The global markets continued their downward tumble. Both the European and American market are facing a liquidity crunch. The European Central Bank has pumped in a little over USD 200 billion over the last week to assuage the liquidity crises. Despite this European Stocks fell on Friday. The Dow also fell on Friday, despite the Fed pumping in money to reduce the liquidity crunch.
Meanwhile, the Japanese growth is slower than expected, which means rates will either remain unchanged or be reduced.
Liquidity pressures back home has lead to the Sensex losing almost 2% in the past week.
How does this affect the SENSEX? More liquidity in the global system leads to a higher risk appetite and with a positive growth story from India; it means that the FIIs will invest more in Indian equities. They certainly seem to be having a high risk appetite, with massive investments in the realty stocks, despite concerns over their valuations.
The global liquidity crises seem to have raised concerns about some leveraged buy-outs. This might increase the cost of funds for numerous Indian acquisitions, like the TATA-Corus deal, or the Aban-Sinvest buy out.
The current mortgage market crises, has lead to some grim outlook for global growth by economists. India might be affected, but if its domestic consumers might be able to limit the damage to just export-oriented sectors.
Corporate Watch
Bajaj Auto is now focussing its energy on the premium motorcycle segment, the 150cc or higher capacity and expects higher margins from this segment. Hero Honda, the undisputed leader in the commuter class bikes is facing a pressure on margins due to higher interest rates.
ICICI bank has decided to raise USD 1.5 billion via External commercial borrowings.
WIPRO has decided to launch operations in China to tap into east Asian markets of Japan, South Korea and Hong Kong.
Financial Service provider, Motilal Oswal fixes IPO price band at Rs 725-825 per share, whose face value is Rs 5. the promoters are expected to reap in Rs 800 crs via the IPO.
Infosys seems to have taken a long to medium term outlook on the rupee appreciation. The srupee is likely to further appreciate against the dollar and hedging against an appreciating rupee in the medium to long term is the right strategy.
General Motors is selling a form of maintenance insurance for its Chevrolet brand of cars. Customers can now buy maintenance packages for their cars for a period of three years. This is a first of its kind for cars, but is not new to the Indian consumer, who have experienced this through the Annual Maintenance Package offered by various companies in India.
Economy
The cabinet has approved converting the existing 4 lane highways to 6 lanes.
Industrial growth for Q1 stands at 11%
The IRDA is now checking the mis-selling of ULIPs. Often agents sell ULIPs as mutual fund-cum-insurance products, with customers unaware of the details.
India has just 31.5 million or 3.15 crore tax payers, that’s optimistically 3.15% of the total population, and the government has decided to squeeze them further to fund its socialist policies.
