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Fin Markets

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Monetary transmission strengthened during Q4 of 2010-11 with interest rates firming up gradually across the spectrum as liquidity remained in deficit mode. The policy transmission to deposit and lending rates is visible in the current base rate regime. Asset prices, including property prices, generally remained range bound. Equity markets experienced orderly correction in Q4 of 2010-11. The rupee exhibited two-way movements against the US dollar without any intervention or active capital account management. Going forward, the financial markets need to brace up to the geopolitical risks in MENA, default risks in the Euro zone and movements in cross-border capital flows.

Global portfolio rebalancing to impact domestic financial markets
V.1 The year 2010-11 was marked by periods of volatility and tranquility in the Indian financial markets. With global uncertainties rising, volatility may aggravate further, partly from building up of speculative positions in global commodity markets. Portfolio choices are also governed by the geopolitical developments in the MENA region and availability of easy liquidity in certain advanced economies. An additional source of uncertainty for the global financial markets is the sovereign and banking sector default risks in parts of Europe (Chart V.1a) There could, however, be a rebalancing of investors’ portfolio if economic recovery in major advanced economies gains traction and causes a quicker-than-anticipated withdrawal of monetary accommodation. With rise in global equity markets (Chart V.1b) there may be a shift in investors’ preference away

from the EME markets to those of the advanced economies, particularly the US. V.2 While credit spreads shrank markedly during Q4 of 2010-11, bond yields in advanced economies firmed up reflecting the post-crisis rise in debt to GDP ratio as well as incipient signs of inflationary concerns. Apart from food prices, the rising expectations of increased crude oil prices following the geo-political risks in MENA raised inflationary expectations especially in EMEs. The initial reaction to the downside risks associated with the natural calamity hit Japanese economy has subsequently given rise to the expectations of boost in demand for its reconstruction.

Global uncertainties and anti-inflationary monetary policy stance impacting Indian markets, but orderly conditions prevail
V.3 Global uncertainties as well as domestic developments impacted Indian financial markets.

Chart V.1: Indicators of Global Financial Market Developments
a. Sovereign CDS Spreads - Euro Area
1600 1400 1200 1600 1400 1200

b. Global Equity Markets
23000 21000 19000 15000 800 600 400 200
4/1/2009 4/29/2009 5/27/2009 6/24/2009 7/22/2009 8/19/2009 9/16/2009 10/14/2009 11/11/2009 12/9/2009 1/6/2010 2/3/2010 3/3/2010 3/31/2010 4/28/2010 5/26/2010 6/23/2010 7/21/2010 8/18/2010 9/15/2010 10/13/2010 11/10/2010 12/8/2010 1/5/2011 2/2/2011 3/2/2011 3/30/2011

Basis Points



800 600 400 200 0
2-1-2011 4-1-2009 6-1-2009 10-1-2009 8-1-2009 12-1-2009 2-1-2010 4-1-2010 6-1-2010 10-1-2010 8-1-2010 12-1-2010 4-1-2011

13000 11000 9000 7000

Greece Italy

Ireland Belgium

Portugal Germany

Spain MSCI World Index MSCI EM Index Sensex (RHS)





Financial Markets

The Indian markets, however, remained largely orderly, despite the challenges posed by persistent inflation and high current account deficit. V.4 Call rate firmed up in step with the policy rates and remained above the upper bound of the LAF corridor for a major part of Q4 of 201011, due to frictions caused by skewed SLR holdings (Chart V.2a). While issuances and rates on certificates of deposits (CDs) continued to increase during the quarter reflecting banks’ efforts to mobilise more funds, issuance of commercial paper (CP) moderated on account of the strong credit growth, even as the rates continued to be high reflecting general liquidity stress (Chart V.2b). The yield curve for government securities (G-sec) further flattened during Q4 in response to policy rate hike expectations and liquidity tightness. V.5 The Indian rupee appreciated moderately against the US dollar. Stock markets remained volatile for the greater part of Q4, weighed by domestic and global concerns, but appreciated towards the close of the quarter on the back of strong foreign portfolio inflows. Returns in the Indian equity markets were relatively lower than most other EMEs (Table V.1). Prices in the housing market continued the rising trend during the third quarter of 2010-11.

