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19 ECONOMY
THE INDIAN EXPRESS, THURSDAY, JANUARY 21, 2016

GOLD

RUPEE

`26,295

`67.95

OIL

SILVER

$25.31*

`34,715

*Indian basket as on January 19, 2016

SENSEX: 24,062.04 417.80 NIFTY 50: 7,309.30 125.80 NIKKEI 225: 16,416.19 632.18 HANG SENG: 18,886.30 749.51 FTSE-100: 5,691.65 185.15 DAX: 9,380.84 283.37

Oil fall, global

woes pull Sensex
418 points down
The BSE index has lost 7.87% or 2,055 points in Jan
ENS ECONOMIC BUREAU
NEW DELHI, JANUARY 20

THE SENSEX crashed 1.7 per cent or 417

points on Wednesday under pressure from a
decline in Asian markets due to global
growth worries, fall in crude oil prices and a
weakening rupee. Wednesdays fall took the
Sensex to a 20-month low below its May
16,2014,levelwhentheNDAemergedvictorious in the 2014 General Elections.
Global factors notwithstanding, experts
said that investors should take the fall as an
opportunitytoinvest.EventhebroaderNifty
at the National Stock Exchange fell 1.69 per
cent or 125 points to close at 7,309. The closing was, however, marginally above the May
16, 2014 closing of Nifty.
During the day, the two indices declined
byupto2.6percentandtheSensexandNifty
hit intra-day lows of 23,839 and 7,241, respectively.
The fall in Indian markets on Wednesday
wasinlinewithglobalmarkets.WhileNikkei
in Japan closed with a fall of 3.7 per cent, the
Hang Seng in Hong Kong lost 3.8 per cent.
Even premier indices Germany, France and
UK were down by around 3 per cent in the
afternoon trading hours.
Equity markets across the world have
been under pressure since the beginning of
this month and the BSE Sensex has lost 7.87
per cent or 2,055 points. If that drop was initially led by fall in China, which witnessed
trade suspension twice in a week after the
countrys indices fell around 7 per cent, the
continuing decline in global crude oil prices
andforeigninstitutionalinvestorspullingout
money from the equity markets weakened
the sentiments further.
According to data available with the BSE,
foreign institutional investors (FIIs) pulled
out a net Rs 1,324 crore from domestic equities and their overall net outflow for the
month of January amounted to Rs 8,470
crore.However,despitethesharpFIIoutflow,
theIndianequitieshaveperformedrelatively
better on account of support from domestic
institutional investors (DIIs) who have invested a net of Rs 9,249 crore in the same period. On Wednesday DIIs invested a net of Rs
1,383 crore. As a result, even large blue-chip
companies lost heavily.
While Adani Ports was the biggest loser
on Sensex with a fall of 5.5 per cent, State
Bank of India declined 5.1 per cent. Reliance

Crude plumbs new

lows below $27/bbl
New York: US oil prices crashed below
$27 a barrel on Wednesday for the
first time since 2003, caught in a
broad slump across world financial
markets with traders also fearful that
the crude supply glut could last
longer. US crude for February delivery, which expires at the end of the
day,slid$2.05,or7.2percentto$26.41
at2:05p.m.EST(1902GMT).Brentfutures for March delivery fell 98 cents,
or 3.3 percent to $27.80 a barrel. It
touched a new contract low of $27.10.
Energy market watchers expect the
global crude glut to persist through at
least the end of this year, adding to
stockpilesthatinsomeplacesaretesting tank limits. REUTERS

Despite crash, Sensex ahead of other major mkts

While the Sensex has lost 7.87% in January alone, it scores over the performance of other major markets which have fallen
more this month. Even the rupee figures among the relatively stable ones against the strengthening US dollar.

`9,249

crore
has been the net investment from
domestic institutional investors in
January. Inflow from DIIs provided
some strength to Indian markets and
acted as a counterbalance to the net
FII outflow of Rs 8,470 crore from
Indian equities in January.

24,062

points

Sensex closing on Wednesday is the

lowest since the Narendra Modi-led
NDA emerged victorious in the
general elections on May 16, 2014.

INDIANMARKETS
EMERGESTRONGEST
Jan 20* Change (%)
BSE Sensex (India)

24,062 -7.87

FTSE (UK)

5,697

-8.73

Dow Jones Ind (US)

15,678

-10.03

CAC 40 (France)

4,126

-11.02

DAX (Germany)

9,408

-12.43

Nikkei 225 (Japan)

16416

-13.75

`RELATIVELYMORESTABLE
Jan 20*

Change

6.58

-1.39

Hang Seng (Hong Kong) 18,886

-13.82

Yuan Renminbi

Shanghai Comp (China) 2976

-15.91

Phillipine Peso

47.84

-1.94

INR

68.01

-2.72

Brazilian Real

4.09

-3.28

Argentine Peso

13.46

-4.02

Mexican Peso

18.39

-7.04

SA Rand

16.77

-8.33

Russian Ruble

80.7

-10.55

Figures denote index values Figures till 9 pm IST

15.9%

has been the fall

witnessed by Shanghai Composite.
Concerns over slowdown in China,
has raised concerns over global
growth recovery, pulling the global
markets down.

