Linking currency depreciation to stock market fall in emerging markets is like asking the proverbial question: What came first - the chicken or the egg?While the Indian rupee and the stock markets are down this year because of high current account deficit; the Shanghai benchmark index has seen a much sharper fall, even as the country has a current account surplus; and the Chinese renminbi has appreciated. In case of Russia, however, both its currency and the stock market are down, despite the country running one of the largest current account surpluses among the emerging markets.In a majority of the emerging markets, currency depreciation has led to a fall in the stock market, but the correlation between the two vary greatly. The rupee, for instance, has been the second-worst performing currency among the seven key ones, but the BSE Sensex has done better than all but its two peers. This indicates at best a tenuous link between the currency and the stock market. Only in three countries

Tenuous link between currency and stock markets?

Business Standard

As investors and traders helplessly watch markets and the rupee fall, many on Dalal Street are wondering what is in store for them in the months ahead. Many believe the government is best placed to improve sentiment in the stock and currency markets at this juncture. Business Standard spoke to some senior market participants on what should the government do to salvage the situation. Edited excerpts:

Policy suggestions to improve market sentiments

Resist bailouts

High interest costs, slowing demand delay recovery

India Inc's dark winter

In a recent press release, a technology company announced a golf tournament, inviting participation from top global chief executive officers (CEOs). Nothing wrong with it except that the company has been headless for some time and is trying to find itself a chief. The press release received quite a few responses on Twitter, albeit tongue-in-cheek ones, from journalists. One read: "So #### is inviting all CEOs for its golf tournament next March. Will #### have a CEO by then or they will pick one from the tournament?" Not a bad idea!

Calling all CEOs...

The late-night revellers on Kolkata's Park Street, the city's popular destination for party goers, seem to be giving local politicians sleepless nights, quite literally. State legislators from various districts of West Bengal, who stay at an MLA hostel on neighbouring Kyd Street, complain that they are having trouble getting some sleep at night because of noisy Park Street. So much so, that a group of MLAs have formally registered a complaint with the Speaker of the West Bengal legislative Assembly Biman Banerjee on this matter. Funny, Park Street has been a party destination for decades and no one's complained, so it is possible to wonder at the sleep patterns of this generation of MLAs.

Sleepless near Park Street

Fresenius Kabi Oncology's appeal on Monday against the Securities and Exchange Board of India directive to buy back more shares in order to delist from the exchanges had its share of wit and repartee. The arguments continued for Kabi for some time with multiple references to voluminous documents. At one point, the lawyer for the company asked the tribunal to turn to page 420. Before reading out the relevant extract, he paused for a disclaimer. "The page number, my lord, is entirely coincidental," he told the judge. That was, of course, a joking reference to the unique euphemism for fraudery in India derived from the infamous Section 420 of the criminal procedure code. The number 17 also came up more than once during Fresenius' arguments in the Securities Appellate Tribunal, prompting one member to jokingly remark that the company seemed to rely on the figure quite a bit. The company's lawyer said that the number may bring them luck. From the other side came the quip, "Thankfully, today

420 and all that

This refers to the report "NPS is designed to offer pension to every worker" (August 18). Perhaps, the questions posed by Sreelatha Menon were more informative than the evasive and vague answers given by Pension Fund Regulatory and Development Authority Chairman Yogesh Agarwal.Though the government and the media have been marketing the National Pension Scheme (NPS) as a solution for the social security problems of senior citizens, it is common knowledge that the scheme was introduced through the back door to get over the impossible task of making provisions for an estimated pension liability of Rs 4 lakh crore, when the Sixth Pay Commission was finalising its report in 2006.Other than the new central government employees who joined service from January 1, 2004, state government and PSU employees, whose contribution adds up to about 85 per cent of the Rs 35,000-crore corpus mentioned by Agarwal, the receipt from the 90 per cent workforce outside the organised sector so far is admittedly

Letters: NPS - Time for a review

This refers to the report "For the automobile sector, the tunnel is long and dark" (August 20). Keeping in view the rising fuel prices, and road congestion, it is high time efforts were made to promote cycling. Automobile manufacturers can start making bicycles as a second line of activity. Even in nations like the US, more people are buying cycles, instead of cars. In European nations such as Sweden, there are separate lanes for cycles. Even in India, the Delhi Metro has a parking lot for cycles, and gives them on hire to commuters. This system can be emulated in Mumbai. Buying a car is more expensive and one has to spend a good chunk of money for maintenance, parking charges in the housing society, and elsewhere. Why cannot adults also depend more on cycles for commuting? Cycling is also good for the health. Instead of travel allowance, companies should give a cycling allowance. Moreover, maintaining a cycle does not involve much expenditure.Deendayal M Lulla  MumbaiLetters can be ma

