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India’s first 5500 HP engine rolled out

Intending to celebrate its golden jubilee on a high mark, Diesel Locomotive Works (DLW), Varanasi, has rolled out the country’s most powerful engine of 5500 HP.

It is considered to be the largest locomotive to be used on a 22-axle load in the world, though several countries have engines more powerful carrying load on higher axle loads.

The WDG5 prototype, introduced in the North Central Railway as a pilot project, has the capacity to attain a speed of 100 km-per-hour, promising better throughput. The new engine comes with advanced technologies pertaining to electronic fuel injection for higher fuel efficiency and emission norms.

The demand for a bigger sized engine has been higher with the country joining the one-billion-tonne club and taking to heavy haulage system for better utilisation of the existing capacity and releasing space for more passenger trains.

India
 
FDI worth Rs.2,000 cr cleared

The Finance Ministry on Friday said it had approved 15 foreign investment proposals totalling Rs.2,000.5 crore and recommended two FDI applications, including that of U.S. drug major Mylan, for final Cabinet clearance.

The 15 proposals were cleared following recommendations by Foreign Investment Promotion Board (FIPB) on August 27.

“In addition, two proposals, namely, IDFC Trustee Company Ltd., as proposed Trustee for India Infrastructure Fund II, Mumbai, and Mylan Inc. U.S. amounting to Rs.10,668 crore, have been recommended for consideration of Cabinet Committee on Economic Affairs,” the Finance Ministry said.

Proposals which have been cleared include that of Jubilant Pharma Pte, Singapore (Rs.1,145.10 crore), Lotus Surgical Specialities (Rs.150 crore), Symbiotec Pharmalab (Rs.306.19 crore) and Advanced Enzyme Technologies (Rs.200 crore).

The Ministry further said it had deferred decisions on 10 FDI proposals, including that of Hindustan Coca-Cola Holdings Pvt. Ltd., HBO India Pvt. Ltd., P5 Asia Holding Investments (Mauritius) Ltd., Australia Asia Resources LLP (USA) and Dhanlaxmi Infrastructure Pvt. Ltd.

U.S.-based Mylan Inc proposes to acquire Agila Specialties Pvt. Ltd., a subsidiary of pharma firm Strides Arcolab. It involves FDI worth Rs.5,168 crore.
Mylan capital

According to a ‘share purchase agreement’, Mylan would acquire entire issued and outstanding share capital of Agila Specialities.

IDFC Trustee Company has sought government approval to set up an Alternate Investment Fund (AIF) category I and for receiving contributions from international investors. As per the Ministry, the proposal involves FDI inflow worth Rs.5,500 crore.

Mylan and IDFC proposals have been recommended for the consideration of Cabinet Committee on Economic Affairs (CCEA).

FDI worth Rs.2,000 cr cleared - The Hindu
 
Afghanistan’s dry fruits arrive in India through Chabahar Port
Twenty containers of Afghan dry fruits have arrived in Mumbai city of India through the Chabahar Port.

Afghan traders are optimistic about expanding their trade further through the Chabahar Port.

The port serves as the best alternative to the Pakistan’s Karachi Port where export activities were constantly interrupted by political restrictions and high storage cost.

Located 72km west of Pakistan’s Gwardar port, Chabahar port holds immense strategic and economic significance for India.

Afghanistan for the first time in its history has been able to directly dispatch products to India.

Through the port, Afghanistan will be able to export its products directly to India, Kazakhstan, Gulf and European states in an efficient manner.
 
Bangladesh begins import of power from India

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Bangladesh, on Friday, began importing electricity from India on an experimental basis, adding 50 MW to the national grid.

The import, which took roughly three years to materialise after it was decided in 2010, was part of the country’s plan to help ease the crisis.

The test-supply of 50 MW electricity was transmitted on Friday morning through an electrical grid inter-connection point in Bheramara, Kushtia, opposite to West Bengal of India. A 125-km transmission line has been constructed between Baharampur of India and Bheramara in Bangladesh. Of this, 40 km fell inside Bangladesh.

