Review of Indian Economy & Markets - week ended 19th September 2015

• As per the figures released by the Ministry of Commerce and Industry, India’s merchandise exports registered a decline of 20.66% in Dollar terms (decline of 15.22% in Rupee terms) during August 2015 compared to August 2014. Exports for the period April – August 2015 declined by 16.17% (10.94% in Rupee terms compared to the same period last year. Global economic slowdown is a major cause for this decline. Merchandise exports contribute to around 15% of country’s GDP.
• Compared to August 2014, exports of Rice (-21.26%, other cereals (-40.10%), Iron Ore (-29.75%), Engineering Goods (-24.23%), Petroleum products (-44.30%) contributed to the negative growth in merchandise exports in August 2015 while Pharmaceuticals (13.33%), Jute Products (57.07%), Handicrafts & handmade carpets (54.46%) and Tea (10.68%) registered a growth.
• Imports also registered a decline of 9.95% at USD 33.74 Billion in August 2015 compared to August 2014. The decline in Rupee terms is around 3.77%. The imports for the period April – August 2015 were down by 11.61% (-6.06% in Rupee terms) compared to April – August 2014. In August 2015, imports of Project goods (-46.04%), Petroleum, Crude & Products (-38.65%), Coal, Coke & products (-16.12%) contributed to the decline compared to August 2014. Gold imports registered biggest growth of 150% in August 2015 compared to August 2014 with imports of Fertilizers and silver contributing substantially. Urea imports surged 43% during the April – August period compared to same period last year. 
• Government reduced import tariff on Gold and Silver to USD 359 per 10 grams and USD 470 per kg respectively - With the commencement of festive season from September 17 (Ganesh Chaturdhi) which will continue for next 2-3 months, the imports of Gold may go up further in coming months.
• Government has permitted foreign investment in partly paid shares and warrants to give a fillip to Foreign Direct Investment in India.
• Government imposed a 20% provisional safeguard duty on certain categories of steel imports including hot rolled flat products. This is expected to provide the much needed relief to domestic producers by curbing imports.
• Rainfall deficit in India since June 1 this year is around 16%.
• In April – August period acreage under paddy in Andhra Pradesh (one of the top producers of Paddy) declined by 245,000 hectare due to failure of monsoon and non-availability of water in reservoirs. With deficient rain fall across India by around 16%, there is a possibility of reduction of acreage under paddy and other crops during this Khariff season. However, the revival of monsoon in September may provide much needed soil moisture for Rabi crops reducing the possibility of spike in food grain prices.
• In line with the announcement in budget speech about reduction of corporate income tax rate to 25% in four years, the Finance Ministry announced that the list of tax exemptions to be phased out will be brought out shortly.
• The central statistical office (CSO) has revised the base year of Consumer Price Index (CPI) from 2010 to 2012 with effect from the release of indices from January 2015. As per the indices, the combined CPI for August 2015 (Provisional) is pegged at 3.66% compared to 3.69% for July 2015 (revised) and 7.03% for August 2014. As per the data released the rural CPI increased from 4.35% in July 2015 (revised) to 4.47% in August 2015 (provisional). However the urban CPI declined from 2.94% in July to 2.67% in August. It is also to be noted that both rural and urban CPI declined from levels of 7.67% and 6.39% in August 2014 to levels reported in August 2014 - Though the indices report decline, one did not see much decline in prices in day to day life. In fact most of the prices are ruling at higher levels compared to those observed in previous month.  
• There is little change in prices of Pulses and Onion during this week though there is a 4-5% decline in wholesale prices of Pulses due to starting of arrival of imports. However, there may not be much improvement in prices of Red gram (Tur Dal) till December 2015 till the arrival of new crop.

Markets

Indian stock markets closed positively during this week with Sensex and Nifty recording a growth of 2.47% and 2.17% respectively over previous week after the much awaited US Fed rate review became a non-event as the FOMC meeting decided to keep the bench mark rates unchanged. The focus now shifts onto September 29 when Reserve Bank of India announces the policy as there is mounting pressure on RBI Governor to reduce the benchmark rate.

Nifty reclaimed the 8000 levels intraday but closed the week at 7982 registering 2.47% growth. Only DIIs were the net buyers this week at INR 10.88 Billion. Nifty Managed to hold 100 WMA (weekly moving average) which is at 7,634. Top six Sensex companies viz., RIL, HDFC, SBI, Infosys, HDFC Bank and ONGC added INR 263.46 Billion in market capitalization while TCS, ITC, Coal India and Sun Pharma lost INR 147.66 Billion in market capitalization.

Top 5 Nifty Gainers	Top 5 Nifty Losers
Tata Power Company	Tata Motors
Axis Bank	Larsen & Toubro
Power Grid Corporation	Tata Steel
Sun Pharma Industries	Cairn India
JP Associates	Bajaj Auto

Companies from Construction, Power and Banking sectors reported a positive growth in stock prices while those from Engineering Sector registered a decline.

Currency

The USD – INR exchange rate improved from INR 66.412 / $ on 31^st August 2015 to INR 65.868 / $ on 18^th September 2015. The decision of FOMC not changing the benchmark rates has contributed to this improvement the in exchange rate in the last 2-3 days.