FY16 Q2 GDP, GVA expected at 7.5%; agri may see slowdown

The second quarter FY16 gross domestic product (GDP) is expected to come in at around 7.5 percent, compared to around 7 percent on a quarter-on-quarter (QoQ) basis. It compares to 8.4 percent same quarter last year.

The range for the GDP figure is anywhere between 7.3 percent and 7.6 percent. The gross value added (GVA) is also expected to come in at around 7.5 percent versus 7.1 percent QoQ and the range is anywhere between 7.3 percent and 7.6 percent as well.

In terms of sectors, agriculture is expected to see a slowdown on a QoQ basis possibly because of the lesser or deficit monsoon. It is hence expected to come in at around 1.1 percent and the range is anywhere between 0.5 percent and 2 percent this time.

Industries, including construction, may come in at around 6.9 percent versus 6.5 percent QoQ. In fact, looking at the index of industrial production (IIP) data this time, it was indicative of the fact that maybe industries would be better for GDP this time.

In terms of a couple of estimates within the industries, manufacturing is expected to lead the way with a growth of over 7 percent. Electricity is also expected to do much better. Even mining is expected to see a pick up at around 5 percent and around 4 percent on a sequential basis.

Services, without construction, is expected to maintain its momentum. So around 9 percent compares to around 8.9 percent QoQ and around 10.4 percent on a YoY basis.

With regard to private final consumption, which will be basically indicative of how consumption patterns are in the urban space, it is expected to scale up by around 40 bps QoQ to 7.8 percent versus 7.4 percent.

Government final consumption is expected to come in at around 8 percent versus a 1.2 percent on a QoQ basis. Gross fixed capital formation, which is indicative of how capex is doing in the economy, is expected to pick up to around 6.9 percent versus 4.9 percent QoQ.

IMF expected to include yuan in SDR currency basket

The International Monetary Fund’s (IMF) Executive Board meets on Monday to discuss a staff proposal to include China’s yuan, or renminbi as it’s also known, in an exclusive group of currencies that make up the basket of the IMF’s Special Drawing Rights (SDR).

The prospects of inclusion, which will represent public acknowledgement of China’s heft in the global economy, look pretty high given that the US, a major investor in the fund, has backed the move, as has the IMF’s Managing Director Christine Lagarde.

Here’s what you need to know about why this change matters to global markets.

So, what exactly is the SDR?

The SDR is a type of international reserve asset that the IMF created in 1969 to buttress the Bretton Woods system of fixed exchange rates that was established at the end of World War II.

Back then, countries could use gold holdings and widely accepted currencies to buy their local currencies overseas in order to maintain their exchange rates. But the supply of gold and the dollar could not keep pace with the growth in world trade or new developments in financial markets. So the IMF created an asset that could be exchanged for freely usable currencies.

Countries are allocated SDRs in proportion to the IMF quotas they pay. They can use SDRs to make payments for future quota increases, to settle debts they owe to the IMF, which uses SDRs as a system of account, or to rebalance their reserves.

The importance of SDRs waned somewhat after the Bretton Woods system collapsed in 1973 and countries let their currencies move more freely in line with market forces. Still, SDRs came in handy during the global financial crisis when they helped supplement member countries’ official reserves. As of September 2015, SDRs worth USD 204.1 billion had been created and allocated to IMF’s members. This number is equivalent to about USD 280 billion.

Currently, the value of an SDR is based on a basket of four currencies: the euro, Japanese yen, pound sterling, and the dollar. At Monday’s meeting, a decision will be made on whether the yuan should be added to this group.

It’s important to note that the SDR is not a currency nor a claim on the IMF. Instead, holders of SDRs can exchange them for currencies that make up the basket, through deals with other SDR holders.

Why is the yuan’s inclusion a big deal?

For one, a potential inclusion for the yuan would be the biggest change to the basket since 1999, when the euro was created, said Raymond Yeung, a senior economist at ANZ. The yuan would officially be recognized as a reserve currency, in a reflection of the changing dynamic of the world’s economy. Central banks use their reserves of foreign currencies to buy their own currency or pay international debts. The inclusion of the yuan would mean central banks who tend to hold their foreign exchange reserves in dollars or euros could have an alternative. For many emerging markets, trade linkages with China are already strong and now their reserves could reflect this relationship.