Money market rates reflect liquidity conditions
V.6 The money market was generally orderly although liquidity conditions remained in deficit mode during the fourth quarter of 2010-11. Reflecting the high credit demand, high currency growth, and unspent surplus balance in the government account as also the hikes in policy rates by the Reserve Bank, the call rates mostly remained above the repo rate during Q4 (Chart V.2a, Table V.2). The rates in the collateralised segments also rose in line with the trend in the call money market. V.7 Transaction volumes in the collateralised borrowing and lending obligation (CBLO) and market repo segments were higher during Q4 than Q3 of 2010-11 (Table V.3). The collateralised segment of the money market remained predominant, accounting for more than 80 per cent of the total volume of transactions during 2010-11. V.8 With strong credit growth not matched by commensurate deposit growth, banks increasingly financed their advances by raising CDs at higher rates. During surplus liquidity situations, when the CP rates are lower than the Base Rates, corporates take greater recourse to the CPs. They, however, prefer bank financing,
(Per cent)

Table V.1: Stock Price Movements and PE Ratios in EMEs
Stock Price Variations Item 1 Indonesia (Jakarta Composite) Brazil (Bovespa) Thailand (SET Composite) India (BSE Sensex) South Korea (KOSPI) China (Shanghai Composite) Taiwan (Taiwan Index) Russia (RTS) Malaysia (KLCI) Singapore (Straits Times) @ : Year-on-year variation. Source: Bloomberg. End-March End-March End-March 2010@ 2011@ 2011* 2 93.7 72.0 82.6 80.5 40.3 31.0 52.0 128.0 51.4 69.9 3 32.5 -2.5 32.9 10.9 24.4 -5.8 9.6 30.0 17.0 7.6 4 -0.7 -1.0 1.4 -5.2 2.7 4.3 -3.2 15.5 1.7 -2.6 Item 5 Indonesia (Jakarta Composite) Brazil (Bovespa) Thailand (SET Composite) India (BSE Sensex) South Korea (KOSPI) China (Shanghai Composite) Taiwan (Taiwan Index) Russia (RTS) Malaysia (KLCI) Singapore (Straits Times) P/E Ratios End-March 2010 6 13.6 16.4 12.4 17.7 12.2 23.1 19.1 9.8 18.9 13.4 End-Dec. End-March 2010 2011 7 20.9 13.9 15.2 18.7 16.0 16.1 15.4 8.6 17.4 11.3 8 18.5 11.6 14.0 17.3 12.9 16.6 14.7 9.6 17.0 10.9

* : End-March 2011 over End-December 2010.


Macroeconomic and Monetary Developments in 2010-11

Table V.2: Rates in Domestic Financial Markets
Money Market Call Market Rate* Repo Rate (Per cent) (Non-LAF) (Per cent) CBLO Rate (Per cent) CommCertifiercial cates of Paper Deposit WADR WAEIR (Per cent) (Per cent) 5 6.29 5.37 6.85 6.82 6.93 7.32 7.82 12.15 12.22 10.10 8.81 9.05 10.40 6 6.07 5.56 5.17 6.37 6.69 7.17 7.34 7.67 8.16 9.15 9.42 10.04 9.96 Forex Market G-Sec Corporate Exchange 10-year Bonds Rate yield Yield - (`/US$) (Per cent) AAA 5-Yr bond (Per cent) 7 7.94 8.01 7.56 7.59 7.69 7.93 7.96 7.68 8.03 8.03 8.15 8.12 8.00 8 8.61 8.37 8.15 8.21 8.27 8.52 8.52 8.58 8.64 8.89 9.05 9.25 9.23 9 45.50 44.50 45.81 46.57 46.84 46.57 46.06 44.41 45.02 45.16 45.39 45.44 44.99 Bond Market Stock Market Indices CNX BSE Nifty Sensex ** **

