Friday, November 18, 2011

Prices go up in TN; Rupee weakens – shares tumble… what does that mean to you ? !!

Do you know the price of a milk packet ?  Tea (single tea !) is the most popular drink and you find so many chai shops in every street…… and the price of a cup of tea would certainly go up.

Yesterday, TN Chief Minister Jayalalithaa announced her government's nod for the hike in bus fares, power tariff and milk prices.   She dwelt at length on the present financial health of the organisations concerned and sought to impress the need for the present hike in prices.  Most of the State has got used to wake up with coffee made from Aavin milk.  Aavin is the  trademark of the Tamilnadu Co-operative Milk Producers' Federation Limited, a Tamil Nadu-based milk producer's union.  The electricity charges are also to go up.  For some, who don’t even know what travel in a city bus is like, these may not have any impact at all.   The price of standard pasteurised 1 litre milk packet was Rs.17.75 which has risen to Rs.24/- now !  [Do you know, how much – or how many litres are consumed at your home every month ?]

Aavin sachets at a distribution point
Photo courtesy : The Hindu

Most of us indulge in Stock market – some know it, some gamble, some for the sheer pleasure of being inside, some do it just like that and there are some who collect volumes of data, put pie charts and try to understand the market patterns……… at times there may not be much of difference in the results !!

For some, presently the market is a source of worry – it has been deteriorating so rapidly – there are reports that 136 companies from the BSE 500 hit their 52-week lows earlier this week.  132  out of those 136 were actually basking in the glory of being at 52-week highs exactly a year ago.  It includes some big names such as  Adani Power, BHEL, BPCL, Blue star, IOCL, LMW, SAIL, L&T, Provogue, MTNL, Renuga Sugars, State Bank of Travancore – it encompasses all sectors of capital goods, infrastructure, power, banking and more.   So what should be one doing – buying without looking into the chart or XL showing the portfolio  ? 

We were looking at Greece and the Europe’s debt crisis without realising that the rupee has been weakening to hit a fresh near 32 month low.  The euro slipped into a low against dollar and so also rupee went sliding down.  Though the downslide was predictable, the volatility was not ! – the dollar is close to Rs.51 now and rupee is expected to slide down more due to a combination of  unfavourable global and local factors. The predictions of Finance experts are not very optimistic.  Laurence Balanco, technical analyst  is quoted as satying that rupee could dive all the way to 58 against the dollar if it fell to the 52 mark and if the Nifty breaks below 5,000 levels, it will hurt the market confidence.

Some say that the travails of eurozone make the global investors go in for US dollar and more demand naturally pushes up its price bringing in a staggering impact on the weak rupee.  And when Indian imports go up, we end up paying more for the same product, which increases the current account deficit, which is the trade deficit plus interest payments and other transfers.

Elsewhere the  Home Ministry  whilst making no effort at Kudankulam or to contain the damage at Manipur arising out of blockage,  raised uncomfortable questions on the reliability of the massive biometric process.  Mr P Chidambaram is quoted as saying that the possibility of fake identity profile in UID is real.  The debate is however seen as a turf battle between Chidambaram and UIDAI Chairperson Nandan Nilekani  who holds the key to India’s biometric data.  Reportedly, more than 12 crore Unique Identity Numbers have been created by Aadhar and a battle at this stage on the biometric exercise shakes the foundation of its creation and existence.

With regards
S. Sampathkumar.   

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