Power Grid Company of Bangladesh (PGCB), which is the co-ordinator of the import process, said by the end of October around 250MW of power would be imported into Bangladesh. Another 250MW was expected to be imported from India’s private sector by November this year.

The two countries signed a memorandum of understanding (MoU) in 2010 regarding import of 500 MW of power from India. Officials here said Prime Minister Sheikh Hasina would go to Bheramara and her Indian counterpart Manmohan Singh would formally inaugurate the power export to Bangladesh via video conference from Delhi on October 5. Authorities said half of this power would be coming from the Indian Government electricity quota, and the rest from the open market. Experts believe the total amount of electricity, which will be imported under a 35-year contract, will greatly improve the country’s power situation, which is now being tackled through costly but short-term rental power plants.
Controversy

The government, meanwhile, rejected the allegations that the coal-based power plant, being constructed under an India-Bangladesh joint venture project in Rampal, near the Sundarbans, would adversely affect the world’s largest mangrove forest. The National Committee on Protection of Oil, Gas, Mineral Resources, and Power-Port, a body of the left-leaning parties and environmentalist groups, have already vowed to resist the planned inauguration of the Rampal Power Plant scheduled on October 22.

The committee members will end their five-day cross-country long march to the Sundarbans on Saturday in an effort to stall the project. The pro-left participants in the long march alleged that the coal-based project would harm bio-diversity and ruin the world heritage. However, the government has been claiming that the environment would not be harmed, as there would be enough checks to prevent pollution.

The Rampal Thermal Power Plant will be located within 14 km of the Sundarbans.

Bangladesh begins import of power from India - The Hindu
 
RINL plans foray into high-end products

As part of its corporate vision, Rashtriya Ispat Nigam Limited, the corporate entity of the Visakhapatnam Steel Plant, has decided to foray into manufacturing of high-end products like seamless tubes, cold rolled grain-oriented (CRGO) and auto-grade steel.

To make it a futuristic steel plant, RINL, a Navaratna company, will soon finalise the process for setting up seamless tube mill involving an investment of Rs.2,300 crore.

This will be followed by production of silicon steel in joint venture or on its own.

Once RINL completes its plan to produce 18” and above seamless tubes, the company will become the only steel plant in the country in both public and private sectors to produce such high dia tubes, according to RINL Chairman-cum-Managing Director A.P. Choudhary.

RINL so far has specialised in long products. Entering into flat and highly specialised products will be a milestone for the State-owned company with its head office located in the city.

The company at present is on the verge of completing its 6.3 million tonne expansion at a cost of Rs.12,500 crore.

The capacity will be raised to 7.3 million tonnes within a year by investing Rs.7,500 crore on capital repairs and modernisation.

In the next phase to achieve a capacity of 11 million tonnes, an investment of Rs.23,000 crore will be made to launch production of several high-end products required for telecom, railways and Defence sectors.

When contacted, RINL Director (Commercial) T.K. Chand told THE HINDU that they were expecting heavy investment from Iraq in future after positive response during their talks with the Iraqi authorities.

Iraq said to be having plans to invest $500 billion in next five years. In India has a trade deficit of $19 billion.

Mr. Chand, who was part of delegation which visited Iraq along with Joint Secretary, Steel Lokesh Chandra as part of Indo-Iraq Joint Commission led by Minister of Petroleum and Natural Gas M. Veerappa Moily, asked the Iraqi authorities to make use of RINL’s export of API rounds and seamless tubes under long-term understanding.

RINL representatives also went to Nepal and Myanmar to explore export potential after deciding to open its International Marketing Office at the World Trade Centre at Colombo sometime in October.

Special focus is being made on exporting its products to Middle East by RINL officials.

RINL plans foray into high-end products - The Hindu
 
India manufacturing PMI inches up, but contraction continues
Bangalore: Factory activity in India shrank for a second month in September, albeit not as sharply as in August, on a dearth of new orders which pushed firms to cut staff, a survey showed on Tuesday.