1 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11

2 3.51 3.49 3.83 5.16 5.54 5.17 5.50 6.39 6.81 6.67 6.54 6.69 7.15

3 3.32 3.04 3.79 5.29 5.37 5.12 5.35 5.96 6.42 6.27 6.21 6.45 6.56

4 3.15 2.95 3.67 5.21 5.25 5.01 5.24 5.88 6.14 6.20 6.20 6.43 6.46

10 5178 5295 5053 5188 5360 5457 5811 6069 6055 5971 5783 5401 5538

11 17303 19679 16845 17300 17848 18177 19353 20250 20126 19228 19289 18037 18457

*: Average of daily weighted call money rates. WADR: Weighted Average Discount Rate.

**: Average of daily closing indices. WAEIR: Weighted Average Effective Interest Rate.

once the CP rates rise above the Base Rate. Leasing-finance and manufacturing companies continue to be the major issuers of CPs (Table V.4). V.9 The primary yields on Treasury Bills (TBs) firmed up during Q4 of 2010-11 in line with the spike in short-term interest rates (Table V.5). V.10 Annualised volatility of one year interest rate swaps increased during Q4 of 2010-11 (Chart V.3). This may reflect market uncertainties on future short-term money market rates.

The yield curve responds to monetary actions and lower budgeted borrowings V.11 Responding to the persistently high inflation and tightening liquidity conditions, G-sec yields, both in the primary and secondary markets, firmed up during January 2011, but moderated thereafter. A lower-than-expected fiscal deficit and market borrowing programme for the first half of 2011-12 improved market sentiments. Yields eased in March 2011 in response to announcement of auctioning

Chart V.2: Movement in Money Market Rates and Turnover a: Policy Rates and Money Market Rates
8 7 6
` Thousand crore

b. CP and CD outstanding vis-a-vis Non-food Credit Growth
450 400 350 300 250 200 150 100 50 30 25 20 15 10 5
Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11

Per cent

5 4 3 2 1 0
Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Mar-09 Apr-09 May-09 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11



Market Repo (Non-LAF) rate Reverse Repo rate

Call Money rate Repo rate

CBLO rate

Commercial Paper

Certificates of Deposits

Non Food Credit (Y-o-Y growth) (RHS)


Per cent

Financial Markets

Table V.3: Average Daily Volumes in Domestic Financial Markets
(` crore)

Money Market LAF Call Money 3 8,812 8,187 8,393 7,129 9,477 7,958 8,606 8,920 8,865 9,436 7,758 10,356 11,278 Market Repo 4 19,150 20,319 17,610 9,481 12,011 15,553 15,927 14,401 9,967 12,989 11,546 13,150 15,134 CBLO Commercial Paper * 6 75,506 98,769 1,09,039 99,792 1,12,704 1,26,549 1,12,003 1,49,620 1,17,793 82,542 1,01,752 1,01,291 80,305 Certificates of Deposit* 7 3,41,054 3,36,807 3,40,343 3,21,589 3,24,810 3,41,616 3,37,322 3,43,353 3,32,982 3,61,408 3,77,640 4,18,524 4,24,740

Bond Market G-Sec @ 8 6,221 10,682 18,774 14,523 10,105 12,488 11,582 10,355 7,645 6,939 7,025 6,994 8,144

Forex Market Corpor- Inter-bank rate (US$ mn) Bond 9 1598 1671 1653 1236 1450 1146 1254 1151 922 830 912 863 1314 10 16,378 18,411 20,122 18,476 17,126 18,476 18,787 25,053 22,092 17,737 20,054 P 19,673 P 22.211 P

Stock Market #

1 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11

2 37,640 57,150 32,798 -47,347 -46,653 -1,048 -24,155 -61,658 -99,311 -1,20,495 -92,933 -78,639 -80,963

5 60,006 50,891 42,274 31,113 29,102 45,181 53,223 43,831 32,961 43,784 44,815 42,292 43,201

