Great turnaround by US FED chief may not help Indian economy at all despite some blitz in the stocks.It would rather push forward the reforms drive wherein lie US interests.

Palash Biswas

Email: palashbiswaskl@gmail.com

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Indian Finance minster P Chidambaram may be highly obliged as the key benchmark indices closed in the green for the third week in a row after the US Federal Reserve Chairman  Bernanke said that a highly accommodative monetary policy is needed for the US economy for the foreseeable future.But I am afraid that the great turnaround by US FED chief may not help Indian economy at all despite some blitz in the stocks.It would rather push forward the reforms drive wherein lie US interests.Mind you,US leaders convinced Chidambaram beyond doubt that India needs to do more to attract large FDI.Here you are, it is yet another matxh fixing for the IPL casino economy based on free flow of foreign capital at the cost of Indian production system and livelihood, natural resources, environment, life cycle and the people.Thus , you may take it easy as the Finace minister of India is sellin India very well, specifically in the United states of America!A robust trading relationship between the two countries is important, Ami Bera, the only Indian-American lawmaker in the Congress, has said.A Congressional committee, which in the recent past had been highly critical of India's policies on trade-related issues, has welcomed the decision of the country to put on hold the Preferential Market Access, which they alleged was protectionist in nature.The subcommittee, in a statement, said the Indian government has announced plans to revisit and review its "protectionist" Preferential Market Access (PMA) policy. This is the deal, P Chidambaram has struck. Thus,Chidambaram and Anand Sharma are in the US to reach out and reassure American investors that the India growth story isn't dead. The growth story based on exclusion,ethnic cleansing, genocide culture, false data and false statics and revised definition!

Fundamental problems of Indian Economy have not been addressed neither the fundamentals have changed a little bit. Agricultural growth rate has touched the bottom and there is no indication of improvement in industrial production.Indian environment is interdependent to agro sector.India's factory output contracted by 1.6 per cent in May versus 1.9 per cent for the previous month, after four months of growth as production in manufacturing and mining sectors slumped from a higher base a year ago.Industrial growth data also revealed that growth in the manufacturing sector fell at minus 2 per cent versus 2.8 per cent in the previous month. The power sector grew at 6.2 per cent as against 0.7 per cent in the previous month.

US Treasury Secretary Jacob Lew has welcomed Finance Minister P. Chidambaram's efforts to address the concerns about investment climate in India and invited him for the US-India Economic and Financial Partnership meeting here this fall.

Chidambaram, who ended his four-day US visit yesterday, held detailed meetings with Lew and US Trade Representative Mike Froman on Friday.The Minister also expressed concern over the proposed immigration law that would affect the interest of Indian software companies.

"Secretary Lew welcomed Finance Minister Chidambaram's efforts to engage with US investors in Washington this week, and he encouraged the Indian Government to continue to implement economic reforms that will further deepen our bilateral trade and investment relationship," the Department of Treasury said in a readout of the meeting.

Lew consulted with Chidambaram on economic conditions in India and the US, and on policy priorities for the July 19-20 meeting of G-20 finance ministers and central bank governors.

Froman on his part welcomed Chidambaram's efforts to address the concerns about the investment climate in India, including through proposed reforms to lift the foreign direct investment restrictions.

It is carnival times for market dominating communities as the spending power of a majority of people in the high-income group continues to rise amid the economic slowdown while the ninety nine percent is at the verge of starvation.The minority corporate government has introduced food security for one third of us amidst ne less than ten percent inflation striking deeply into the fiscal management and disturbing fiscal deficit  and balance of payment as well. Whereas real food security may be chieved with priority to cultivation.It is nowhere is achieved  with any social scheme meant for increment for government expenditure for lequidity of purchaing capacity to boost the open market hunting. It is against the laws of open market and  happens to be nothing but digital biometric fraud!

Look, "Despite the global economic slowdown, the size of high-income group consumers continues to grow and they spend over 40 per cent of their monthly income on luxury items, whereas middle-income group consumers have come under heavy pressure," Assocham said in a statement on the survey.

The respondents said the slowdown in the economy had not affected their spending patterns, with many of them stating that maintaining their lifestyle was an extremely important facet of their social life, it said.

