India Strategy - Aug 2009
Saturday, August 08, 2009
India's wireless telecom subscriber base increased from 415.25mn in May to 427.28mn at the end of June, representing a monthly growth rate of 2.9%. Wireless tele-density stood at 36.64. The total number of telephone subscribers in India increased to 464.82mn at the end of June from a level of 452.91mn in May, thereby registering a growth rate of 2.63%. With this, the overall tele-density in India has reached 39.86.
Wireline subscriber base declined from 37.66mn in May to 37.54mn in June. BSNL/MTNL own 86.2% of the wireline market share. While major private wireline service providers increased their subscriber base, BSNL/MTNL have lost 0.19mn subscribers in June. Wireline teledensity is 3.22.
The lower growth rate in the Metros and the higher growth rate in the Circle ‘C’ reflects the service penetration levels. Subscription levels are currently witnessing higher growth rates in the so far underserved ‘C’ category circles.
Total broadband subscriber base has increased to 6.62mn in June from 6.4mn in May, thereby showing a growth rate of 3.4%.
We’ve had a disastrous end to a week which started off at a year’s high. But the outlook doesn’t look all that bad for the coming week. To begin with US jobless rate has declined to 9.4% versus expectations of an increase. Non-farm payrolls also dropped less than anticipated. AIG has raked in a $1.8bn profit, cheering the stock. On the flip side, RBS has slumped following a $1.7bn loss. Worst still, RBS doesn't expect a substantial improvement until 2011.
Back to our market, some buying is sure to set in at lower levels as the "left-out" feeling will prompt many to jump in. During the coming week, the IIP numbers will be released. Since the core sector growth has come in strong, the IIP data too should bring some more cheer. However, the monsoon continues to play truant. Any further negative news on this front could rain some more losses.
Some correction at higher level is something which is a given. The global markets too look less keen on a fresh bounce. Even if they do, it may not last too long. Use the lull to evaluate your portfolio as the medium- to long-term outlook remains positive.
India's manufacturing sector continued its recovery process with output growing for a fourth consecutive month in July, spurred by a series of fiscal and monetary stimulus measures announced over the past few months. Markit Economics’ Purchasing Managers’ index (PMI) stood at 55.3 in July, according to a report released today. In June, the Indian manufacturing PMI stood at 55.34. It was the fourth monthly reading above 50, which indicates factory production increased. Before that, it shrank for five months through the end of March, hitting a trough of 44.37 in December.
Growth in India's manufacturing activity held steady in July amid robust local demand and a slight rebound in exports, but intense competition curbed companies' pricing power even as raw material costs jumped, the Markit survey showed. "The domestic market remained the primary impetus to growth, although the export market also played a part as its recovery gained pace," said Gemma Wallace, an economist at Markit Economics. The new orders index rose to 59.75, its highest in nine months, from 58.56 in June. Wallace also said that there was evidence that capacity pressures have started to building up.
India’s inflation, as measured by the wholesale price index (WPI), fell for the eighth straight week and stood at -1.58% in the week ended July 25 as compared to -1.54% in the week ended July 18. It was at 12.53% during the week ended July 26, 2008. The WPI for ‘All Commodities’ for the week ended July 25, rose by 0.04% to 236.9 from 236.8 for the previous week. The index for Primary Articles rose by 0.4% to 262.2 while the index for ‘Food Articles’ group rose by 0.8% to 261. The index for ‘Non-Food Articles’ group declined by 0.4% to 241.5. The index for Fuel, Power & Light group remained unchanged at its previous week’s level of 338.2. The index for Manufactured Products group declined by 0.1% to 205.6.
Week-on-week, the WPI was almost flat, for the second straight week. While prices of primary articles rose WoW, prices of manufactured goods remained unchanged. Inflation in primary food articles is almost in double digits - 9.7% for the week ended July 25. They are rising at their fastest pace since early February and are largely responsible for the recent spike in CPI. With monsoon so far being significantly below average, there is further upside risk to primary food prices. WPI inflation will likely remain in negative territory till September, and is expected to rebound sharply as the base effect wears off. WPI inflation is seen at over 5% by the end of the year.
India’s monsoon was 64% below normal in the week ended August 5, according to the Indian Meteorological Department (IMD). Rains were 25% below the 50-year average of 503.4 millimeters between June 1 and August 5, the agency said. Last week's rainfall was the worst since mid-June. The weather department said that only seven of India's 36 weather zones received normal rains during the past week. Weekly rainfall was scanty in 23 areas, deficient in 4 zones, while only 2 regions received excess rains. The soybean-producing central part of India got a negligible 1% of the normal rainfall, putting the crop at risk if the dry patch continues another week. Rainfall in cane-growing Uttar Pradesh was about 80% below normal, while Maharashtra, a major producer of sugar and cotton, saw about 90% shortfall in the week ended Aug. 5, the weather office said.
"Subdued rainfall activity is likely to continue over western, central and peninsular parts of the country during next 2-3 days," the IMD said on its web site on Friday. Fairly widespread to widespread rainfall activity with isolated heavy to very heavy falls is likely along the foot hills of Himalayas, northeastern states, West Bengal, Sikkim and Bihar during next 2-3 days, it added. Fairly widespread rainfall activi