11 9,191 9,262 8,836 8,605 8,443 9,656 10,446 11,404 11,190 8,574 8,430 8,011 7,458

*: Outstanding position P:Provisional. #: Comprises volumes in BSE and NSE. @: Average daily outright trading volume in Central Government dated securities. Note: In col. 2 (-) ve indicates injection of liquidity while (+) ve indicates absorption of liquidity.

of unutilised investment limits for FIIs for GSec and corporate debt. The flattening of yield curve despite inflationary pressures may have been aided by policy rate hikes and temporarily lower issuances (Chart V.4a). V.12 In the primary market, investors’ sentiment remained positive, as reflected in the sustained bid-cover ratio, which stood in the

range of 1.39-3.87 during the year and 1.69-3.25 during the fourth quarter. More long dated securities were issued to take advantage of the yield curve movements (Table V.6). The spreads on five-year corporate bonds over the corresponding government bond yield widened during the fourth quarter of 2010-11 on the back of tight liquidity conditions (Chart V.4b).
(` crore)

Table V.4: Major Issuers of Commercial Paper
End of Period 1 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Leasing and Finance Amount 2 27,183 34,437 31,648 36,027 39,477 42,572 57,161 58,098 80,306 58,871 49,282 55,591 51,339 46,350 Share (%) 3 62 50 40 40 52 43 45 52 54 50 60 55 51 58 Manufacturing Amount 4 12,738 23,454 31,509 42,443 22,344 43330 55,933 40,485 54,894 45,457 24,960 35,601 40,262 22,695 Share(%) 5 29 34 40 47 30 43 44 36 37 39 30 35 39 28 Financial Institutions Amount 6 4,250 10,830 16,071 11,835 13,685 13,890 13,455 13,420 14,420 13,465 8,300 10,560 9,690 11,260 Share(%) 7 9 16 20 13 18 14 11 12 9 11 10 10 10 14 Total Outstanding 8 44,171 68,721 79,228 90,305 75,506 99,792 1,26,549 1,12,003 1,49,620 1,17,793 82,542 1,01,752 1,01,291 80,305


Macroeconomic and Monetary Developments in 2010-11

Table V.5: Treasury Bills in the Primary Market
Annualised Volatility (in Per Cent)

Chart V.3: Volatility in Treasury Bill and Interest Rate Swap
80 70 60 50 40 20 30 20 10 0
4-2-2009 5-3-2009 6-3-2009 7-4-2009 8-4-2009 9-4-2009 10-5-2009 11-5-2009 12-6-2009 1-6-2010 2-6-2010 3-9-2010 4-9-2010 5-10-2010 6-10-2010 7-11-2010 8-11-2010 9-11-2010 10-12-2010 11-12-2010 12-13-2010 1-13-2011 2-13-2011 3-16-2011 4-16-2011

40 35 30 25

1 2009-10 2010-11 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11

2 3,80,000 3,03,000 36,000 36,000 12,000 16,000 33,000 13,000 26,500 24,000 19,000 21,000 29,500 37,000

3 3.57 6.04 4.14 4.39 5.29 5.51 6.15 6.11 6.57 6.82 7.14 7.17 7.15 7.23

4 3.97 6.47 4.64 4.76 5.31 5.86 6.41 6.41 6.82 7.15 7.29 7.37 7.51 7.49

5 4.38 6.66 5.07 4.92 5.41 5.88 6.48 6.59 6.97 7.14 7.37 7.55 7.68 7.61

15 10 5 0

364 day T-Bill

364 day IRS(RHS)

