RBI Annual Monetary Policy Review

The Reserve Bank of India is scheduled to meet for an annual review of the monetary policy on May 3, 2011. It is expected that RBI would raise repo and reverse repo rates by 25bps each.

The Annual review will be conducted in the scenario where we have high crude prices and commodity prices, surge in core inflation, domestic activity which signals a slow down, subdued investment activity and global uncertainties. The monetary policy will face severe dilemma; however RBI is expected to focus on rising inflation.

The Inflation figures for the month of March touched the figure of 9% in March, much above RBI’s projection.

The Industrial Production figures are also indicating a slowdown. The Corporate order book also depicts the same.

Yet currently it seems inflation situation outweighs the growth concerns. It is expected that the Central Bank may continue with the gradual tightening, raising both the Repo & Reverse Repo by 25 bps, accompanied by a hawkish statement.

As the full impact of the previous tightening is yet to take effect and the industrial activity slowing it is unlikely that the Central bank may raise the policy rate by 50bps

Do you want to track commodities ?

A must visit site for people who want to track commodities.

Before investing in commodities we should note that, like all investments they have wide price fluctuations over time and it’s impossible to predict which commodities will be in favor and which will be out of favor and for how long.

To illustrate those price fluctuations, U.S. Global Investors produced what it calls the Periodic Table of Commodity Returns. That table shows how the price of 14 commodities have ebbed and flowed over the past the decade, and illustrates the principle of mean reversion — the concept that returns eventually move back towards their mean or average.

For instance, the table shows that palladium was out of favor in 2008, falling 49.29% that year, but in favor the following two years, rising 118.07% in 2009 and then 96.6% in 2010 & Lead was out of favor in 2008 falling 62.52% but gained 152.37% in 2009.

Let’s try to catch the trend for the year 2011.

http://www.usfunds.com/research/the-periodic-table-of-commodity-returns/

Warren Buffet's Entry in India - Insurance sector is just a begining

Chairman and CEO of Berkshire Hathaway Warren Buffett, is in India. He has made a quiet entry into the Indian market through his company Berkshire India, a wholly owned subsidiary of Berkshire Hathaway. The company received approval from India’s Insurance Regulator to sell auto insurance products as a corporate agent of Bajaj Allianz General Insurance. Berkshire also plans to enter the India reinsurance market. At present there is only one re-insurer in domestic market i.e the Government owned General Insurance Corporation.

The 80-year-old billionaire investor announced in Bangalore  to further grow his empire Berkshire, whose market cap stands at a staggering USD 200 billion. “Berkshire is in the acquisition hunt for good profitable businesses,” he said but refrained from spelling out an acquisition strategy that he will adopt in India. During his first brush with Indian media, Buffett had said India was a logical investment destination and the country was too big to be called an emerging market.

The ‘Oracle of Omaha’ brings me hope that India will now be discovered as one of the best destinations for Investment. The various news making rounds in the analyst circle is that, he may be eyeing the retail market of India which is expected to grow from US $ 392.63 billion in the year 2011 to US $ 674.37 billion in the year 2014 as per BMI India Retail Report.