Another grim Purchasing Managers’ Index (PMI) comes as Asia’s third-largest economy grapples with its worst slowdown in a decade and policymakers struggle to put a floor under the battered currency.

The HSBC Manufacturing PMI, compiled by Markit, rose to 49.6 in September from 48.5 in August, but remaining below the watershed 50 mark that separates growth from contraction.
The index, which gauges business activity in Indian factories but not utilities, has hovered near that 50 mark from May but falling orders dragged it under in August for the first time in more than four years.

NMDC may buy stake in Indonesian coal mine
MUMBAI: State-owned NMDC is considering a stake in an Indonesian thermal coal mine owned by Renuka Coalindo, an acquisition aimed at expanding the profile of the minerals producer that has been focused mainly on iron ore and coking coal.

Confirming the development, two directors of NMDC told ET on the condition of anonymity that the company was evaluating PT Renuka Coalindo Tbk, listed on the Indonesian stock exchange, which operates a 1.2 mt coal mine in the Jambi province of Sumatra. The company is a subsidiary of Renuka Energy Resource Holdings, an associate of Renuka Sugars, with mineral concessions in Columbia and Brazil as well.

Two-wheeler firms eye Africa, Latin America
Mumbai: Indian two-wheeler makers, finding the going tough in a domestic market that is close to saturation point, are breaking new ground in markets such as Africa and Latin America. Rising labour costs in China, which is the biggest exporter of two-wheelers to these markets, are helping the Indian cause.

Bajaj Auto Ltd, which ships 30% of its motorcycle production to overseas markets, is the market leader in Nigeria—one of the biggest markets in Africa. It sells 35,000 motorcycles per month against rival Honda Motorcycle’s 6,000-7,000 units.

The Pune-based motorcycle maker exports its products to markets across Africa, South America and Asia, and is working on increasing its presence and exploring markets in North and West Africa, Turkey and Asia, said Rakesh Sharma, head of international operations.

In India, an economic downturn, high borrowing costs and increasing fuel prices have slowed sales growth. Combined two-wheeler sales in India remained flat at 57,51,267 units in the five months from April to August, compared with 57,10,176 units in the same period a year ago, according to the Society of Indian Automobile Manufacturers, or SIAM. After expanding at a brisk pace for several years, sales rose by a mere 3% in fiscal 2013.

That has sharpened the focus of domestic manufacturers on exports although even without the economic downturn, two-wheeler makers have been taking aim at overseas markets. “Exports have been a binocular strategy for the company for the last 7-8 years, irrespective of the domestic market condition. We are number one or two in most of the markets we are present in,” said Bajaj Auto’s Sharma.

To address the competitive South-East Asian markets, where Japanese manufacturers firms have a dominating presence, Bajaj is piggy-backing on Kawasaki Heavy Industries Ltd—a model it adopted for the Philippines.

Bajaj will co-brand the motorcycles as Kawasaki-Bajaj. “They (Kawasaki) have the knowledge of these markets,” said Sharma.

Other two-wheeler makers such as Hero MotoCorp Ltd and Mahindra 2 Wheelers Pvt. Ltd are also scouting for greener pastures in foreign markets. Hero MotoCorp and Mahindra and Mahindra Ltd have announced plans to enter the Latin American market in the last two months. Hero said it aims to generate 10% of its total revenue from global markets by 2016-17.

Analysts said one reason for exploring markets such as Latin America and Africa is that the domestic market is getting saturated. After expanding at a double-digit annual pace over the past decade, growth has started tapering off in India, the world’s second-largest two-wheeler market.

Exports to destinations such as Africa and Latin America offer untapped potential and would help companies offset the shrinking demand at home, suggested a 25 September report by analyst Aditya Jhawar from Espirito Santo Securities India (ESS).

“We expect Indian companies to increase their footprint in Brazil, which is presently dominated by Japanese manufacturers garnering a 90% market share,” wrote Jhawar from ESS. The other important markets in Latin America are Chile and Columbia.