V.13 Interest Rate Futures (IRF) on 91-day TBs were permitted by the Reserve Bank in March 2011. These futures will be cash settled with the final settlement price based on the weighted average price/yield obtained in the weekly auctions on the date of expiry of the contract. This is likely to enhance liquidity and also to provide more options for the financial markets to hedge interest rate risks through exchanges. Deposit and lending rates transmit the antiinflationary policy stance V.14 Stronger transmission is evident as banks continued to increase both the lending rates and deposit rates across maturity spectrums. Deposit rates have risen rapidly to accommodate fast rise in credit and to offset the tight liquidity

environment during 2010-11. Scheduled commercial banks (SCBs) raised their deposit rates in the range of 25-500 basis points between end-March 2010 and end-March 2011 across maturities. The deposit rates for 1-3 years maturity increased by 50-125 basis points during the fourth quarter (Table V.7). Several banks reviewed and increased their base rates by 75-125 basis points between July 2010 and March 2011. Base rates of 64 major banks with a credit share of around 98 per cent ruled in the range of 8.0-9.5 per cent in March 2011, reflecting greater convergence since base rates became operational effective July 1, 2010.

Exchange rate remains orderly and flexible
V.15 The rupee remained stable during the fourth quarter of 2010-11, without any

Chart V.4: Turnover and Yield in the Bond Market a: Government Securities Yield Curve
8.5 8.0

b: AAA-rated Corporate Bonds Spread over G-Secs
10 9 8 7 6 5 4 3 2 1 0
04/01/09 05/01/09 06/01/09 07/01/09 08/01/09 09/01/09 10/01/09 11/01/09 12/01/09 01/01/10 02/01/10 03/01/10 04/01/10 05/01/10 06/01/10 07/01/10 08/01/10 09/01/10 10/01/10 11/01/10 12/01/10 01/01/11 02/01/11 03/01/11 04/01/11

Per cent

7.0 6.5 6.0 5.5 5.0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31-Dec-10 31-Mar-11 28-Apr-11 31-Mar-10

Per cent


200 180 160 140 120 100 80 60 40 20 0

Term in years

AAA 5-Yr Corp Bond

5-Yr G-sec

Spread (RHS)


Basis Points

Annualised Volatility (in Per Cent)

Year/ Month

Notified Average Implicit Yield at Amount Minimum Cut-off Price (Per cent) (` crore) 91-day 182-day 364-day


Financial Markets

Table V.6: Issuances of Central and State Government Dated Securities
Item 1 Central Government Gross amount raised (`crore) Devolvement on Primary Dealers (`crore) Bid-cover ratio (Range) Weighted average maturity (years) Weighted average yield (per cent) State Governments Gross amount raised (`crore) Cut-off yield (Per cent) Weighted average yield (per cent) 2009-10 2 2010-11 3

4,51,000* 4,37,000 7,219 1.4-4.3 11.2 7.2 1,31,122 7.0-8.6 8.1 5,772 1.4-3.9 11.6 7.9 1,04,039 8.1-8.6 8.4

turnover in OTC forwards and swap involving rupee remained sluggish during this period. While turnover in the merchant segment decreased from USD 93 billion in October 2010 to USD 64 billion in March 2011 (up to March 25), the turnover in the interbank segment declined from USD 418 billion to USD 367 billion for the corresponding period.

Equity markets underperform, remain volatile
V.17 Reflecting several macroeconomic uncertainties, Indian equity markets underachieved and remained volatile during Q4 of 2010-11. Markets lost much of the valuation gains made during the last four months of 2010, when they outperformed most of the international markets. During Q4 of 2010-11, the BSE Sensex has been the worst performer amongst the major equity indices. Slowdown of net equity investment by the FIIs in India largely contributed to the decline (Chart V.6a). In terms of the coefficient of variation, the volatility of Sensex between end-December 2010 and end-March 2011 at 3.95 per cent is much higher than the 2.0 per cent of the MSCI emerging market index and 1.9 per cent of the MSCI world index. The equity derivatives segment had gone up

* : Inclusive of MSS desequestering of `33,000 crore.

intervention or active capital account management. It exhibited two-way movement against major international currencies except Euro. There was a modest appreciation against the US dollar since mid-February 2011 (Chart V.5a). While the turnover in inter-bank segment of the foreign exchange market remained volatile, the turnover in the merchant segment increased in Q4 of 2010-11. V.16 Volumes in the exchange traded currency derivatives increased during Q4 of 2010-11 (Chart V.5b). The growth in volumes particularly for currency futures and options has been supported by retail participation and companies. In fact, the monthly trend of

