 6% respectively. However it is doubtful if this can be treated a s a wash out as NSSO and PMEAC expected a rebound in the quarter and this statistical compariosson may improve by next month. 

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A 75 bp cut to ensure Liquidity remains, should be another half a Trillion rupees ( Indian) into the system or $10 bln of liquidity if banks take it out  or RBI deposits.

The 75 bp cut shows that RBI cannot consider OMOs any more and is likely to be a semipermanent action till there is a liquidity run consequent to any substantial inflation run even on imported oil and seems unlikely will ever be rolled back. Banks may need to roll new products or focus on new industry to lend this out from the new non reserve funds available as the substantial amounts cannot be deployed in the current NBFC/Infrastructure or even the planned retail growth . However banks may stilll lose that last option.

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Again a DNA lead on the Money pages, the story of how Adani and Guj Pipaval have grown volumes in 2011-12 with 90% in two years in Pipavav respectively is a stroy of Private enterprise success even as JNPT and Kandla remain the only others growing India as a shipping destination while public ports at the bigger locations are lost in degrowth challenges . 

Mundra has already handled 51TEU of port traffic last year and this year , assuming last quarter's 16.6 mln TEU (tonnes and 20 ft Eq Units have been equated in our analysis review) to continue we will end up above 60 mln TEU this year at the new port. The Pipavav terminal in the mean time scores 610k TEUs though the port says it does not do well on bulk containers.

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At least half a dozen medications including an AIDS regime in Israel and Brazil, and Erlotinib and Docetaxel i nthailand nearer home have been allowed to be produced by low cost competitors under compulsory Licence as outlined in a great DNA lead today. Cipla's challenged patent "at risk generic" for Bayer's Nexavar that sells at 10% of the EUR 4200 per month charged by patent holder Bayer ( 2008 patent) has been in the market for 2 years but is not getting the patent crossed. Meanwhile the Indian patent is being reconsidered by the Mumbai Patent Office, an dit could also easily allow NATCO to sell the same medicine in its generic form at $160 per month, Natco having applied for Compulsory License as allowed by the WTO for unaffordable or not widlely available drugs under the Trips denominated flexibility allowing Bayer royalties on the sale. 

It seems like the method needs a push, maybe it will end up in the PMO's office in a few months? Also, the Price control specification being decided may take the minimumrate among three competitorsaa s long as they sell more than 1% of market shaare, resolving the problem for the Pharma market in its own convoluted manner but really convulsing the case for MNC pharma that cannot grow the volume on its current price tabs for medicines in India. The small enough traction in this huge -to-be Pharma market makes me sound like one big naysayer but I remain a helluva optimist for thinking this bi monthly barrage in the national media means it is actually near any promised resolution! 

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The MCX pop of 355 to 1390, could even end up in a fairy tale closing above 1500-1600 as there are not enough investors going around and the refunds from this one would likely get to buy it on the secondary markets without troubled conferences about the listed equity's pricing.

However that is not to say Dravid won't be missed in the Financial meleee of the markets and the budget or that Dhoni will be excused with Sehwag lorded out by the new minnow Captain Virat Kohli. india loves its 65 inch wonders.. 

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Watch the Ticker on Friday open, LIC in two block deals of 4.6 mln shares till now, more could come...at INR 244.x per share

Cutting CRR a day before budget unlikely, More divestment in March and April , unlikely

Key developments awaited the ONGC subsidy allocation post budget and unfortunately the world will bewaiting action on food subsidies which would increase not just from Food security, Mamata sitting like the Hulk on FSubsidy reform, FDI and more of the mea culpas of this government's last hurrah!

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The movie of course was good Irfaantainment, and a Info-commentary and well, made me wish I was from that belt, but with India's irrigation systems still left to god's will and the central states still fodder for suicides and deficits in the Welfare subsidies, the 3.5% deficit for Subsidies itself is not going to be near enough to sustain India on its mature path to increasing domestic product and necessarily capacity ahead of the so called developed world.

The new Power regime apart, which now seemingly involves two new Foreign partners like GDF and E.ON and definitely not EDF and EDP ( from the last letters that denote their Western European domicile) we cnanot Repower India's future, without catering to the half dozen UMPPs where costs have gone up to $2 bln per GW from all accounts and chinese equipment, land and more remain issues to be sorted out ( more= fuel, coal and gas, location and industry migration like the NMZs ) 

Then comes the question of did we really come to the custp of another great start which we can blame Mamata for spoiling with a few chosen spanners in Multi Brand retail, ( and thus UP by a circuitous extension, I can explain but not to Joe Leahy) the Railway expenditure vs modernization line and the rest of the fracked indian Superpower story. Though it could not stop the MCX from coming up, HDFC Bank and ICICI Bank from getting international interest ( even the 74% limit) and the $1 bln worth of FDI that still came thru in December. On the flip side, where we were in this rant'o'rama, we still have 122 cancelled 2G licences to wish for a well priced 4G iPad3 to come to India and the Airtel brand is also falling even after having conquered the Dark Continent, Maharashtra does not want its Auto belt to grow and Na Modi or others do not want ewither the DTC or GST or the other regime which makes it more unlikely for UPA itself to come back in two years, all from leaving the reforms to the dogs literally somewhere after the first budgetr from this government.. Reforms, anyone? 

