• Inflation figures for May’16 released. CPI based inflation rose to 5.76%, second consecutive month of increase after witnessing moderation till March’16 primarily due to increasing food prices. Similarly, WPI based inflation also rose to 0.79%, second month of increase after remaining in the negative zone for more than a year. It may be noted that RBI kept its policy rates constant last week due to fear of rising inflation.

  • However, Balance of Payment figures have given some comfort. India’s Current Account Deficit has shrunk to barely $ 0.3 bn in Q4’16, sharply lower from $ 7.1 bn in Q3’16. The saving has come primarily due to lower trade deficit. (More on this, in another story)
  • Two smaller news from Power sector reflect the changing scenario and move towards more efficient market. Orissa decides to surrender its power allocation from central generation utility as its finds cheaper ways to meet its needs, whereas NTPC enters the power exchange to sell its surplus power, called Unrequisitioned Power Surplus (URS). (My earlier story on the same – http://indiaeconomyandbusiness.com/2016/05/24/efficient-electricity-market/)
  • Tata power acquires renewable power generations assets from Welspun group for a consideration of Rs 9,250 crore. However, it may not be such a good deal for the company, which stretches its balance sheet considerably.
  • Government release first ever Aviation Policy liberalizing the rules and putting big thrust on connecting the smaller towns, an initiative which has the potential like the penetration achieved by the telecom sector.
  • International – Microsoft announces acquisition of Linkedin for $ 26.2 bn in an all cash deal. While Microsoft has all the cash it needs to finance the deal, an all cash deal is a huge risk it has agreed to take, especially considering the performance of its past acquisitions. In comparison, Facebook acquired Whatsapp in a smarter fashion with a significant part paid as equity out of a total consideration of $ 22 bn.
  • US Fed keeps policy rates unchanged in line with expectations. (My earlier story on this.  http://indiaeconomyandbusiness.com/2016/04/28/us-fed-rate/)

(Image courtesy of ddpavumba at FreeDigitalPhotos.net)

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