Letters: Cars vs cycles

This refers to the article "The Bhagwati-Sen Debate: An Epitaph" (August 9). It is distressing to see a world famous economist like Prof Jagdish Bhagwati descend to personal attacks in the course of his economic policy debate with Prof Amartya Sen. The ugliest part of it was his mentioning Sen's daughter. Why would he mention Sen's daughter in his commentary, effectively advertising the circulating pictures? If he thought that some people were retaliating against Sen's criticism of Narendra Modi by circulating his daughter's pictures, then, having brought that matter up, he should at least have strongly denounced such a mode of retaliation.Sen's daughter is a graduate of Harvard University, and a high achiever in the field of dramatic arts. She is a writer and activist, apart from being an actor. How a modern woman expresses herself in the realm of art may not be palatable to some, but, in this day and age, an erudite professor is expected to show more respect for women involved in per

Letters: Unfair on Bhagwati's part

Banking business is on its radar too, but considering the strict terms for new bank licences, the group may consider a roundabout way to get into the sector

Growth drivers: it's all about money

Financial markets are responding to structural problems

No stopgap solutions

Early elections can cut short the period of uncertainty

Time for polls

When in doubt, blame the bureaucrats. Recently, Minister for Housing and Urban Poverty Alleviation Girija Vyas told a group of journalists that the flagship Rajiv Gandhi Awas Yojana has not been performing well owing to a lack of attention to the scheme. So, which predecessor was she talking about, Ajay Maken and Kumari Seilja, a journalist asked. Vyas immediately corrected herself and said she was referring to officials in the department, not her predecessors.

Official censure

Communist Party of India leader Gurudas Dasgupta last week became the unwitting reason for some musical chairs among top bureaucrats in the petroleum ministry. Earlier this month Petroleum Minister Veerappa Moily had Giridhar Aramana, the joint secretary in charge of gas pricing, transferred. Soon after, Petroleum Secretary Vivek Rae wrote the minister a letter asking him to revoke the decision. To no avail; on August 14, the gas pricing portfolio was re-allocated to another joint secretary. Within hours, however, an order came returning the portfolio to Aramana. The proximate cause, it appears, is a public interest litigation on gas pricing filed by Dasgupta. Until that issue is resolved, ministry officials said, Aramana would retain the portfolio because he has the most knowledge of the intricacies of gas pricing.

Gas problem

This refers to T N Ninan's column "Story of two devaluations" (Weekend Ruminations, August 17). The clinical analysis of the effects of the last two devaluations of the rupee should serve as an eye-opener to policymakers who seem to be struck by panic in the face of the rapid depreciation of the rupee during the past few weeks. Far from arresting the slide, rapid-fire measures such as capital controls are more likely to serve as red flags hindering foreign fund flows that can only make the situation worse.Considering there are obvious limits to import compression, it is surprising that scarcely any attention is paid to boosting exports, that hold the key to the major problem of the current account deficit. The cynicism on the export front is so deep-rooted that no one in authority seems to recognise the recent spurt in exports as a turnaround, and much less as a welcome consequence of the depreciating currency.I seek the indulgence of the author to point out here an arithmetical flaw t

Letters: Devaluation logic

The Forward Markets Commission, which is handling the National Spot Exchange crisis, is perplexed because the bourse keeps changing its statements. In a recent order, the commission lamented in explicit if ungrammatical terms: "NSEL had given different information of different occasion, for example while its meeting with Commission on 1st August, 2013, Shri Anjani Sinha, MD & CEO of NSEL informed that Exchange had settlement guarantee fund (SGF) of Rs 860 crores, where as in written reply to the mail dated 1st August, 2013, submitted that exchange had SGF of Rs 738.55 crores. However, during interaction with Board of NSEL, buyer, and seller on 4th August, 2013, it was informed that SGF had only Rs 62 crores." The commission also said with regard to the details on stocks of commodities lying at warehouses, "three sets of information had been given within a span of 7 days against the same buyer".

Diminishing balance

CRISIL has analysed the sales performance of 8,500 micro, small, and medium enterprises (MSMEs) from 2009-10 to 2011-12 (refers to financial year, April 1 to March 31). The average sales per enterprise grew by 14.43 per cent to Rs 2,068.89 lakh in 2010-11 over the previous year, but sales growth declined marginally to 13.74 per cent. Though the economic environment in the last couple of years remained subdued, owing to concerns about high inflation and interest rates, MSMEs have coped well due to their flexibility, strong cost-control, and their ability to adjust faster to the evolving business environment.Growth in index of industrial production (IIP; base year 2004-05) declined sharply to 2.9 per cent in 2011-12 from 8.2 per cent 2010-11, while gross domestic product (GDP) at factor cost at constant prices registered a growth of 6.2 per cent in 2011-12 (revised estimate), as against a growth of 9.3 per cent in 2010-11. Despite a sharp decline in both IIP and GDP, the sales growth of

MSMEs show the way in a sluggish economy

Govt seems to have overreacted to stem capital outflow

StatsGuru-18-August-2013

Prices have been stable in India since the international high in 2011

Indicus price monitor

India Inc is yet to adopt the concept of equal opportunity in its true sense

Business Standard

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