Jhawar, in his report, forecast the domestic market to expand at a compounded annual growth rate of 8.7% till 2020. Two-wheelers have reached 48% of addressable households in India and 63% of addressable households in urban regions, according to ESS estimates.

Latin America and Africa have also become attractive markets as Chinese labour costs have risen, said analysts.

Labour costs in China are rising at high double digit rates and by 2015, the cost of manufacturing in China may be equivalent to the cost of manufacturing in the US, wrote Jhawar of ESS in his report, citing a study done by Alix Partners, a consulting and business advisory firm. “Our checks also highlighted that people acknowledge Bajaj’s good quality and lower need for maintenance as compared with Chinese motorcycles,” said Jhawar. According to Surjit Singh Arora, an analyst at Prabhudas Lilladher Pvt. Ltd, Chinese firms account for a major share of around 75-80% in Africa and 70% in Latin America.

Analysts said a price war among the Chinese companies, which dominate the African market, and cost pressure facing them due to the increase in labour costs in China, bodes well for Indian companies such as Bajaj Auto. The rupee’s depreciation will also make Indian vehicles more competitive.

“In our assessment, exports from Indian manufacturers are likely to grow in the region of 13-15% over the next five years,” Arora said.
 
Stimulus for two wheelers, consumer durables to push demand for economic growth
As the festival season begins, the finance ministry will provide more capital to public sector banks than Rs 14,000 crore pegged in the Budget for 2013-14 to enable the lenders provide more loans to borrowers in two wheelers, select consumer durables at lower interest rates. The aim is to spur demand for shoring up economic growth, which fell to a four-year low of 4.4% in the first quarter of 2013-14.

The decision in-principle was taken at a meeting between Finance Minister P Chidambaram and RBI governor Raghuram Rajan. Economic affairs secretary Arvind Mayaram was also present on the occasion.

Meanwhile, Pawan Goenka of Mahindra & Mahindra met revenue secretary Sumit Bose to push for reducing tax on sports utility vehicles and lowering interest rates for automobiles.

"The Government has decided in-principle to enhance the amount of capital to be infused into Public Sector Banks (PSBs). In the Budget for 2013-14, a sum of Rs 14,000 crore was provided for capital infusion. This amount will be enhanced sufficiently," the finance ministry said in a statement here after the meeting.

The additional amount of capital will be provided to banks to enable them to lend to borrowers in selected sectors such as two wheelers other consumer durables at lower rates n order to stimulate demand, it added.
 
ONGC aims at commercial production of shale gas by next year

Oil and Natural Gas Corporation (ONGC), on Friday, announced that it had drawn up plans to start commercial production of shale gas next year.

Addressing reporters on the sidelines of the ‘Oil and Gas Summit’ organised by Indian Chamber of Commerce (ICC), ONGC Chairman and Managing Director Sudhir Vasudeva said the Cabinet Committee on Economic Affairs (CCEA) had allowed ONGC and Oil India Ltd (OIL) to tap shale resources in blocks allotted to them on a nomination basis. “We are planning to drill 10 wells this year and hope to start commercial production next year,” he added.

ONGC plans to start drilling for the unconventional shale hydrocarbon resource in Gujarat sometime this month. The company is getting technological support for the venture from ConocoPhillips.

Cambay in Gujarat is one of the basins that has been identified as potentially bearing shale resources. Shale extraction uses hydraulic fracturing, which involves blasting water, sand and chemicals underground to release trapped oil and gas.

In the first phase, ONGC and OIL have been permitted to explore for and produce shale oil and gas from onland blocks that were allotted on a nomination basis before advent of the New Exploration Licensing Policy in 1999. The government will offer shale oil and gas blocks to other companies through an auction planned after such a policy is taken to the Cabinet for approval in the next few weeks.

Shale gas, or natural gas trapped in sedimentary rocks (shale formations) below the earth's surface, is the new focus area in the U.S., Canada and China as an alternative to conventional oil and gas. As per available data, six basins—Cambay (in Gujarat), Assam-Arakan (in the North-East), Gondawana (in central India), KG onshore (in Andhra Pradesh), Cauvery onshore and Indo-Gangetic basins, hold shale gas potential. Various studies have estimated recoverable reserves of shale gas at between 6 trillion cubic feet and 63 trillion cubic feet.