What slowdown? It is nothing but corporate lobbying media hyped as merger and acquisition activity in India witnessed a significant surge in the April-June period of the year taking the year-to-date tally to USD 10.9 billion through 130 transactions, says global deal tracking firm mergermarket.Deal activity in the second quarter of this year more than doubled to USD 7.7 billion over the first quarter of 2013 (January-March) when deals worth USD 3.2 billion were announced. Moreover there was an uptick in both inbound and outbound deal activity with inbound M&A value jumped 190.4 per cent from Q1 and outbound deals surged 732.6 per cent above the Q1 2013 tally.

Destruction of Indian agrarian greenfields and conversion of cultivation to indiscriminate industrialisation and urbanisation have changed the destiny of humanscape all round. We are predestined to suffer from calamities as the latest Himalan tsunami has red alerted. But the comradors ruling us have no mercy either on Indian economy or Indian masses as they have no liability to Indian republic and its sovereignity.It is ceebration of death and distter as they are looking forwdrd Sensex to reach 20,500-20,600 levels next week. They just plan to sell of resources of India and everything that we,the people have, should b invested into the markets for trickling economics of exclusion.They just celebrate because, on the last trading day of the week, the market sentiment improved further, buoyed by good results from Infosys - the star performer of the day - and trade deficit figures. Trade deficit fell in June over 39 per cent MoM to US$ 12.24 billion. Despite facing an uncertain macro environment, changing regulatory regime and a volatile currency environment, Infosys reported a good set of numbers in Q1 and is cautiously optimistic about the rest of the year. However, the dollar guidance of 6-10 per cent, that the company maintained, is still far lower than the average industry expectations.

The mining sector fell to minus 5.7 per cent as against minus 3 per cent (MoM). During the beginning of the week we saw the International Monetary Fund (IMF) lowering India's growth forecast for FY14 to 5.6 per cent from the 5.8 per cent it projected in April, holding that the risks of a longer downturn in emerging market economies had increased because of domestic capacity constraints, slowing credit growth and weak external demand.

A roller coaster ride in the second half of the week was seen as the index gained nearly 3.4 per cent. The Sensex ended at 19,958.47, gaining 462.65 points, while the Nifty ended at 6,009, gaining 141.10 points for the week.

On a daily chart of the Nifty, a bat formation is visible which is likely to complete in the range of 6,135-6,153. The formation is on its way to D where a reversal formation would take prices near 5,950 levels. While looking at the Sensex chart, an inverted head and shoulder formation is visible, which can take the index to 20,600.

Indian economy is seeing signs of upward momentum helped by gradual reduction of inflationary pressure though the country's growth still remains "relatively weak", according to Paris-based think tank OECD.

In most of the developed countries, growth prospects are expected to witness moderate improvements, the Organisation for Economic Co-operation and Development (OECD) said.

The conclusions are based on Composite Leading Indicators that are designed to anticipate turning points in economic activities.

There is more concern among US businesses now about investing in India than was a few years ago though New Delhi was pursuing reforms, senior American leaders have said.

The US Trade Representatives (USTR), Mike Froman; and David Cote, chairman and CEO of Honeywell, said India needs to address the concerns of the American business on a host of policy issues so as to attract foreign direct investment in key areas like infrastructure sectors.

They said bilateral trade with India was way below that with China and called for addressing key issues.

At the same time, Froman and Cote - who are the US Co-Chairs of the India-US CEOs Forum - said the key Indian functionaries are committed to reforms.

They said those including finance minister P Chidambaram, commerce and industry minister Anand Sharma and the Planning Commission deputy chairperson, Montek Singh Ahluwalia, are committed to the reforms, "though it is not happening much as they would like to".

"In our relationship with a number of different countries, the business community often has been the strongest component of close relationships.

"When the business community feels that things are not going well and begin to raise questions about the relationship, it has an impact on the bilateral relationship on the politics, which you seen by the reaction from the members of the Congress as well. So that is so important," Froman said.

In an exclusive joint interview to PTI at the Foggy Bottom headquarters of the State Department after the meeting of the India-US CEOs Forum, the two representing the voice of Obama Administration and Corporate America, said their issues with India are recoverable.

"It is recoverable. That is why it is so important that we are requesting the Government of India to address these issues so that we can maintain the strong foundations for a good US India relationship," Froman said.

