RBI hiked interest rates by 25bps for the 10th time in 16 months as it resists handling the mounting inflation. The RBI has raised the short-term lending (repo) rate by 25 basis points to 7.50 per cent and the short-term borrowing (reverse repo) rate by a similar margin to 6.5 per cent.
The purpose of hiking interest rates is to reduce the money supply to the public. Higher rates of interest implies that borrowing will not be easy for those who wish to invest in new industries, expand existing infrastructure, purchase houses or vehicles, etc. This has a negative tendency of slowing down growth
Like the markets reacted very negatively to this act and this latest hike will further dampen the auto sector because industry is already under pressure and this fresh step will further worsen the condition, followed by high inflation and high fuel prices.
Other factor which affected world markets and currencies was rate hike by China and Australia is on the cards which resulted in weakening of Euro and Dollar.
Finally coming back to Indian Scenario, Dalal-Street experts see Sensex sinking to 15k by December 2011. Investors worldwide are more risk-exposed because of the European crisis and this will result in the market trending lower over a period of time. The majority of the factors affecting inflation are given out from a gush in prices of imports and exports which RBI is not able to handle ad so it should wait and watch more local and global data before taking further actions.

What’s on economy these days…???

Inflation petrol prices all time high and European zone debt crisis..Most importantly RBI hiking rates again and again and because of that we see share markets coming down and almost all the industries in the country are getting affected.

First of all if we’l talk about European sovereign debt crisis or Greek Debt Crisis particularly.

In 2010 the debt crisis was mostly centered on events in Greece followed by Ireland and Portugal the most..they have 'credibility problem', because they lack the ability to repay adequately due to their low growth rate, high deficit, less investments etc. On 2 May 2010, the Eurozone countries and the International Monetary Fund agreed to a €110 billion loan for Greece, conditional on the implementation of harsh Greek austerity measures. The Greek bail-out was followed by a €85 billion rescue package for Ireland in November, and a €78 billion bail-out for Portugal in May 2011.

If we see the present situation Greece’s 18-month sovereign debt crisis brought the government to the brink of collapse.

Along with that the fall of the Irish and Portuguese governments in recent months has driven the countries into bankruptcy. Despite the sharpening sense of urgency, European Union governments, the Europe Central Bank, and the European Commission remained gridlocked over how to respond to the debt emergency, which pushed Greece closer to sovereign default and Europe towards a fresh banking crisis. These borrowing costs soared to record levels as investors took fright which resulted in suffering for global stock markets

Albeit Germany has back tracked from this Greece crucial stage while promising a debt compromise plan but Till date European Central Bank, IMF, Bank of England are trying to take out possible measures for dealing with this problems. e.g

The 17 Eurozone finance ministers has structured a new three-year bailout for Greece in Luxemborg in a way that would persuade European banks, pension funds and other private creditors to roll over the country's inflated debt releasing bailout package of 110 billion Euros (159 billion dollars).

All these steps are taken with a hope that it will solve the Greece debt soon and thereby improving their economy.

Hey friends…

Few days back we got to know about the 9^th rise in the Repo and Reverse rate by Reserve Bank of India (RBI). Generally the people were very agitated after this act of raising rates, also the share markets showed a very negative impact with a downfall of 460 points that day.

RBI is a very proactive institution of India which focuses more on growth of the country.

Now if we consider the present inflation scenario, ultimately its affecting the growth factor.

Inflation is reached new levels (8-9%) which is at the end hampering the development.

Inflation can be due to many reasons such as currency difference, supply-demand mismatch. In India the prime reason is supply-demand mismatch. Due to increasing population demand always rises and due to some or the other reason supply is always constrained i.e. Due to less supply, more demand the prices of a commodity increases thereby causing inflation.

So in such kind of cases the inside situation is the producer knows that the consumer has money and the consumer needs the product no matter how costly it is so taking the advantage of circumstances they increase the prices which leads to price rise and hence inflation.

RBI in order to control prices increases the repo rate i.e. the rate at which RBI lends money to banks.

When banks will get money at a higher rate from RBI then they will lend it an advanced rate topeople which will ultimately increase their EMI or take their liquidity which will lower the prices. As in when consumers will have less money, demand of a commodity goes down which will eventually control the prices.

e.g. a person has surplus money ,he is getting loans at a very low rate from bank so he’ll go and purchase say three flats because he’s getting money very comfortably but if he won’t get loan so easily and when he’ll get that too at a very high rate so he’ll buy only one flat which reduces the demand for flats and thereby dwindling the costs.

Through this post I just wanted to convey that all we do is blaming RBI and other policy makers but without knowing the inside story.

RBI is taking good measures and I don’t comment on politicians but personally RBI is doing well..