All currencies against US dollar

Rupee revisits 2013, recovers

from below 68 against dollar
The Indian currency is down 15.60% from 58.78 after NDA poll victory in 2014

Industriesthatannouncedstrongthirdquarter result on Tuesday also fell 3.8 per cent.

While global concerns have weighed
heavily on the Indian markets in the recent
past, experts feel that India may outperform
the markets worldwide on account of domestic strengths. If government spending is
expected to lead the recovery along with
crowing in private sector spending, a revival
in earnings growth for India Inc may provide
the recipe for a reversal in equity market
movement. Some experts, however, say that
the markets may remain under pressure in
the short term.
Expectations of the markets going
downhill are likely to strengthen as the double whammy impact of oversupply in crude
and the concerns in Chinese economy will
dampen the investors preference towards
equities. Stabilisation in the currency market and oil prices will be the focus area during the near-term, said Vinod Nair, head of
research at Geojit BNP Paribas Financial
Services.
Jayant Manglik of Religare Securities,
however,saidthatinvestorsshouldcontinue
toinvest.Incurrentsituation,tradersshould
avoid leveraged trades and stick to strong
companiesfortrading.Investorsshouldcontinue to invest in quality companies for long
term investment, he said.

ENS ECONOMIC BUREAU

MUMBAI, JANUARY 20

THE FOREIGN exchange market is in turmoil

again with the rupee testing the 28-month
lowof 68tothedollar,lastseeninSeptember
2013, on capital outflows and the sustained
fall in equity markets. With this decline, the
rupee has fallen 15.60 per cent from 58.78
against the dollar on May 16, 2014, the day
BJP swept to power in the last General
Elections.
The domestic currency opened sharply
lowerat67.77fromitspreviouscloseof 67.65
and breached 68 level for the time since
September 4, 2013, to hit an intra-day low of
68.07, down 42 paise, and closed at 67.95/96
againstthedollar.Publicsectorbanksreportedly sold dollars on behalf of the Reserve
Bank of India to prevent the local currency
from weakening further. The rupee had hit
the record intra-day low of 68.85 in
September 2013. On September 6, 2013, the
rupeeclosedatarecordlowof 68.80perdollar as uncertainty over a possible US-led militarystrikeagainstSyriaknockeddownAsian
equities and currencies.
However,thistimeitistheChinesefearof
a major slowdown, which has been reiter-

ated by the IMF forecast, coupled with low

crude oil prices which together portend to a
major global economic slowdown.
The rupee started at just above 66 on
January1,2016butsincethenhasbeenmoving sharply downwards with the currency
crossing the 67 level on the January 14, 2016
and the 68 mark on the January 20. This
movementwasquiteunexpectedasthefundamentalshadjustifiedalevelof 65-66,said
a CARE Rating report. The market, which
does not rule out the rupee falling below 70
level, is now waiting for guidance from the
RBI in the form of intervention or announcement on the rupee. In FY14, when the rupee
fell,theRBIhadintervenedbyrestrictingoutflows on current account and later invoked
the swap on FCNR deposits to bring in dollars. The RBI has already indicated that it
would bring in measures to stabilise the rupee if the forex market turns volatile.
According to analysts, the RBI has to be
watchful on how speculative activity behaves as there is a tendency for such triggers
tobeunleashedwith exportersholdingback
their earnings and importers rushing in. The
problem this time is less acute compared
with 2013 when the oil companies had
rushed in to buy their dollars at a time when
the crude oil price was high.

Das: FinMin, RBI

keeping close watch
New Delhi: The finance ministry on
Wednesday said it is keeping a close
watch, along with RBI, on the domestic currencys movement and hoped
that market volatility will stabilise
soon. Economic Affairs Secretary
ShaktikantaDassaidtheongoingcurrencyandstockmarketvolatilitystem
from investor expectation of rate increase by the US Federal Reserve as
well as uncertainty around the
Chinese economy. PTI

WHY RUPEE IS FALLING?

