Inflation may ease to 6.5% in December: Rangarajan

 
Mumbai: A fall in vegetable prices is likely to ease headline inflation and retail inflation to 6.5 percent and 9.20 percent respectively in December, Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan said on Saturday.

"Some of the things that have really pushed up inflation are vegetables like onion prices, which have crashed in December. Therefore when December number comes in mid January, we will see retail inflation coming down by 2-2.5 percentage from the current level of 11 percent or so. There could be a decline in wholesale price index ... Could be the order of 1 percentage," Rangarajan told reporters on the sidelines of the silver jubilee celebration of Indira Gandhi Institute of Development Research.

Wholesale price-based inflation (WPI) accelerated to 14- month high of 7.52 percent in November, while retail inflation quickened to eight-month high of 11.24 percent during the month.

Going forward, Rangarajan said, the declining trend in inflation will continue and WPI may ease to 6.5 percent by March-end.

"The RBI has estimated WPI to be around 6.5 percent by March end. That is the number we are looking at. We will see a decline in December and perhaps it will continue," he said.

Quoting an econometric study, the former RBI governor said the threshold inflation level is around six percent, but there is a need to look at the slightly lower as the level is much higher than what many other countries in the world... advanced countries treat as the acceptable level of inflation.

Gold recovers on low-level buying, global cues

Gold prices recovered by Rs 240 to Rs 30,400 per ten grams in the national capital on Saturday on emergence of buying at existing lower levels amid a firm global trend.

Silver also snapped three-day losing streak by gaining Rs 450 to Rs 43,950 per kg on increased offtake by industrial units and coin makers.

Traders said emergence of buying at existing lower levels amid a firm global trend, spurred by the Federal Reserve's decision to taper stimulus, mainly led to a recovery in precious metals.

Gold in New York, which normally sets price trend on the domestic front, rose by 0.8 per cent to $1,203.70 an ounce and silver by 1.4 per cent to $19.45 an ounce.

On the domestic front, gold of 99.9 and 99.5 per cent purity recovered by Rs 240 to Rs 30,400 and Rs 30,200 per ten grams, respectively. It had lost Rs 270 in last two sessions.

Sovereign, however, held steady at Rs 25,150 per piece of eight gram.

In line with a general firm trend, silver ready rebounded by Rs 450 to Rs 43,950 per kg and weekly-based delivery by Rs 200 to Rs 44,000 per kg. The white metal had lost Rs 1,580 in the previous three sessions.

Silver coins also jumped up by Rs 1,000 to Rs 85,000 for buying and Rs 86,000 for selling of 100 pieces.

PepsiCo India to invest over 1,200 cr on new plant in Andhra

 
Beverages and snacks major PepsiCo India on Saturday said it will invest over Rs 1,200 crore to build a new beverage manufacturing facility in Andhra Pradesh.

The company plans to build a new greenfield beverage manufacturing plant in Sri City, Andhra Pradesh, which upon completion will be PepsiCo's largest beverage plant in India, PepsiCo India said in a statement.

"PepsiCo intends to invest more than Rs 1,200 crore in the project, which is part of the recently announced plans by PepsiCo and its partners to invest Rs 33,000 crore in India by 2020," it added.

The company also announced plans to substantially increase sourcing of mango pulp from Andhra Pradesh in the next six years.

Commenting on the development, PepsiCo India Chairman and CEO D Shivakumar said the new beverage facility is a key part of the company's growth plans for the Indian market and "we are delighted to locate it in Andhra Pradesh".

"Sri City is ideally located and offers the perfect opportunity to harness the benefits of superior connectivity, great infrastructure and an ample talent pool, which are the prerequisites for every industry," he added.

Realty welcomes home loan rate cuts by SBI, HDFC

 
Welcoming the 0.25 per cent rate cut by two of the biggest home loan financiers SBI and HDFC, realty sector participants on Friday said the move will help revive interest in the gloomy market.

"This is a positive move to boost property sales and spur industry growth. Home buyers who were earlier waiting for rates to come down will now certainly look at buying their dream homes," industry body Confederation of Real Estate Developers Association of India (Credai) Chairman Lalit Kumar Jain said.

"The home loan rate cuts from certain banks have occurred after nearly a year, and will augur well for investment sentiments in the market," property consultant CBRE South Asia's Chairman and Managing Director Anshuman Magazine said.

It may be noted that the residential sector had suffered a major set back due to increasing home loan rates, which had forced buyers to postpone their home buying decision.

Magazine also welcomed Reserve Bank's move to hold on to its key rates despite the high inflation, which resulted in the rate cut announcement by SBI and HDFC last evening. He said the move is a positive signal for the investment climate.

Weekly roundup: Market takes Fed tapering in stride; Sensex surges 364 pts

 
The benchmark S&P BSE Sensex spurted by 364 points this week on almost across-the-board buying triggered by frantic foreign fund inflows amid status quo stance taken by RBI on key interest rates.

On Friday, the 30-share index spurted by 371 points on sharp rise in heavyweight Reliance Industries, whose stock flared up after the government allowed the company, with some riders, to increase price of its natural gas from April.

The market lost 151 points on Thursday in a knee-jerk reaction to US Federal Reserve's decision to taper its monthly bond buying programme starting next month. It bounced back smartly the next day.

According to brokers, the market had already factored in the much-awaited announcement about stimulus roll-back.

The Sensex resumed steady at 20,714.26, but dropped to 20,568.70 on rise in inflation and fears of hike in interest rates before the December 18 RBI policy meeting.

However, the BSE benchmark index later recovered to 21,117.99 before ending at 21,079.72, showing a smart rise of 364.14 points, or 1.76 per cent, over the last week as RBI unexpectedly decided to keep key policy rates unchanged.