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This is the estimate of the spend on Infrastructure in the Budget, and I am goin gto assume that includes the Welfar infrastructure spend. If I only had more hands with me , it would have been simple to have a commitment on quant analysis

Of course CII and other interested parties ( read Vinayak / Feedback as Infrastructure advisor , speaking against the monopoly of a certain Pulok C. from the PMO - Profit Tv) have been more interested in pointing out implementation issues in Infrastructure incl allocation of Coal mines and work for the Infrastructure committee to approve executive review of projects in power and other infrastructure..Right of way on Road projects/ forest land in road projects, other infrastructure projects continue to hurt from Land acquisition which has been parked separately from the budget )

Most market participants would be happy with the FRBM structure in implementation by whatever name, with the Fisc discipline defined a sa upfront priority and some flak for Divestment followed by some quick big ticket divestments, but no PSE executive seems to be on board with the plan incl Kotak clients...

There is a second Citi- HDFCled Infra debt fund now apart fromthe one between HSBC and IIFCL/i3 

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The UPA government had definitely lost the initiative and unless extensive rear guard action is planned by Sh Manmohan Singh, the loss of spirit in UP is likely to pervade the remaining two budgets ( if both are indeed presented) to go thru in the muddled manner that at least brings vote to Madam in the east, while gujarat and Karnataka look well out of grasp and maybe even MP in the next round of by elections. But then , given only $1 bln in FDI in December, we have been forced oto post political commentary like this on our Deal Post..and this is hopefully yet economic and banking related discusion on the coming budget.

The 2012 hopes for a consumer led revival including NBFC and retail unsecured credit for banks, lowering rates , making healthy NIMs and a new fiscal year meaning capital infusions ( not just the letters) for carrying NPAs in case of public enterprises for example.

LIC will be under the scanner, but again we digress from the Budget proposals. Hope comes in terms of DTC proposals, making Pranab Da's task difficult from the frst ball bowled, as he sets down to publicly downsell such hopes as DTC, GST and others like a targeted Fisc in favor of diluted middle of the lane proposals with virtually no Economic impact. Services may lead revenue upticks in FY13 and as of now that is one safe tactic available to budget planners which should be used aggressively, planning for a 30% revenue uptick helped by the Service tax on negative list  and the new DTC with appropriate bells and whistles in exemptions, as also recommended by the Parl panel and which will remain UPA's legacy, whatever other parties might think.

The Divestment target should remain high and we should proceed forward on our higher percentage of Revenue to GDP to more than 20% whatever be the political exigencies. On the flip side, Exports would have a difficult task of staying in the rosy lane esp if production dows not pick up more than afew pips, even as investment is again led by public investments in infrastructure and even Food security and employment

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The UPA government had definitely lost the initiative and unless extensive rear guard action is planned by Sh Manmohan Singh, the loss of spirit in UP is likely to pervade the remaining two budgets ( if both are indeed presented) to go thru in the muddled manner that at least brings vote to Madam in the east, while gujarat and Karnataka look well out of grasp and maybe even MP in the next round of by elections. But then , given only $1 bln in FDI in December, we have been forced oto post political commentary like this on our Deal Post..and this is hopefully yet economic and banking related discusion on the coming budget.

The 2012 hopes for a consumer led revival including NBFC and retail unsecured credit for banks, lowering rates , making healthy NIMs and a new fiscal year meaning capital infusions ( not just the letters) for carrying NPAs in case of public enterprises for example.

LIC will be under the scanner, but again we digress from the Budget proposals. Hope comes in terms of DTC proposals, making Pranab Da's task difficult from the frst ball, as he sets down to publicly downsell such hopes as DTC GST and others like a targeted Fisc in favor of diluted middle of the lane proposals with virtually no Economic impact. Services may lead revenue upticks in FY13 and as of now that is one safe tactic qavailable to budget planners which shoul dbe used aggressively, planning for a 30% revenue uptick helped by the Service tax on negative list  and the new DTC with appropriate bells and whistles ine xemptions, as also recommended by the Parl panel and which will remain UPA's legacy, whatever other parties might think.

The Divestment target should remain high and we should proceed forward on our higher percentage of Revenue to GDP to more than 20% whatever be the political exigencies. On the flip side, Exports would have a difficult task of staying in the rosy lane esp if production dows not pick up more than afew pips, even as investment is again led by public investments in infrastructure and even Food security and employment

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Currency speculation in India's Rupee FX markets returned with RBI curbs lifted in January resulting in daily Fx turnover of INR 2.5 Tln, and its negative impact on liquidity erased after RBI curbs put Rupee spot on cash only basis and Forward rebooking and client wise limits of banks were curtailed. However Open market operations had to be conducted, 10 year yields still at a high of nearly 8.4% in today's bond markets, showing the unseemly consitution of the markets after ONGC needed a last minute repair onto INR 50 bln worth of LIC and SBI intervention

It is thus likely that either yields track for double digit or Rupee track to 60 in bad budget reports/expectations and the best budget statement a rescue for the Rupee to 50 t o the Dollar and sub 9% yields for 2012 at the very best

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Buybacks have been approved aas a mechansm and LIC in a last minute bid updated to 199 mln shares on the NSE in an auction while BSE has updated an auction of 99 mln shares at INR290 LIC gets INR 38 bln additionally for the missing 130 mln odd shares.

The deficit has been fixed to thus a t least the extra due to OMCs from the goverrnment share for Oil subsidies for Fiscal 2012. No buyback candidates have been announced. 

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