GLOBAL ECONOMIC slowdown,

with China being the major factor

FALL IN crude oil prices and the

sell-off in stock markets

FIIs HAVE been in the selloff mode

in equity segment for last 3 months

At Davos, leaders
look beyond the global
market mayhem
REUTERS

DAVOS, JANUARY 20
BLOOD-LETTING IN global markets is dominating corridor talk as business leaders and
policymakers meet in Davos, although so far
the view is that it doesnt signal a financial
crisis. As the World Economic Forums annual meeting in Switzerland wrestled with
topics ranging from the impact of robots on
jobs to gender and wealth inequality, the
MSCI World equity index fell to its lowest
level since July 2013.
I dont believe this is a repeat of
2008...that is not to say that there are not
some very significant risks impacting the
market-notleastof whichisChinasslowing
growth, John Veihmeyer, global chairman
of KPMG, said in the Reuters Global Markets
Forum on Wednesday.
The International Monetary Fund cut its
global growth forecasts for the third time in
less than a year to 3.4 per cent on Tuesday,
as new figures showed that the Chinese
economy grew at its slowest rate in a quarter
of a century in 2015. While Chinas rapid
slowdown, combined with a dramatic fall in
thepriceof oil,hasspookedinvestorsaround
the
globe,
European
Economics Commissioner
Pierre Moscovici told Reuters
Television he too did not believe there would be any return to an international financial crisis. I dont feel that the
crisis is coming back... but
there are downsides that we need to address, he said.
However, some in Davos were less confident about the outlook for 2016 after the
rocky start to the year. Market turmoil can
be a harbinger that something is wrong and
even if it is irrational, can have real consequences. What is going on now is a message
that the excessive optimism that has been
spreading around is wrong, Nobel Prizewinning US economist Joseph Stiglitz said.
Veteran British businessman Roger Carr,
who is chairman of British defence group
BAE Systems, said the future was not looking bright. This time last year in Davos there

was a very different environment, it was

quite benign. The issue was the haves and
the have nots, it wasnt: are we all going to
have less?. It is very pessimistic at the moment, he said.
However, bankers such as
former Barclays chief executive
Bob Diamond said the slowdown in Chinese growth was a
healthy correction which,
while serious, was needed.
This was echoed by Professor
Ding Yuan, vice-president and dean of the
China Europe International Business School
in Shanghai, who said it would be wrong to
take the small devaluation of the Chinese
yuan and the falls in the Shanghai 300 index
as indicators of Chinas economic health. For
CEOs at Davos trying to navigate the year
ahead, the price of oil remains the great unknown. In many of the markets we operate
in, the oil price is a major factor of the health
of the economy. Were expecting governments to adapt to this new order..., whether
theyreat$30orlowerorhigher.Whoknows
whats going to happen in 2016?
Vimpelcom CEO Jean-Yves Charlier said.

PRESS TRUST OF INDIA

DAVOS, JANUARY 20

SEEKING TO allay concerns over volatility in

currency and stock markets, RBI Governor
Raghuram Rajan on Wednesday said things
would stabilise and emphasised that monetarypoliciesalonecannotchangetheworld.
While expressing optimism that people
will look at stable emerging markets (EMs),
including India, Rajan said the falls in these
economies are actually markets problem
and not of the economy.
Therupee,Rajansaid,hasbeenrelatively
strong in the EM currency basket, but India
is affected by the same kind of jitters impacting other world markets.
Asserting that monetary policies alone
cannot change the world, the RBI Governor
said at the World Economic Forum (WEF)
thattherearevariousothertoolstocarryforward reforms and boost growth.
The good news across the world is that
we have realised that monetary policies are
not going to change the world and there are
much more to the reforms.
Not just enabling but also creating the
underlying framework for growth is the one
which will take us a long way, he said,
adding that monetary stimulus has largely
run its course.
The RBI Governor also downplayed concernsaboutChinaandsaidthatcountrykeep
making fresh efforts to resolve their economic problems.
My sense is that after the initial volatility, things will stabilise, people will try and
look for the good, stable emerging markets.
India is one of them. Our growth is pretty
good, all the other indicators seem to be going well, he told CNBC.
... at this point if you are an emerging
market, you focus on fundamentals, try and
get inflation down, try and get your current
accountdeficitdown,keepyourfiscalontarget, do all the good things, and then people
reward you, he said. Commenting on terror
attacks and war-like situation in various
countries, Rajan, at a session on the growth
illusion, said wars should never be seen as
opportunities to push economic growth.
Wardoescreateopportunityforgrowth,
but it certainly destroys your GDP. I am sure
people would love to have bigger GDP rather
than a higher growth. I dont think war is an
option, Rajan said.
Hewasreplyingtoaquestiononwhether
thecountriesshouldcreatewarfundstofight
wars rather than printing more money.