ONGC aims at commercial production of shale gas by next year - The Hindu
 
Infosys, TCS bag IT contract from US utilities firm

New Delhi, Oct 3:

India’s largest software firms Infosys and Tata Consultancy Services (TCS), have bagged a contract from US-based Northeast Utilities to manage a part of its IT department, a source said.

Northeast Utilities, which operates New England’s (in the north-eastern corner of the US) largest utility system serving over 3.6 million electric and natural gas customers in Connecticut, Massachusetts and New Hampshire, plans to cut 200 jobs over the next six months as it seeks to reduce costs.

“Northeast Utilities is eliminating 200 jobs from its IT department, which has a strength of about 400, and over 40 of these jobs will shift overseas to Infosys and TCS,” the source said.

Financial details about the deal were not immediately available.

When contacted, an Infosys spokesperson said: “We do not comment on client engagements.”

TCS declined to comment on the matter, saying the company is in its silent period ahead of its second quarter results.

Meanwhile, Northeast Utilities Executive Vice President and Chief Administrative Officer David McHale in a conference call said the utility will cut 200 positions of the total 400 IT-department jobs. Of the jobs being eliminated, 40 will continue working for two partner companies based overseas.

At present, 70 per cent of the total IT workforce of the US firm is based in Connecticut.

Shares of TCS rose by over 4 per cent and Infosys inched by around one per cent on the BSE today.

Last week, Infosys and software giant IBM won a € 300 million (about Rs 2,535 crore) contract to develop the computer system for the UK-based bank Williams & Glyn’s.

The bank (Williams & Glyn’s), which was dormant for about 30 years, is being revived by UK-based lender the Royal Bank of Scotland Group Plc (RBSG). The bank is part of the RBS Group and is scheduled to launch operations by 2015.

Infosys, TCS bag IT contract from US utilities firm | Business Line
 
Obamacare has hidden benefits - for India

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Among its many savings efforts, Obama's health law encourages the use of generic drugs, many of which are manufactured in India

Republican opposition to President Barack Obama's healthcare law is at the heart of the government shutdown in the US. The same law is creating new jobs and business, thousands of miles away in India.

As millions of Americans are encouraged to enrol in health insurance plans under the new system, executives in India's generic drug and software industries foresee an upswing in business. Nearly 40% of the generic drugs used in the US now come from India, and industry insiders say sales will grow as the reforms collectively known as Obamacare roll out.

Muralidharan Nair of Ernst and Young says Obamacare envisages savings of $150bn (£935m) per year from drug cost reductions. That is also the size of opportunity for people who work in the industry.

"Obamacare will be a harbinger of a tectonic change in the way generic consumption is going to happen in the US, and India stands to gain significantly," says Mr Nair.

He forecasts a year-on-year growth of 25-30% in the generic drug industry in India, already branded as "pharmacy to the world".
'Zero' cost

Experts say generic drugs are pivotal to the success of the new healthcare system. That is because nearly 90% of patients in the US have some kind of co-payment on their insurance, which encourages them to take lower-priced generics rather than brand-name drugs.

"If you move to generic drugs, the out-of-pocket cost drops to zero in many cases," says Kavita Patel, a former advisor to the Obama administration on health reforms and now with the Brookings Institute.

"A generic medicine for cholesterol can be as low as $4 a month compared to $300 a month for a branded one."

Doctors in the US are now encouraged to switch to generics where appropriate.

"When people go to a pharmacy with a paper prescription, the pharmacy will ask the doctor if they can switch it to a generic," says Ms Patel.

On the electronic health records, used by nearly half of the country, generic alternatives pop up when the doctor enters a brand-name drug into the pharmacy computer system.
US regulators' scrutiny

The challenge for Indian industry is also to maintain the quality that meets US standards, as there's a huge perception barrier associated with generics - many fears generics are of lower quality.

