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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (3768)	2/19/1999 4:26:00 PM
From: Mohan Marette	Respond to of 12475

'India is attractive on valuations'-Warburg Dillon Read + Top Picks Warburg Dillon Read: Jan.'99 Deterioration in the macro continues. During the first seven months of the current fiscal, industrial output rose by only 3.6% and even official growth projections have been pared to 5.6% from 6.1% earlier. And in this context, the YTD trade deficit of $ 6.7 bln appears heinous. An extrapolation of this trend suggests that the full year's deficit could touch $ 10 bln, implying a current account deficit in excess of 2% of GDP. This is not a benign figure for an economy which has a fiscal deficit in excess of 6%. The only positive development over the last month has been that wholesale price inflation has edged down to sub-8% levels following a step-up in food imports. Consumer price inflation, although currently at record levels (November: 19.7%), should adjust downward over the next couple of months. Monetary growth remains excessive but the threats of rising non-performing assets and deteriorating fiscal imbalances are forcing authorities to persist. At end-December, net government borrowings had exceeded the full year's targets by 36% although the reaction in prices of dated government securities has been somewhat muted because of hefty deposit accretion. Theoretically, there is ample liquidity in the system to accommodate demand for credit from the private sector. In practice, though, this may not materialise because, in a risk-averse environment, banks are content to park surplus liquidity in government paper which is not in short supply. This is evident from the fact that investment in government securities is around 37% of deposits as against a statutory requirement of 25%. On the basis of current trends in tax revenues and privatisation, the fiscal deficit is likely to be in the 6.3-6.5% range. To counter this problem, the government has advocated a 10% cut in spending, but if the past is anything to go by, the bulk of the cuts is likely to be in the capital account, which would suppress growth prospects further. On the brighter side, this magnitude of deterioration may just be the catalyst to accelerate the privatisation programme in 1999. In the interim, the flexibility to rein in excessive monetary growth will remain limited despite the worsening of the trade accounts. ================================ Economic forecast ================================ INR 1999 ================================ GDP (Average) 4.5% Inflation (Average) 7.0% 91 day T-bill 9.0% Prime rate 14.0% Rate vs USD 47.0 ================================ Fortunately, adequate external reserves as well as the pervasive administrative checks in the foreign currency markets have supported the INR in an otherwise difficult environment. This support could well be short-lived given that reserve accretion via the RIB issue was largely a one-off phenomenon. With forwards at undemanding levels, we continue to recommend covering of open INR positions. We remain neutral on India as it appears to be a safer bet in the short term, given our view of Asian markets weakening in early-99. Moreover, India is attractive on valuation basis - it has underperformed the rest of Asia by more than 40% since Oct. '98 and its earnings yield gap is at its lowest in ten years. Our top picks for 1999 are: Infosys and Satyam Computers in software, ITC and Hindustan Lever in consumer, Ranbaxy and Hoechst Marrion Roussel in pharmaceuticals, Punjab Tractors and Hero Honda in automobiles, and Hindalco in metals. HDFC will be the lone winner in the banks / financial institutions category. Further procrastination in fiscal reform will culminate in a prolonged period of sluggish growth. (Source:CapiralMarkets)

To: Mohan Marette who wrote (3768)	2/20/1999 9:49:00 AM
From: Mohan Marette	Respond to of 12475

Travel-'A Fair to remember'-Surajkund Mela- (Slide show) rediff.com rediff.com

To: Mohan Marette who wrote (3768)	2/21/1999 9:58:00 AM
From: Roger G. Budgell	Read Replies (2) \| Respond to of 12475

Mohan: I just came across this thread this morning. I think that India will be the largest world economy in the 21 century. It will be based on the new technologies that are software based. I was reading recently that 5 India software firms will try for a NASDAQ listing this year: 1. Infosys Technologies; 2. HCL Technologies; 3. Datamatics; 4. Wipro;and 5. NIIT. Can you comment on this? Are there any presently listed in Canada; TSE,VSE,ASE? I thing I will enjoy this site hence I'm bookmarking. Roger