Finally, after nearly four decades of reforms, the Chinese currency would be considered to meet the criteria of being “freely usable,” passing the IMF’s test on convertibility, Yeung said. China’s taking steps towards a more open, market-oriented economy and policymakers have cited the inclusion in the SDR basket as a crucial aspect of this metamorphosis.

Will there be a surge in demand for the yuan?

Not immediately, at least. Even if the IMF’s Executive Board gives the go-ahead on Monday, the yuan won’t be added to the SDR basket until September 2016. So that leaves IMF members with enough time to respond to the change in the basket’s composition.

Claudio Piron and Adarsh Sinha at Bank of America Merrill Lynch estimate demand for the yuan created by IMF members rearranging their SDRs to be worth USD 35 billion, not a particularly large number for an economy of China’s size.

But the long-term implications could be more profound.

Estimates by Piron and Sinha suggest central banks already hold around USD 80 billion in yuan reserves. Assuming the currency eventually reaches a similar share of international reserves as the pound and the yen, the additional demand could be about USD 370 billion according to their calculations.

A note of caution, however. This magnitude of change in global reserves takes at least three years, and usually longer, the BoAML analysts say. This gradual pace of inflows related to the yuan’s rise as a reserve currency will be more than matched by the liberalization of outflows.

Still, as the yuan gains in importance as a reserve currency, China’s bond market could become more international. According to Piron and Sinha, China’s bond market is the world’s third largest but foreign ownership is a measly 3 percent. As more countries start parking their reserves in yuan, the number should climb as risk-averse central banks typically favor holding government bonds.

This number could climb to 20 percent of outstanding bonds, looking at the average historical record of neighboring Asian bond markets, they say.

Hold on, what about reforms?

Chinese authorities tend to intervene in their financial markets just a wee bit more than peers whose currencies tend to enjoy reserve status. There are also controls on how much money Chinese investors can send out of the country and how much domestic assets overseas investors can buy.

Analysts and economists expect some steps to address these issues but the steps are understandably (and wisely) expected to be gradual. Yeung at ANZ believes China will have to meet certain requirements before September next year. The yuan is currently traded within a 3 percent daily allowable band with the euro, yen and other major currencies.

In other words, the yuan can rise or fall 3 percent from a daily reference rate set by the People’s Bank of China (PBOC). The PBoC may still need to widen the trading band of the yuan with the dollar from 2 percent either side to 3 percent allowing a more flexible exchange rate regime, Yeung said.

Piron and Sinha believe that a SDR inclusion implies a commitment by China to continue down the path of gradual capital account liberalization and reduced intervention in currency markets.

“Moreover, the steady move higher in the USD/CNY fixing suggests the PBoC would allow the fixing to be more sensitive to broader US dollar trends than previously, making it reflect market conditions better,” they say.

All of this will drive mkts in ‘most important’ week of yr

Markets could be in for macro overload in the week ahead with central bankers, next Friday’s jobs report and OPEC dominating the headlines.

“My guess is most of the action will be a tail wind for stocks,” said Jack Ablin, CIO of BMO Private Bank.

Central bankers in the US and Europe are in high gear in the coming week, with the European Central Bank expected to expand its easing program and cut its already negative deposit rate. That coincides with a week that could bring the most important US jobs report and other data the Fed will consider when it meets December 15 and 16.

“I think people should be starting to shift their focus away from the December meeting because they’re going to raise. They should be asking themselves if the economic data is good enough to augur a multi-rate hike cycle, rather than just a one and done,” said Peter Boockvar, chief market analyst at Lindsey Group.

Next Friday’s November employment report is expected to show 200,000 nonfarm payrolls and an unchanged unemployment rate of 5 percent, after October’s surprisingly strong 271,000 jobs. Wages are projected to rise 0.2 percent, after October’s unexpected 0.4 percent increase.

“The shift is really back to the economic data and away from all the earnings we’ve seen. We of course get ‘Class A’ type data. It’s not just the jobs report, but the ISM manufacturing number and vehicle sales,” said Boockvar.

The Thanksgiving week is typically positive for stocks, but the market ended it mixed and flattish. The S&P 500 closed up 0.04 percent for the week to 2,090, while the Dow fell 0.14 percent to 17,798.