To change the perception and to ensure quality, the US Food and Drug Administration (FDA) has stepped up its presence on the ground in India.

This March, India allowed the FDA to add seven inspectors, which will bring its staff in India to 19. In the past few months, Indian drug makers have been hit by enforcement measures or inquiries.

Several manufacturing plants, including that of pharmaceutical giants like Ranbaxy, have been penalised for lapses. This has unnerved investors.

After the FDA's "import alert" against Ranbaxy, the company's share plummeted nearly 30%, the biggest fall since 1991. Shares of another company, Wockhardt, fell as much as 79% after a similar FDA alert.

While some complain the FDA's strict monitoring is needlessly harsh, some analysts say the scrutiny will ultimately bolster quality and confidence in Indian drugs.
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"India has to be paranoid about zero tolerance for lapses," says Mr Nair of Ernst and Young. "Compliance should be non-negotiable."

The Indian IT industry is also expecting a many-fold increase in business. Indian companies that make specialised software and analytics for global healthcare providers are already recording a jump in business.

More than 30 million American citizens will be part of the new healthcare system and this will mean a huge change in technology.

Ed Nair of Dataquest magazine foresees a total re-engineering of the healthcare provision system.

"All of this requires a whole lot of systems to be deployed - and a whole lot of people to be deployed, which presents a huge opportunity for India," he says.

BBC News - Obamacare has hidden benefits - for India
 
IMF pegs FY14 GDP growth at 4.25%

TNN | Oct 9, 2013, 07.47AM IST

NEW DELHI: The International Monetary Fund (IMF) on Tuesday estimated the Indian economy to grow at 4.25% in 2013-14, hurt by lacklustre manufacturing and services sectors and slowdown in demand due to monetary tightening. Several multilateral agencies, economist and brokerages have scaled down India's growth projections for the current financial year after the April-June quarter data showed the economy expanded at its weakest pace in four years at 4.4%.

The IMF estimate is well below the 5-5.5% growth that the government expects in the current fiscal. The Indian economy slowed to a decade low of 5% in 2012-13, prompting calls for urgent measures to boost growth and revive sentiment.

:no:

IMF pegs FY14 GDP growth at 4.25% - The Times of India

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:cheers:

China will continue to grow 30% faster than India for the next 5 years(2014-2018)per the above forecast by the IMF。
 
India September Trade Deficit Narrows to 30-Month Low

NEW DELHI—India's trade deficit narrowed to the lowest in 30 months in September as weaker oil and gold demand helped cool imports while exports accelerated.

The deficit narrowed to $6.76 billion from $17.15 billion a year earlier, Director General of Foreign Trade Anup Pujari told reporters Wednesday while releasing the data. It was at $10.9 billion in August.

"Steps taken by the government to curb imports of nonessential items, especially precious metals, have resulted in the significant fall in imports," Trade Secretary S.R. Rao, who was also present at the briefing, said.

Data show imports of gold in September fell 82% from a year earlier to $800 million while crude-oil imports dropped 5.94% to $13.20 billion. This helped reduce overall imports, which were down 18.1% on the year at $34.4 billion.

In recent months, the government has increased the import tax on gold to check demand for the metal. The central bank has also tightened rules to reduce speculative purchases by bullion dealers and taken other steps to curb demand.

While imports fell, exports rose for the third successive month. They were up 11.15% from a year earlier at $27.68 billion in September.

India's trade gap has been the key driver of its large current-account deficit—$87.8 billion in the fiscal year ended March 31. That has in turn led to a sharp fall in the value of the rupee and fueled concerns over how the south Asian economy will manage to finance such a wide current-account gap once the U.S. Federal Reserve begins to unwind its easy-money policies.

The sharply narrower September trade deficit would calm some of those concerns. The steady rise in exports would also bolster expectations that growth in the south Asian economy could pick up in the coming months.

India's economy grew at a decade-low rate of 5.0% in the fiscal year ended March 31.Authorities are hoping that improving exports would help the country's ailing manufacturing sector recover.