"There was a very frank discussion, where in body held back any issues," Froman said

"Over the last two years we have felt a cooling when it comes to US interests in investing in India.

"They are cooling, because we have seen a number of actions taken, each explainable in itself but cumulatively causing US investors to say aaaann, you know, I may be wanting to think up a little bit more," Cote said.

Responding to a question, Cote gave a sense that US companies are unlikely to be forthcoming in investing in India much unless their concerns are addressed.

"There is more concern now about investing in India than was a few years ago. This is all very recoverable.".

Froman said the US companies are the friends of India.

Indian shares rose more than 2 percent to their highest levels since early June as blue chips such as ITC staged a broad recovery from recent falls on hopesthat U.S. monetary stimulus would not end as early as feared.

   Federal Reserve Chairman Ben Bernanke said on Wednesday  the U.S. central bank would continue to pursue an accommodativemonetary policy as inflation remained low and the unemploymentrate might be understating the weakness of the labour market.

   That helped ease concerns about foreign selling that have hit Indian markets. Overseas investors have sold a net 100.8billion rupees ($1.68 billion) of shares since the start of June.

   Still, some caution also prevailed ahead of Infosys Ltd  earnings due on Friday, which will kick off the blue

chip reporting season, and data on industrial production and consumer prices also due on Friday.

   Deven Choksey, managing director, K R Choksey Securities Ltd, said Bernanke's statement assured the market that he was in no hurry to scale back stimulus.

   "Investors need to watch out for more measures on rupee depreciation for further direction," said Choksey.

   India's benchmark BSE index gained 1.87 percent after earlier hitting its highest mark since June 4, while the NSE stock index rose 1.92 percent, after earlier markingits highest intraday level since June 7.

   Both indexes were headed for their biggest daily percentage gains since June 28.

   Blue chips led gains, with ITC Ltd up 1.9 percent and HDFC Bank Ltd up 3.2 percent.

   Infosys gained 1.7 percent a day ahead of its April-June earnings.

   Shares in Mangalore Chemicals & Fertilizers Ltd (MCF)  surged 10 percent to a record high, hitting their maximum daily limit for a second consecutive session, on expectations the company is becoming a target for a takeover.

   Shares in Apollo Tyres Ltd gained as much as 2.45 percent, hitting their highest intraday level since June 18, after Morgan Stanley Asia (Singapore) Pte on Wednesday bought a 0.5 percent stake in the company via a bulk deal, NSE datashows.

   However among stocks that fell, State Trading Corp of India Ltd lost 3.8 percent after a government minister said India's cabinet approved planned stake sale in the company.

The wide divergence of opinion within the Federal Reserve over when to wind down its unprecedented support for the U.S. economy was on full display on Friday, starkly illustrating Chairman Ben Bernanke's leadership challenge for the rest of this year.

St. Louis Fed President James Bullard and Charles Plosser, his counterpart at the Philadelphia Fed, sat on the same panel at a conference here, but sang quite different tunes on what to do about the U.S. central bank's massive bond-buying program.

While Bullard and other more dovish policymakers want to keep buying assets until inflation rises and unemployment drops, Plosser and the more hawkish of the Fed's 19 policymakers want to reduce the pace sooner than later.

"It is time to exit from the asset purchase program in a gradual and predictable manner," Plosser told the 5th Annual Rocky Mountain Economic Summit.

After delivering his speech and fielding a few questions from bankers and economists, Bullard told reporters: "I'd like some kind of reassurance that inflation was moving back toward target" before reducing the bond buying.

It was yet another clue for investors as they try to predict when the Fed will reduce the $85 billion in monthly bond purchases, a policy meant to encourage investing, hiring and overall U.S. economic growth.

According to minutes of the Fed's June policy meeting, around half of the 19 policymakers gathered there expected to end the quantitative easing program (QE) by late this year, while the other half wanted to keep buying bonds into next year.

That contrasts with the conditional timeline Bernanke articulated in a news conference after the meeting on June 19, when he said the Fed's 12-member policy-setting committee expects to end QE by mid-2014, as long as economic growth continues as expected.

While the official statement from the 12-member Federal Open Market Committee made no mention of that timeline, Bernanke said he was speaking on its behalf. The comments prompted a global market selloff, from bonds to stocks to emerging-market currencies, over the following few days.