In the coming week, there are also several important Fed appearances, including two by Chair Janet Yellen. She speaks to the Economic Club of Washington on Wednesday and testifies before the congressional Joint Economic Committee on Thursday, giving her opportunities to reinforce the Fed’s message on the potential for a December rate increase.

“She just wants to firmly set expectations. Assuming no disasters, they’ll raise rates. She has to stay on message. When you’re 2 ½ weeks from your first rate hike in nine years, you have to start steering people into the same camp,” Boockvar said.

Barclays chief US economist, Michael Gapen, said the jobs report would have to be shockingly weak for the Fed to hold off on a rate rise. “I doubt we’re going to see a number that was as strong as last month, but you need a number like 50,000 or 75,000 for the Fed not to go in December. There’s a low bar for this report to clear,” said Gapen.

As for the oil market, the Organization of the Petroleum Exporting Countries is not expected to change its stance on letting the market set prices when it meets next Friday. A year ago, OPEC said it would not cut back on output unless other higher-cost producers did the same and instead, it would let the market set the price. The market did drive the price, and oil is now trading in the low USD 40s a barrel.

In the past week, oil prices rose as the market focused on geopolitical concerns, with the downing of a Russian jet by Turkey. But by Friday, most of that premium was out of the price, as traders once more focused on high supplies and still-growing inventories.

“I think the members that matter, the Saudis and close partners are simply maintaining output and letting the rebalancing play out. It hasn’t played out as they intended but they’re locked into it now,” said Greg Priddy, director of global energy and natural resources at the Eurasia Group.

Analysts say OPEC could manage to talk down prices even further, depending on the rhetoric from its meeting, where some members like Venezuela will continue pushing for production cuts and other members will resist.

“I think we’re going to have inventories accumulating through 2016,” said Priddy. “We’re not going to have inventory drawdowns until 2017, and that’s because Iran is coming on … but it will be accumulating at a much lower pace as we get into the second half of the year.”

Other important events in the coming week include the IMF’s decision Monday on China’s currency. It is expected to vote to include the yuan in the fund’s Special Drawing Rights basket which, while largely symbolic, would elevate the currency and China’s influence in the global economy.

Analysts don’t expect the move to have a big impact immediately, but ultimately it could be a factor in opening China’s capital markets.

The dollar will also be a big focus in the week ahead, as the diverging paths of the Federal Reserve and ECB and other central banks has been driving it higher. The euro in the past week fell below USD 1.06 and the dollar index rose above 100.

“Next week could be one of the most important weeks of the year,” said Marc Chandler, head of foreign exchange strategy at Brown Brothers Harriman.

Some strategists expect the jobs number to be the big mover for currencies, but Chandler said there’s scope for the ECB to surprise. “More often than not, [Mario] Draghi has surprised the markets with his dovishness,” he said.

The ECB could push out the timetable for its easing program into 2017, and expand the type and quantity of securities it is buying.

Ablin said investors are also awaiting any data that reveal how holiday shopping is going over the weekend and on Cyber Monday.

“We’re all going to wait on the retail data. How meaningful it is, I don’t know. Are the brick-and-mortar retailers going to get hammered or are investors overly concerned?” he said.

Don’t see mkt going anywhere now; like Bharat Forge: Dipen

Indian investors understand that a ground level change is happening in this country, which may or may not get necessarily reflected in IIP or other macros, says Dipen Sheth of HDFC Securities. This is a fundamental, structural, basic change that is happening in this country, he says.

But the world is slowing down and the US Federal Reserve is perhaps going to hike in December, so the markets will perhaps go nowhere for a while and that is okay, he told CNBC-TV18.

He believes the public sector banks (PSU) can look like a good turnaround story in 4-5 years.

Sonia: It has been a couple of good days for the market but that is because we have seen a lot of buying coming from the domestic institutions. Do you think that positive sentiment will continue even if we don’t get any major positive from the parliament session?

A: It is not just a two-day phenomenon. Let us get things in a better perspective here. So if you go back all the way to 6-7 years ago till FY09, this is probably the first year that foreign institutional investors (FIIs) have pulled out a significant amount of money on a net basis from our markets. The last number known to me is little more than Rs 17,000 crore and the market is down some 7 percent in the trailing year or year-to-date (YTD) or something. The domestic guys have put in 3.5 times plus this amount, Rs 60,000 crore again an unprecedented number and you are excited with what has happened in the last two days.

