Snap news: Inflation higher than expected at 11.42%

Another blow for the Indian economy as inflation for the week ended on June 14 saw prices move north once again.

Now what will be the RBI’s response?  Another rate increase?

But the real question is: will the Indian economy and markets be able to bear another hike?

Is the India growth story now at risk?

Snap news: Markets and Rupee crumble

Bombay Stock Exchange’s Sensex index was down more than 4 per cent in early trading on Friday on the back of Wall Streets falls and fears of more bad news on inflation, which is expected to increase to 11.29 per cent. The rupee also fell sharply against the dollar after crude reached a new record high yesterday at $140.39.

The Sensex was down 4.3 percent, or 615.68 points, at 13,806.54 with all its components were in the red, according to Reuters.

The rupee dropped as much as 0.5 percent to 42.885 against the dollar before trading at 42.8225 as of 10:22 am in Mumbai, according to Bloomberg.

Main stocks at a glance:

News to look out for:

ECONOMY

Inflation: At midday new figures will be release. India’s wholesale  sale index is widely expected to rise further to 11.29 from 11.05, according to 18 economist surveyed by Bloomberg. Only two economist predicted that inflation would fall.

India’s benchmark 10-year bond yields rose 0.04 per cent to 8.64 per cent early on Friday, supporting economists’ forecast that inflation is likely to increase later today.

COMPANIES RESULTS

Unitech

Essar Oil

Bharat Electronics

World Bank: In India it’s hard to do business. Are they right?

Arvind Panagariya, an economics professor at Columbia University and author of India: the emerging giant, says quite clearly: NO!

In a comment piece in the Economic Times, he criticised the World Bank for ranking India 120th out of 178 countries in its 2008 ‘Ease of Doing Business’ index. The rankings suggest that it is easier to do business in Bangladesh, Pakistan, Nepal and Bhutan than in India. But is that what businesses experience?

Snap news: Tata steel FY08 results

Tata Steel, including it’s subsidiaries, reported strong full year results with net profit up at Rs123bn ($2.9bn) in 2008 compared to last years Rs41bn ($976m), on the back of high commodity prices. The groups net sales were up at Rs 1.30tr from Rs 252m in 2007.

The company’s FY08 standalone net sales stood at Rs196.9bn, up 12 per cent from a year earlier.

Tata Steel’s shares closed up 1.9 per cent at Rs757 on Bombay’s Stock Exchange, ahead of presenting it’s full year results.

Tata Steel’s full year results balance sheet

[Via Indiaearning.com of TV18]

Oil and toffees fuel India’s low-cost airlines crisis

It’s all over the press in India: Low-cost airlines are feeling the heat of rocketing oil prices and record-high inflation.

The 70 per cent rise in jet fuel over the last six month and strong fall in the number of passengers, who are now opting for rail travel, has forced low-cost airlines to make “rationalisations” where possible.

Rationalisation in this case means: cutting staff, sending back expensive expat pilots back home and worst of all no more toffees for travellers.

Practice what you preach

After outraging India with his remarks about the need to defend Hindus with suicide attacks against Muslims and his threats to kick out “the unwanted” Biharis from Mumbai, it turns out that Bal Thackeray (pictured on the left) is not from Mumbai either.

The leader of Shiv Sena, a former cartoonist and extremely eccentric character, has been accused by Hari Narke, professor at Mahatma Phule chair in Pune University, of having double standards, as he revealed that Thackeray’s family was not originally from Maharashtra.

[Via The Economic Times]

Multi-millionaire boom for India

As the credit crisis makes life harder for aspiring millionaires around the world, India was the country with the highest number of new entries in the multi-millionaire club, according to a survey by Capgemini SA, reported by Bloomberg.

Mixed reaction to RBI’s decision to hike rates

The central bank’s second unscheduled interest rate rise was broadly expected, however, Indian economist and market pundits feel that the RBI’s governor Yaga Venugopal Reddy did not keep his word of taking a “determined and calibrated”action against inflation.

The general mood in Mumbai is that a 50 bp increase was exaggerated, as economist fear that it will hurt the country’s growth rate.