India September Trade Deficit Narrows to 30-Month Low - WSJ.com
 
IFC to sell rupee-linked bonds to fund India investment

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The International Finance Corporation (IFC), the World Bank's investment arm, plans to raise $1bn (£630m) by selling Indian rupee-linked bonds.

IFC will use the proceeds to finance "private sector investment in India".

It said the bonds, which will be sold outside India, will strengthen the country's capital markets and attract greater foreign investment.

Foreign investors have been sceptical of entering India amid uncertainty over policies and a slowdown in growth.

Analysts said the IFC bonds were likely to help attract investors who have been looking to enter India but needed assurance.

"This lends the weight of the credit rating of the World Bank to the potential investment," Vishnu Varathan, a senior economist with Mizuho bank told the BBC.

"By co-working with the World Bank you get some of the credit risks involved with India off the table."
'Attractive proposition'

The IFC move also comes at a time when the Indian currency has seen its value decline sharply.

The rupee fell more than 25% against the US dollar between May and September this year.

Though it has recouped some of those losses over the past weeks, it continues to remain weak - still down nearly 14% from its value in May.

Analysts said that given its weakness, a rupee-linked investment may be even more attractive to foreign players.

"From an investment point of view it is an attractive proposition," said Mr Varathan

"It looks like the rupee is beginning to turn a corner and any rupee denominated investment now is likely to benefit when it matures."

BBC News - IFC to sell rupee-linked bonds to fund India investment
 
India’s stock market hits record high
India’s stock market hit an all-time record high shortly after opening on Friday, driven by investor optimism after a string of positive corporate earnings and broader hopes for a turnround in Asia’s third-largest economy.

In early trading, the benchmark Sensex index of leading shares hit 21,293, exceeding its previous high of 21,206 set during the stock market boom of 2008, providing investors with extra cheer in the final day of trading before India’s annual celebrations for the festival of Diwali on Sunday.

The performance is a striking recovery for the country’s equity market, after a period of economic crisis in which leading companies were buffeted by declines in the rupee after having suffered generally disappointing financial results earlier this year.

Numerous brokerages downgraded their forecasts for the market in the middle of the year, but confidence has gradually returned since Raghuram Rajan became head of the Reserve Bank of India in September.

Investors have also shown optimism about the probability of a decisive outcome in India’s forthcoming national election, which is due to held before May – an event many hope could end the nation’s period of slowing growth and indecisive policymaking, analysts said.

“There is clearly money flowing into the country, and [Raghuram] Rajan’s reputation along with the expectation of a change of government is making people much more optimistic about the future,” said Pradip Shah, chairman of IndAsia Fund Advisors, an investment group.

“This record has been helped by a big positive feeling about the rural sector too. . . while people are hopeful that the broader investment cycle is going to improve, so investors are looking for opportunities across the board.”

India’s $1.1tn stock market has risen by about 14 per cent since the start of September, one of the strongest performers in a broader bounce-back for emerging market indices following the US Federal Reserve’s decision to delay unwinding its ultra-loose monetary policy.

Investors have been cheered by a series of unexpectedly positive earnings from Indian blue chip companies including automaker Maruti Suzuki and IT outsourcer Tata Consultancy Services.

The strong rally has been led by stocks that were hit during the period of currency crisis and temporary emergency financial measures, including India’s banking sector. The Bombay Stock Exchange’s Bankex index has risen by 18 per cent over the past month.

“The rupee factor was weighing a lot on people’s minds, and now the rupee has stabilised it has made it much easier to focus on the positives,” said Rashesh Shah, chief executive of Edelweiss, a Mumbai-based broker.

“There is a lot of buying going on, but selling has pretty much completely stopped, because anyone who wanted to sell did so during the bad times in August. . .[and] many international investors are still under-invested in Indian equities so it could keep going.”

http://www.ft.com/cms/s/0/21266d22-42b1-11e3-9d3c-00144feabdc0.html#axzz2jKCg8oYc
 

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