So let us get a fix on this phenomenon. It is very clear, Indian investors are voting with their feet, they understand that there is a ground level change happening in this country. It is not necessarily reflected in the index of industrial production (IIP) and business confidence and stuff like that right now, it will reflect over a period of time. We are taking all the right medicine.

Again if I get back to medical parlance, it is only a matter of time before the patient begins to do much better. People are figuring out. This is a fundamental, structural basic change, which is happening in the country. I am completely hopeful that we are going to become unrecognisably different in a decade from now but then we are creatures of the market and the world is slowing down and the Fed is going to hike rates in December is the consensus view, so the markets will go nowhere for a while and I am okay with that. It gives me a lot of time to study and figure out what is worth buying.

Latha: There is a bunch of good news coming for public sector banks. They were surprisingly the supporters of the market in the previous contract. As an index, they rose about 2 percent where the Nifty itself was down about minus 2.8 or thereabouts. So are you beginning to nibble at that sector?

A: Absolutely. So public sector banks have had nothing going for them for quite some time and I don’t need to tell you about their stressed asset position, about their tottering capital adequacy and about the fact that they are generally perceived to be inferior cousins of their private sector pack and all with good reasons.

When the tide changes, you need to figure out how and why the tide is changing and the tide is changing simply because of the way the government is working and it will change over a period of time. There is a lot more work to be done. So I am not going to go out and say, each and every public sector bank is worth buying today. However, I will soon expect to see the bankruptcy code out there, a proper bankruptcy bill or a law in force, before that I will expect to see that some of the errant borrowers are going to be chased by the law in a way that helps liquidate their assets and some of that is playing out.

Even the private sector banks are forcing some of the large corporates to engage in asset sales and so on. I think a couple of large public sector banks have seen change in leadership. I must say accompanied by bad news internally, so you look at what is happening with Bank of Baroda. You have a shining star from the private sector environment taking it over and at the same time a little bit of a scam breaks out in the daily geography.

So I think we are in a process of churn and evolution. In two-five years from now, maybe we will have a lot more regard and respect for the public sector banks. At that point of time, would you want to be in that space?

Sale of road assets to generate Rs 200-220cr: NCC

Infra company NCC  will be selling two of its road projects in order to raise money. The company is putting its Western UP Tollway and Bangalore Elevated Tollway on the block. The company hopes to complete the stake sale by FY16-end.

Speaking to CNBC-TV18, Executive VP-Finance YD Murthy, says the company will earn Rs 200-220 crore from the asset sale.

Furthermore, Murthy says the proceeds will be used to fund working capital requirement.

NCC stock price

On November 27, 2015, at 13:26 hrs NCC was quoting at Rs 77.75, down Rs 0.55, or 0.7 percent. The 52-week high of the share was Rs 118.20 and the 52-week low was Rs 53.45.

The company’s trailing 12-month (TTM) EPS was at Rs 3.40 per share as per the quarter ended September 2015. The stock’s price-to-earnings (P/E) ratio was 22.87. The latest book value of the company is Rs 57.64 per share. At current value, the price-to-book value of the company is 1.35.

Why markets see next week as among most important of year

Even in a Thanksgiving holiday lull, financial markets are gearing up for a week of drama.

“Next week could be one of the most important weeks of the whole year,” said Marc Chandler, head of foreign exchange strategy at Brown Brothers Harriman. US markets are closed for the Thanksgiving holiday Thursday, and stocks trade in a shortened session Friday. So by Wednesday the market focus was already on the coming week, and for investors worldwide, it’s a busy one.

First on Monday, the IMF is expected to grant China’s yuan reserve currency status. The yuan would be included in the fund’s Special Drawing Rights basket which, while largely symbolic, would elevate the currency and China’s influence in the global economy.

Next Friday’s US November jobs report is the highlight of the week because it is the last big piece of data for the Fed to mull before its rate hike meeting Dec. 15 and 16. But then there’s the European Central Bank’s meeting next Thursday, where it is expected to expand its easing program and the diverging central bank policies should continue to play out in markets.

Fed Chair Janet Yellen speaks not once but twice next week, and she is expected to hammer home the US central bank’s message that it wants to raise rates in mid-December barring any unexpected economic blowup. Yellen will be testifying before the Joint Economic Council on Thursday, but she speaks before the Economic Club of Washington on Wednesday at 12:35 p.m. EST. There are more than a half-dozen other Fed speakers, and an open central bank meeting Monday on how the Fed operates under new Dodd-Frank rules governing its emergency powers.