Thanks

Take care..:)

Hello friends..hope you are njoyng..:)
In today’s scenario both India and China are amongst the top contenders of global economy and are the world's most assorted nations. Still, if we try to analyze the different economic and market vogues , we can make a contrast between Indian and Chinese economy.
If we see past few years,Trade between India and China stood at $42.4 billion in 2009-10
Of this, import to India was of $30.8 billion, while the country exported goods worth $11.6 billion to China.
China is still a much bigger economy than India, even though the two countries have roughly similar numbers of people
According to a report on Asia’s middle classes this year, India still has about 650 million people living on under $2 dollars a day measured in 2005 while China now has less than 100 million living on that amount
Some important facts and figures related to India and China are as follows:-

Facts
1.GDP

India $1.3123 trillion

China4909.28 billion

2.GDP growth

India 8.90%

China 9.60%
3.Per capital GDP

India $1124

China $7,518
4.Inflation

India 7.48 %

China 5.1%
5.Labor Force

India 467 million

China 813.5 million
6.Unemployment

India 9.4 %

China 4.20 %
7.FDI

India $12.40

China $9.7 billion

Foreign Direct Investment
8.Gold Reserves

India 15%

China 11%
9.Foreign Exchange Reserves

India $2.41 billion

China $2.65 trillion
10.World Prosperity Index

India 88Th Position

China 58th Position

Other add-ons of China
1. Fastest speed train.
2. World manufacturing hub.
3. Own plants for making air planes.
4. Own arms and weapons manufacturing unit.
5. Well developed Telecom companies.
6. Top performer in Sports at world events.
Indians buy aeroplanes , weapons from foreign companies ,our chemical industry is heavily dependent on Chinese and Japanese imports.In matter of sports we are never on top 5 at world events e.g. India hosted the Commonwealth Games in October, China hosted the Asian Games in November but the news coverage of the Indian Games was rife with words like “delays,” “corruption,” “shambles” while China, it appeared, had lovely, shiny venues ready to go about five months ahead of the event.
One of the biggest firm Reliance just gave billion of dollor worth order to china for its power plant but not to BHEL, its we who are making other countries stronger by not working ourselves self dependent.
In order to be considered a developed Country, India needs to focus on the common man. On the prosperity of the general public and on the living conditions that its residents have to face.

some other parts that can help
1. Improve governance and young people in politics
2. Raise educational achievement and increase quality and quantity of universities
3. Control inflation along with introduce a credible fiscal policy
4. Liberalize financial markets and monitoring on foreign investments by bilateral trade
5. Increase agricultural productivity
6. Improve infrastructure and improve environmental quality.

India is well on the way to becoming an Economic Super Power by 2020. India will have a large enough economy forecast at around $ 10.8 Trillion. By 2020 India would be well considered a major global economic player and should have a well developed Infrastructure and production capacity with a much larger skilled resource pool with a comparatively young (median age).

Shift in Infosys management panel…

Infosys

Infosys was founded on 2 July 1981 by seven entrepreneurs, N. R. Narayana Murthy, Nandan Nilekani Krish Gopalakrishnan, S.D. Shibulal , K Dinesh with the present value of $6 billion.

Narayana Murthy who was the founder of company,needs no introduction, he started the company by borrowing Rs.10,000 from wife Sudha Murthy will retire in in august 2011

Nandan Nilekani was of the originator of Infosys became the CEO of Infosys in March 2002, taking over from Murthy. Nilekani served as CEO of the company from March 2002 to April 2007, when he relinquished his position to his colleague Krish Gopalakrishnan, becoming Co-Chairman.He left Infosys on 9 July 2009 to serve as the chairman of the Unique Identification Authority of India.

Krish Gopalakrishnan another founder Infosys Technologies Limited. The initial years of his responsibility at Infosys included management of design, development, implementation and support of information systems for clients in the consumer products industry. But after he took over as CEO and MD his functions included Customer Services, Technology, Investments and Acquisitions.

S.D.Shibulal,was supposed to be the best niche for this place. He’s the co-founder of the company. On June 22, 2007, Shibu took over from S. Gopalakrishnan as Chief Operating Officer. According to the company website, Shibu's focus has been on increasing competitiveness, improving customer experience, enhancing employee engagement and increasing the depth of services.On April 30, 2011, Shibu took over the role of Chief Executive Officer.

This was about the creators of Infosys and the deciding panel for choosing new CEO and MD was laid by Jeffrey Sean Lehman. He stated this thing Narayana Murthy's successor is not his replacement.

But now finally KV Kamath appointed new chairman of Infosys, Shibulal new CEO functioning from 21^st august,2011.

He is the non-Executive Chairman of ICICI Bank, the country's largest private lender. KV Kamath was a natural choice as he was a non-IT person and he has a very acute mind he would have the same kind of keen sense in the business even if he was from the IT industry.

Shibulal as already mentioned is a person who will ensure that his leadership transition is smooth along with making other organisational changes to strengthen our market position and ability to serve our clients better.

While Krish.Gopalakrishnan continued to hold his position as Executive Co-Chairman of the company and will work on enhancing customer, employee and investor connect ensuring that this company moves forward in the strategic direction that it has been set.

