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Mad in the Studio

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With corporate results, inflation and rate hike making headlines throughout the week, conversation in The Studio too meandered around the same. Here's a sneak peek to the ‘expert' musings on the stock markets and some macro-economic mumbo jumbo.

Amrita: Well, the results so far have been largely okay, of course, with some exceptions here and there. But most companies seem to be going strong on the topline growth. Not bad at all I would say!

Siddharth: But don't forget their fight with rising costs. Companies such as L&T, Godrej Consumer Products have seen higher input costs eating into their profits. Inflation is turning out to be a bigger threat than most would have imagined.

Renu: Oh yes! Hero Honda has raised the wages of its employees, citing higher inflation as the reason! Even the Centre has revised the wages of agricultural labourers under the Mahatma Gandhi National Rural Employment Guarantee Scheme. The wages have been linked to CPI and the revised salaries will benefit 50 million Indians.

Siddharth: Inflation is becoming an increasingly huge worry at this point in time. The RBI will have to do a major part of the fire-fighting in containing this devil. No doubt, it has increased the benchmark interest rates to a two-year high, but I think there's more to come as it has raised the inflation forecast to 7 per cent as against its earlier prediction of 5.5 perc ent.

Renu: Did you know India is the third country after Brazil and China among the BRIC nations to tighten policy this month? Global investors are now expecting Russia to follow suit.

Amrita: That's interesting because India has topped a list of the most “over-regulated countries in the world” in a survey on Asian business and politics, done by Hong Kong-based Political and Economic Risk Consultancy.

Renu: Well, doesn't really matter. I read somewhere that onions, petrol and beer cost the same now! The government better get its act together. After all, in the past 15 years, Indians have voted out at least two national governments after inflation eroded their spending power.

Siddharth: Well, for now, inflation seems to be spooking the investors' community. Both the Sensex and Nifty lost over 3 per cent each this week.

Did you know that the Sensex lost 10.3 per cent in January alone? This is also the highest monthly loss in the past 28 months.

Renu: January must be jinxed! January blues have now become a regular feature. For four years in a row now, it's soaring inflows towards the end of each year first and then a sudden lull before the Budget rally in February. Just that this time around, the Sensex has underperformed the MSCI Emerging Market index. Guess, India will have multiple headwinds to grapple with this time.

Siddharth: Well, at least our Little Master won't be complaining about rising costs. Sachin Tendulkar has signed a couple of endorsement deals, which have roughly earned him Rs 1.5 crore a day so far! With the World Cup coming, at least his stock his soaring. Wish there was a listed derivative instrument on him!

Renu: You bet! I could have traded on his stock on my new iPad! Though its India launch wasn't as huge as expected, the gadget does make me want to show-off, I must confess.

SRIVIDHYA SIVAKUMAR

(This article was published in the Business Line print edition dated January 30, 2011)
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