Oil will also be big in the coming week, with OPEC’s meeting in Vienna next Friday. The Organization of the Petroleum Exporting Countries is not expected to take any action that would change its year-old strategy to let the market set prices but the meeting may be loud with rhetoric from members that want the policy to change.

Already outspoken Venezuela tops the list, but Iran and others may also want the cartel to cut some production. Iran would want to clear the way for its own oil to come back on the market, once sanctions are lifted.

The currency market Wednesday was already previewing next week’s central bank activity. News reports of a more aggressive ECB sent the euro lower, to the USD 1.05 range and the dollar index moved above 100 before settling back below it. ECB President Mario Draghi speaks after the meeting Thursday, but he also travels to New York where he will be speaking to the Economic Club of New York on Friday.

The European Central Bank is expected to possibly add to its quantitative easing program and extend it to different types of debt. The ECB could also cut its already negative deposit rate by another 10 basis points.

“They are buying 60 billion euros [USD 64 billion] worth a month, and they possibly get to 80 or 90 billion euros,” said Chandler. As the euro fell Wednesday, the yield gap between the two-year German bund and US Treasury was the widest in nine years. The two-year bund yield fell to negative 0.42, reaching the widest spread with the US two year in nine years.

The euro crossed back above USD 1.06 Wednesday after dipping below it, and analysts say it’s possible the common currency could move lower again after the ECB meeting. “The market’s priced in a lot so it’s going to be tough for Draghi to leapfrog expectations,” said Alan Ruskin, head of G-10 currency strategy at Deutsche Bank.

Ruskin said the currency market will also be waiting for the November jobs report.

“Most people view the Fed tightening in December as a fait accompli unless the jobs number is very weak,” he said.

He said a level above 200,000 could not only signal a Fed rate rise but would be strong enough to bring forward expectations for hiking in 2016.

“There’s a big level (in the euro) at 104.60, which is a cycle low. Just the ECB alone is going to have a hard time taking out that kind of level. I think we’re going to need strong US jobs data to propel it to new levels,” said Ruskin.

The IMF move on the yuan has been much anticipated, but Chandler said what’s not known is the percent it will be given in the basket. Currently it was expected at about 15 percent but that could be reduced. “Chinese interest rates are higher than US interest rates. The bigger the weight the more emerging markets have to pay for debt,” he said. “The SDR is a function of the country and the interest rate.”

Chandler said there’s an expectation the IMF move would boost private-sector investment, as investors follow central banks into the currency but he doubts there will be much of that initially

 

Like Bank Nifty; mkt has strong support at 7700: PhillipCap

Vineet Bhatnagar of PhillipCapital says the 50-share index Nifty is currently in a strong support range of 7700-7730 and has a resistance at 7930 levels.

Speaking to CNBC-TV18, Bhatnagar says the market has selective pockets to invest into and the Bank Nifty is the one of the most preferable space to allocate funds into.

On specific stocks, Bhatnagar advises investors to buy IndusInd Bank  , HDFC Bank   among private banks; TCS  and Infosys  among tech stocks, and Maruti Suzuki  in the auto sector.

Sonia: It has been a lacklustre November series but what is the expectation for December?

A: I think December perhaps could be a rub off from where we are in November although my sense is that if the support that we have been looking at does turn out to be a strong support which is 7,700 to 7,730 and if there is sharp bounce back although the market is trading about 100-150 Nifty points above it but if it is a sharp bounce back and if the market starts trading above 7,950 by the next week or so then there could be some enthusiasm that one could see before we go in for Christmas vacation but otherwise it could linger around here.

Latha: Is it going to be a tame finish to this one? No fireworks today between 2:30pm and 3:30pm. It should end between 7,820 and 7,880?

A: Looking at the amount of rollover that we are seeing as of this morning, actually I am expecting some kind of a firework to happen. So there are two ways to look at it. One, based on the below average rollover in the single stock futures. The square off may happen quite smoothly throughout the day which could be supportive of because of the way the market has opened. Alternatively if it does not happen then it is always concentrated in the last half-an-hour or so in which case not only the Nifty components but even some of the second line names could come under pressure.