SNAPSHOTS
PopetellsDavoselite:
Consideryourrolein
creatingpoverty

8-9% growth
doable: Jaitley
Davos:Withglobalheadwindshitting
emerging markets as well, finance
minister Arun Jaitley on Wednesday
said volatility has become a global
norm, but India can certainly grow at
8-9 per cent in a friendlier global climate. Certainly, the world is facing a
difficult and challenging situation. I
dont think we are going into extreme
conditions because there is predictability but volatility today is the
norm and no country is immune to
it, Jaitley said. Also, in signs of no
thawwithCongressonGST,Jaitleydescribed as preposterous the partys
demand for putting a cap on tax rate
in the Constitution Bill saying
nowhere in the world tariffs are mentioned in the statute. PTI

Monetary
policies
alone cant
change the
world: Rajan

MAHINDRA INVOKES STAR WARS: TECH IS LIKE FORCE

Microsoft Corporation CEO Satya Nadella, Sheryl Sandberg, Chief Operating Officer and Member of the Board, Facebook, and
Anand Mahindra, Chairman and Managing Director of Mahindra Group during the session The Transformation of
Tomorrow at the World Economic Forum meet in Davos on Wednesday. PTI
Referring to the Star Wars series,
Mahindra said, Technology is like the
Force and depends on how we use.
Question is do we want Jedis or Sith.

Microsoft CEO Satya Nadella said world

cant afford another digital divide and it
was to see that the fourth industrial
revolution leads to digital dividends.

Facebook COO Sheryl Sandberg

pitched for ending gender disparity
saying, Men still rule the world and I am
not sure it is going that well... PTI

Fourth industrial revolution coming:

Bosses worldwide brace for tech shocks
REUTERS

DAVOS, JANUARY 20
IMPLANTABLE MOBILE phones. 3D-printed
organs for transplant. Clothes and readingglasses connected to the Internet.
Such things may be science fiction today
but they will be scientific fact by 2025 as the
world enters an era of advanced robotics, artificial intelligence and gene editing, according to executives surveyed by the World
Economic Forum (WEF). Nearly half of those
questioned also expect an artificial intelligence machine to be sitting on a corporate
board of directors within the next decade.
After steam, mass production and information technology, the so-called fourth industrial revolution will bring ever faster cycles of innovation, posing huge challenges to
companies, workers, governments and societiesalike.Thereisaneconomicsurplusthat

HUBO, a multifunctional walking

humanoid robot in Davos. Reuters
is going to be created as a result of this fourth
industrial revolution, Satya Nadella, chief
executive of Microsoft, said in Davos.
One of the most in-demand participants
inDavosthisyearisnotacentralbanker,CEO
or politician but a prize-winning South
KoreanrobotcalledHUBO,whichisstrutting

its stuff amid a crowd of smartphone-clicking delegates. But there are deep worries, as
well as awe, at what technology can do.
A new report from UBS released in Davos
predicts that extreme levels of automation
and connectivity will worsen already deepening inequalities by widening the wealth
gap between developed and developing
economies. An analysis of major economies
by the Swiss bank concludes that
Switzerland is the country best-placed to
adapt to the new robot world, while
Argentina ranks bottom. There will be winners and losers among companies, too, as
new players move into established industries with disruptive new technologies.
That is something uppermost in the
minds of Davos attendees such as GM CEO
Mary Barra, who is confronting the threat of
driverless cars or bank boss Jamie Dimon at
JPMorgan Chase , facing competition from
digital fintech start-ups.

POPE FRANCIS told members of the

worlds wealthy political and economic elite on Wednesday that they
should not be deaf to the cry of the
poor and must consider their own
role in creating inequality. New technologies such as robotics must also
not be allowed to replace humans
with soulless machines, he said in a
message to the World Economic
Forum in Davos. To all of you I appeal
once more: Do not forget the poor!,
he said. REUTERS

Jobscopehuge,need
rightskills:Sikka
WITH A new WEF study warning
about a net loss of over five million
jobs in next five years due to the
fourth industrial revolution, IT giant
Infosys CEO Vishal Sikka on
Wednesday said there are huge employment opportunities in India but
there is a need to impart right skills
and training. Speaking at a session on
The Promise of Progress on the job
marketimpactof thefourthindustrial
revolution, Sikka said there would
certainly be disruptions but the new
technologywouldnotnecessarilycreate imbalances if right kind of education, connectivity and training is provided to the people. PTI

Perceptionabout
largebankslow
THE PERCEPTION about large
global banks remains low and
was worse last year than what was
seen after the 2008 financial meltdown, says a report. Trust Meltdown
report by Media Tenor International
has
been
released
as
the rich and influential gather at
the World Economic Forum
(WEF) meet here. The report has
been focusing on the image of global
banking industry that is projected
across media. PTI