According to Mr.Murthy he’s leaving his company in capable hands These three leaders meld an extraordinary range of talents and experiences with a united commitment to drive the company... We could not be in better hands…

Ascending Crude oil Prices

As we all are familiar with rising commodities (like discussed about silver in previous post) and crude oil too…

There are many reasons responsible for the price rise in crude oil in 2010-11.If we focus on some factors then the prime causes are:-

1. 1. BP(British Petroleum) oil spill-It happened on 20 th April,2011 in Gulf of Mexico. It is the largest accidental marine oil spill in the history of the petroleum industry. It is believed that the daily flow rate diminished over time, starting at about 162,000 barrels of oil per day and decreasing the reservoir at a considerate level.At that time crude oil hit the levels of $100.

From then onwards demand for crude oil reached new heights.

2. Unrest in Egypt-Global oil prices could exceed $110 a barrel when political unrest in Egypt continued because of their president Hosni Mubarak, and the other main reason was agitation near Suez Canal or the Suez Mediterranean (SUMED) oil pipeline which passes near Cairo. The canal ships 1.5 million barrels per day (bpd) of crude and the pipeline carries 1 million bpd. Together they account for nearly 3 percent of daily global oil demand.

All this ultimately affected the global oil prices.

3. Libyan turmoil-Growing anti-government movements, military suppression due to Muhammad Gadaffi administration increased more of public chaos and serious political problems. According to OPEC(Oil and Petroleum Exporting Countries) Libya comprises of total 2 % of world’s oil share. It exported 9.7 billion cubic meters to Europe in 2009-10.The actual civil war in Libya was longer than in Egypt, which led Libya to more losses and at the end we could see crude oil trading between $115 - $120.

Other reasons were Dollar-denominated commodities become cheaper with a weak dollar, in turn increasing the price of oil and Heating oil demand from the Northern hemisphere along with debt crisis in euro-zone.

Present situation

Top oil exporter Saudi Arabia is unhappy with high oil prices and concerned about their impact on the global economy. Unrest and violence in North Africa and the Middle East and strong demand growth in Asia have pushed prices to their highest levels since 2008.Rising fuel demand led by growth in China, India and the Middle East has outpaced Riyadh's expectations, and Saudi Arabia now sees medium to long-term oil consumption higher than it had previously anticipated.

If we see further rising demand should push up crude oil prices in 2011 in the near term. At the same point in time ,lack of new significant oil discoveries confirm that there is an impending oil crisis that will hit the global economy. This would further drive up already accelerating oil prices.

That was all…but still if you are more interested in looking for oil prices then following is the link

http://www.oil-price.net/en/articles/oil-price-at-comfortable-level.php

take care..stay blessed..:)

Hey wats up friends..??

Its been long since I posted..so here I go…as we all are aware of rising silver prices..but whats the reason behind it increasing so suddenly and that too so steeply…and why only silver not gold…???????????

In 2007 commodity prices soared when there was actually a slowdown in the global economy. Then there goes a concept of USA Federal Reserve intervention that keeps track for all the currency reserves. For maintaining their own accounts, they keep on printing dollars which ultimately reduced the value of currency and increase the value of commodity in global markets. Silver remains valuable because it is in great enough supply to be useful as money. Silver is not only used as money and for jewelry. It has many industrial uses.. We need it for mirrors, medical devices, as catalysts in chemical reactions, in photovoltaic cells for solar-power technology, in rechargeable silver-zinc batteries, in household appliances and in high tech products such as cell phones and TVs. 45% of the demand for silver comes from the electronics industry alone. Increasingly, silver antimicrobial and antibacterial qualities are being used in many types of medical applications. There are many ongoing research projects on the use of silver based compounds for therapeutic and antibacterial purposes. Increasing industrial demand and application for silver forecast higher prices due to economic growth in China, India, Vietnam, and Brazil. Their growing middle classes are now demanding the quality of life and standard of living enjoyed by many in the West and thus the demand for silver will likely increase.

As gold prices continued to move higher, silver buying increased. People have now even shifted to silver as an investment avenue which earlier was limited to gold. Gold is harder to find and mine. Silver is relatively more abundant and can be consumed in industrial processes. The gold silver ratio has exhibited quite a bit of volatility. A higher ratio shows both gold strength and silver weakness. When the ratio declines – as it appears to be doing right now – it means silver is getting stronger. It should be noted that a declining ratio doesn't mean the gold price is falling. It could mean that both metals are rising, but that silver is rising faster than gold. If we see records for the past five weeks Silver had just soared 33% in five weeks. Gold only went up just 4% over the same period.

Summing up, the short-term signs appear bullish for precious metals market.The rates of silver are likely to drop up to Rs55,000 and again it may go beyond Rs70,000 in near future…

Go and get silver as soon as possible…It’s a very beneficial deal for future..

And I hope I was able to explain you with the relevant points..

Take care…have a great time…