Sonia: What is the most prudent strategy that one can executive in the December series?

A: I think the prudent strategy to execute in December series will still be a bull spread primarily because we are looking at 7,730 having not broken this entire November month. So do a call spread and that will be a good strategy to do at this point in time.

Latha: What is the sense you are getting in terms of the stocks that may pull up the Nifty today?

A: Bank Nifty is supportive. It has been supportive throughout November; in fact that has been one big reason why Nifty has not given way the way some of the pessimists were looking at – that should continue to be a situation even now. There are pockets of strength within the Bank Nifty. In the private space we are hopeful of IndusInd Bank, HDFC Bank and Kotak Mahindra Bank  providing the support. On the public sector undertaking (PSU) side State Bank of India  (SBI), Bank of Baroda   continues to be the anchors.

Good response to Indian made brands in Bihar:Globus Spirits

Alcoholic beverage maker Globus Spirits  sees the second half of the current financial year being slightly better than the first half. In an interview with CNBC-TV18, Shekhar Swarup, Executive Director, Globus Spirits says it plans to increase capacity by 70 percent, and will commission new plants in the first half of FY17. The company expects new plants in the eastern part of the country to drive earnings growth, says Swarup.

The Indian Made Indian Liquor (IMIL) growth during this half of the year will be similar to that see during the first half, and the brands have got a good response in Bihar, Swarup says.

Latha: How is business looking like? Do you expect that the second half is going to yield much better in terms of sales and profits for you?

A: Second half of the year for Globus Spirits has typically been about 60 percent of the entire year for us compared to the first half gone by, it will be slightly better. Be that as it may, I think the story in Globus is more on the expansion that we are conducting in East India where we are setting up two distilleries and growing an installed capacity base by over 70 percent. One distillery is coming up in West Bengal and the other one in Bihar. Both of them are expected to be commissioned within the first half of next year and high capacity utilisations in second half of next year.

This is on the back of the increased alcohol demand in the country considering the alcohol mandate that has been implemented by the government of India. The demand of alcohol has grown by over Rs 200 crore litters per year and the industry now is trying to gear up its capacities.

Latha: Revenues apart, the profit in the first quarter was more sedate, it was only up 1.6 percent, 1.25 crore, will you all do much better in terms of profits for the current year?

A: As of now, the second half like I mentioned will be a ort of a straight line of the first half. The numbers will be up more 60 percent of full year will be the second half. The great increase in earnings is going to come from the new facilities that are being set up in east India.

Sonia: In the quarter gone by, your Indian Made Indian Liquor (IMIL) brands which is Nimboo, Narangi, etc, they did very well with 54 percent year-on-year (Y-o-Y) growth to 2.9 million cases in the quarter gone by, what is the expectation for Q3 and Q4 from the IMIL category?

A: IMIL is the heart of Globus’ business. We operate our distilleries in Rajasthan, Haryana and we supply IMIL in those states. Haryana has recovered from a bad period in the market where the industry had slowed down. We have seen that the growth has come back in Haryana. Globus’ brands will benefit from that greatly in the first half. Rajasthan on the other hand has also seen great growth. Globus’ brands are eyeing 30 percent market share in the state of Rajasthan. We do believe this growth that we saw in first half will be sustained into the second half and of course next year as well. Since this is a growth of our brands and market share that we capture.

Sonia: So you launched the IMIL brands in Bihar in January this year. You sold about half a million cases in the quarter gone by, which is almost 20 percent of your total. So Bihar is also picking up for you. What kind of a contribution do you expect from Bihar in the quarters to come, what could the growth be?

A: Bihar as of now is a franchise play for us where we have franchised our brands to a franchise in the state of Bihar, in district of Patna. So as of now it is going to remain a franchise play in terms of profitability that is limited. The reason we have started doing this is is to see our brands into the district and of course as a distillery, it is operational early next year, the margins will increase because we will pick up manufacturing ourselves.

Latha: Give us an idea of how your earnings growth will look like? Last year you did about Rs 2, this year already in the first half you have done almost Rs 1.60 paise, so are you likely to double your earnings this year itself and what will it be in FY17 more importantly?

A: Like I mentioned, this year will be in a sense of straight line of what is of the first half that has gone by with slightly higher revenues in second half. When it comes to next year, we are adding over 70 percent capacity with the realisations being much better in East India compared to what we had in North India.

