Thought for the day
"Power is given only to those who dare to lower themselves and pick it up. Only one thing matters, one thing; to be able to dare!"
—Fyodor Dostoevsky (Russian, 1821-1881)
Word for the day
Busticate (v)
To break into pieces.
Malice towards none
#NareshAgarwal
#NarayanRane
It's beginning of an End. A terrible End.
Bhasmasur after all is not a mythical character.
The eccentricity of North Korean dictator Kim Jong Un highlights
the threat which keeps the humanity endangered.
Despite NPT, nuclear disarmament treaty and other mutual and
multilateral understandings in post cold war era, there is a huge pile of
active and very potent nuclear weapons still available in the world. This stock
is sufficient to destroy the entire global population many times over.
The "deterrent purpose" argument is totally unpalatable.
If that was the only objective, 100-200 weapons would have been sufficient. You
do not need 10000 nuclear weapons to deter the enemy, howsoever powerful it may
be.
The point to ponder is whether such a massive human effort will go
totally waste or the Satan will put it to use some day!
What is bothering Indian markets - 5
After enjoying falling oil prices for three consecutive years,
India is experiencing reversal in oil trade gains.
In the last three fiscal years, India experienced a positive terms
of trade shock. But in the first three quarters of 2017-18, oil prices have
been about 16 percent greater in dollar terms than in the previous year. It is
estimated that a $10 per barrel increase in the price of oil reduces growth by
0.2-0.3 percentage points, increases WPI inflation by about 1.7% and worsens
the CAD by about $9-10 billion dollars.
The market opinion on oil price trajectory going forward is
vertically divided.
One section believes that OPEC and Russia should continue to
control production supporting higher prices for global crude. A large number of
hedge funds and derivative traders seems to actually positioned according to
this view.
The other view, which has gained prominence in recent weeks is
that rise in US production of shale oil, adequate inventories and slow demand
growth should render the OPEC cuts ineffective and global crude oil prices
should correct back to sub $50/bbl level.
Whatever be the future outcome, the Indian markets seem worried
about the prospects of higher oil prices sustaining through 2019. Given the
empirical experience, the collective wisdom of market seems to be pricing in a
fiscal slippage due to oil subsidies staging a comeback in election year
(2019).
After improving for two years (mainly on low oil prices), the
trade deficit of India has started worsening again.
The current account deficit has also widened in 2017-18 and is
expected to average about 2% percent of GDP for the year as a whole. The
current account deficit can be split into a manufacturing trade deficit, an oil
and gold deficit, a services deficit, and a remittances deficit. In the first
half of 2017-18, the oil and gold balance has improved (smaller deficit of $47
billion) but this has been offset by a higher trade deficit ($18 billion) and a
reduced services surplus ($37 billion), the latter two reflecting a
deterioration in the economy’s competitiveness.
Moreover, given the low growth base of oil and gold deficit, a
likely pick up there could worsen the picture further.
Moreover, given the low growth base of oil and gold deficit, a
likely pick up there could worsen the picture further.
The worst part remains that despite all government effort to improve
trade balance, like increase in import duties and import substitution efforts
through programs like Make in India, may have limited impact only due mainly to
lack of resource availability & capability.
Given that the foreign investment flows into Indian equities and
bonds have slowed down in recent time, funding of current account deficit could
be a challenging task; though no balance of payment problem is foreseen as yet.
Nonetheless, like other deficit currencies like Indonesian Rupiah
and Philippine Peso, Indian Rupees is also seen vulnerable to external shocks, because
they need funding for their current-account deficits, and the environment is
not supportive for portfolio flows.
Any currency to the much talked about trade war may weaken INR
further, given its vulnerability to external shocks.
No wonders, INR has been one of the worst performing emerging
currencies in last one month.
The worst part remains that despite all government effort to improve
trade balance, like increase in import duties and import substitution efforts
through programs like Make in India, may have limited impact only due mainly to
lack of resource availability & capability.
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