Markets have since calmed, and Bernanke on Wednesday reemphasized the Fed's commitment to accommodative policy.

San Francisco Fed President John Williams, speaking in Vancouver, British Columbia, sought to downplay the importance of the range of views.

Only a few months ago, Williams himself had called for a stop to bond-buying by the end of the year.

But inflation has come in lower than he expected, prompting him to make a "small shift" in his own view, so now he fully" supports Bernanke's mid-2014 target.

"We are probably going to need to have more accommodation than I had been thinking a couple months ago because of the inflation data," he said.

But the gap between his current view and his old view, which half the Fed officials share, is not a "substantive difference."

"I don't see these differences as being that big," he said.

Lower-than-expected inflation helped convince him to make that "small shift" in his policy view, Williams said, adding that exactly when the Fed ends the bond buying program is not as important as making sure the high unemployment rate comes down and undesirably low inflation rises back to the Fed's 2 percent target.

The policy-setting FOMC is made up of more dovish officials than the broader group of 19. Yet the fact that half, and possibly more than half, of the broader group expect the accommodation to end at least six months ahead of Bernanke's timeline could sow confusion in financial markets.

"The message continues to breed volatility and eye-rolling criticism of Fed communication efforts," said Eric Green, an interest rate strategist at TD Securities in New York.

"What we do know is that half of the broader FOMC policy universe wants to end all asset purchases this year and it is a bias hard to dismiss, even if many are non-voters this year," he wrote in a client note.

INFLATION A GROWING CONCERN

While Bullard has a vote on policy this year, Plosser regains his vote next year. Bullard dissented at the June meeting due in part to a lack of concern over weak inflation readings.

Inflation as measured by the Personal Consumption Expenditure (PCE) price index is around 1 percent, below the Fed's 2-percent goal, despite the bond-buying and four-and-a-half years of near-zero interest rates.

"If inflation went lower than where it is on a PCE basis then the (FOMC) would have to re-think its strategy," Bullard told reporters.

"The simplest thing to do would be to say that we would stick with the QE program for longer ... until we see inflation coming back to target," he added.

Plosser, an long-time critic of the bond-buying, told reporters: "I don't think it has been very effective, I think we are taking huge risks ... I would just as soon unwind from that."

Since Bernanke articulated the QE timeline on June 19, Wall Street economists have increasingly forecast the Fed will reduce the pace of QE at a meeting scheduled for September. There is also one set for the end of this month.

Also since June 19, longer-term market-based yields have risen sharply before more recently shedding some of those gains. Benchmark 10-year Treasury notes slipped on Friday, with the yield rising again to 2.59 percent.

WHEN TO TIGHTEN POLICY

Turning to when the Fed should finally raise interest rates, Plosser argued the central bank should commit to tightening policy when the unemployment rate falls to a 6.5-percent "trigger," instead of just using that level as a rough guidepost for considering a rate rise.

Plosser's proposal, introduced in his speech on Friday, runs against the grain of most other U.S. monetary policy makers, who have increasingly stressed that rates could well stay near zero well after the U.S. jobless rate hits that level.

To clarify its future intentions and to give the economy even more support, the Fed said in December it would keep rates that low until unemployment falls to 6.5 percent, as long as inflation expectations did not rise above 2.5 percent. Unemployment was 7.6 percent last month.

Plosser said these so-called "thresholds," while an improvement, still leave too much room for interpretation. The Fed should "commit to its forward guidance" by treating those levels as "triggers rather than thresholds," he said.

The "FOMC has offered a variety of changing targets or signals about future behavior," he told the conference, which was hosted by the Global Interdependence Center.

"Although the aim was to clarify our policy intentions, I believe the repeated changes have likely caused more confusion than illumination."

The proposal may be a long shot, since influential officials have recently stressed the Fed is in no rush to raise rates.

On Wednesday, Bernanke renewed his message that policy would remain "highly accommodative" and rates could well stay low even after the jobless rate falls below the threshold.

"There will not be an automatic increase in interest rates when unemployment hits 6.5 percent," he said.

On Friday, Bullard said the Fed could even formally lower that threshold, but added that such a move would require more deliberation.