Therefore, I do believe that despite adding 70-75 percent capacity, our earnings will be higher than the growth in revenue or growth in earnings will be higher than growth in revenue.

Globus Spirits stock price

On November 26, 2015, at 13:21 hrs Globus Spirits was quoting at Rs 90.70, up Rs 12.80, or 16.43 percent. The 52-week high of the share was Rs 91.05 and the 52-week low was Rs 39.25.

The company’s trailing 12-month (TTM) EPS was at Rs 2.92 per share as per the quarter ended September 2015. The stock’s price-to-earnings (P/E) ratio was 31.06. The latest book value of the company is Rs 123.29 per share. At current value, the price-to-book value of the company is 0.74.

Govt committed to reforms, growth, job agenda: Deutsche Bk

India is one of the most interesting markets globally when it comes to Fortune 500, not just for portfolio capital but for direct investment as well, says Gunit Chadha of Deutsche Bank.

Global growth has certainly provided India with enough headwinds, he says. Besides, the government is committed through the reform agenda, development agenda, growth agenda and job agenda, he told CNBC-TV18.

According to him, India stands out among the emerging markets where the best is still ahead of the curve and probably not too far away.

Q: Are you seeing any greenshoots in the economy?

A: Greenshoots are happening but they are happening still more on the urban consumption side rather than on the infrastructure and capex side which the government must lead. I think even if it is a fiscal stretch, out from the 3.8-3.9 percent into the 4.3-4.4 percent range.

Q: You mentioned that there is a slowdown in some economies on a global level. Could be slightly unrealistic to say this but is India at least in a decent position, in a well enough position to be able to grab the opportunity that volatile economies like Brazil, Russia, China for instance may possess?

A: China is a very large economy. China is a USD 11 trillion economy, still growing in the 6-7 percent corridor. So, the absolute amount of incremental GDP which China will produce devolves everything else. I think strongly growing China is good for the world, leave alone it being good for China and good for India as well. However, keeping that on the side, I think you are absolutely right. India is one of the most interesting markets globally when it comes to Fortune 500, not just for portfolio capital but for direct investment as well and we are seeing the results of that happening.

We don’t have USD 2 trillion market which is growing at 7 percent north and the government is dreaming of actually getting into the 8-9 percent trajectory. The government is committed through the reform agenda, development agenda, growth agenda, job agenda. I think it has certainly got headwinds because of global growth, but India does stand out amongst the emerging markets you mentioned as a country where the best is still ahead of the curve and probably not too far away.

ECB announces Christmas break for QE

The European Central Bank (ECB) said on Wednesday it would temporarily pause its asset purchase program between December 22 and January 1, resuming the purchases on January 4.

The move is “in anticipation of lower market liquidity during this period and in order to reduce possible market distortions”.

The bank, which controls monetary policy across the 19 countries that use the euro, said purchases between November 27 and December 21 would be somewhat frontloaded.This is “to take advantage of the relatively better market conditions expected during the early part of the month.”

ECB President Mario Draghi has hinted that that the bank could look to ramp up or extend its 1 trillion euro (USD 1.1 trillion) quantitative easing (QE) program.

At the moment, the ECB purchases 60 billion euros worth of assets each month and has committed to doing so until at least September 2016.

Its next monetary policy meeting and subsequent media conference with Draghi will take place on December 3 in Frankfurt.

An announcement on expanded asset purchases is hotly anticipated and may roil markets, particularly given that the US Federal Reserve is seen making an historic interest rate rise in the same month.

Some ECB policymakers are seen opposing the expansion, however, with Sabine Lautenschlaeger, a German member of the bank’s six-person executive board, publicly against such a move.

“I don’t see any reason for further monetary policy measures, especially not for an extension of the (asset) purchase program,” she said on Monday in Munich, according to Reuters.

Carsten Brzeski, chief economist at ING-DiBa, sees Draghi and the ECB doves winning out.

“While stronger-than-expected confidence indicators could motivate some ECB members to pitch the old Prince song ‘When doves cry’ and argue against new ECB action, Draghi’s determination at the October meeting combined with continued underlying economic weaknesses and the absence of any inflationary pressure should be decisive in launching QE2,” he said in a research note on Tuesday.