3 Jan 2012: India opens markets to foreign investors

FTSE 100 5647 Up 133bp
S&P 500 1258 Down 43bp
NIFTY 50 India 4761 Up 268bp

Major Stories

  • India opens Markets to Foreign Investors
    • India has now made it possible for ‘qualified’ foreign investors to directly invest in listed Indian companies
    • This move has come with a view to widen the class of investors and reduce the high volatility in the Indian markets
    • India has recently been experiencing double-figure inflation, and industrial growth has dipped; this move should spur the growth
    • India’s Sensex was one of the world’s worst performing index last year, falling 25%
  • World’s biggest economies face $7.6trillion debt
    • Govt’s of world’s biggest economies are set to face $7.6 trillion of debt which matures in 2012
    • Led by Japan and US at $3tr and $2.8tr, and includes Brazil, India, Russia and China
    • IMF have reduced their growth forecast to 4% from 4.5% taking in view the Eurozone, US’s debt, and China’s real estate market
    • After US’s rating was cut to AA+, and several European nations have been warned of similar downgrades, the refinancing of these $8tr will be hard, as there is stiff competition for buyers
    • Borrowing costs for G-7 nations are expected to increase by as much as 39%; China’s 10-year yields may be flat while India’s might drop from 8.39% to 8%
  • Spain issues fresh warning on deficit size
    • Spain’s estimates of last week on its deficit shooting up to 8% of its GDP may yet be incomplete says the new Govt
    • Some ‘emergency austerity measures’ have just been announced; these are worth Euro 15bn
    • The Euro 20bn cuts planned for this year in Spain include tax raise of 6bn and public spending cuts of 8.9bn. The exact details of these cuts are unclear
    • Such cuts will most definitely lead to a recession in the coming quarters in Spain
  • Manufacturing lifts Risk Assets
    • FTSE All World is up 0.6% helped by a positive session in Asia; the manufacturing data has exceeded expectations, and commodity are on a bullish trend
    • Gold bounces 1.5% to $1590/ounce, while the Dollar index dips 0.5%
    • FTSE 100 is lifted by mining companies to a 1.2% rise, while STOXX is up 0.7%
    • Market bulls seem to indicate that ‘the worst might be over’

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