Table V.7: Deposit and Lending Rates of Banks
(Per cent) Sep-10 1 1. Domestic Deposit Rate (1-3 years tenor) a. Public Sector Banks b. Private Sector Banks c. Foreign Banks Base Rate a. Public Sector Banks b. Private Sector Banks c. Foreign Banks Median Lending Rate* a. Public Sector Banks b. Private Sector Banks c. Foreign Banks 2 6.75-7.75 6.50-8.25 3.00-8.00 7.50-8.25 7.00-8.75 5.50-9.00 7.75-13.50 8.00-15.00 7.25-13.00 Dec-10 3 7.00-8.50 7.25-9.00 3.50-8.50 7.60-9.00 7.00-9.00 5.50-9.00 8.75-13.50 8.25-14.50 8.00-14.50 Mar-11 4 8.00-9.75 7.75-10.10 3.50-9.10 8.25-9.50 8.25-10.00 6.25-9.50 -



* : Median range of interest rates at which at least 60 per cent of business has been contracted.


Macroeconomic and Monetary Developments in 2010-11

Chart V.5: Trends in Forex Market a: Nominal Exchange Rate of the Rupee
58 56 54 52 50 48 46 44 42 40
2-Apr-09 28-Apr-09 24-May-09 19-Jun-09 15-Jul-09 10-Aug-09 5-Sep-09 1-Oct-09 27-Oct-09 22-Nov-09 18-Dec-09 13-Jan-10 8-Feb-10 6-Mar-10 1-Apr-10 27-Apr-10 23-May-10 18-Jun-10 14-Jul-10 9-Aug-10 4-Sep-10 30-Sep-10 26-Oct-10 21-Nov-10 17-Dec-10 12-Jan-11 7-Feb-11 5-Mar-11 31-Mar-11 26-Apr-11

b. Exchange traded currency derivatives for USD-INR
85 80 75 90,000 80,000 70,000 60,000 10000 8000 6000 4000 2000 0 12000

` crore

50,000 40,000 30,000 20,000 10,000 0

65 60 55 50






`/US Dollar `/Pound Sterling (RHS)

`/100 Yen `/Euro (RHS)


substantially over the year and currently constitutes almost 90 per cent of the overall investments. FII investments accounted for 19.8 per cent of the total investments in derivatives (Chart V.6b) V.18 The activity in the primary segment of the domestic capital market remained buoyant during the first three quarters of 2010-11, but moderated during Q4. However, resources raised through public issuances were higher during 2010-11 than the previous year (Table V.9). During the year, resource mobilisation by mutual funds turned negative, owing to high volatility in the market, surfacing of risks in the real sector, lower retail investments possibly on account of higher returns on competing instruments (bank deposits in particular) and also due to lower corporate support to the MFs.

Asset price concerns remain as housing prices remain firm
V.19 Property prices continued to rise in most cities during Q3 of 2010-11, as reflected in the Reserve Bank’s Quarterly House Price Index (HPI) based on data in respect of seven cities collected from the Department of Registration and Stamps (DRS) of the respective State Governments. However, the indices for Delhi and Chennai witnessed a decline during this period (Chart V.7).

Macro-factors may determine financial market movements ahead
V.20 Going forward, macroeconomic factors may dominate financial markets movements in 2011-12. Macro-risks are large and uncertainty abounds on how they might play out. Global commodity markets are witnessing firming up

Chart V.6: Movement in Stock Prices and Turnover a: Stock Prices Indices and Institutional Investment
35000 30000 25000 20000 25000 20000 3,500 3,000

b: Activity in the Indian Stock Markets
800 700


Options (RHS)








` Thousand crore

` crore


15000 10000 5000 0 -5000

10000 5000 0 -5000
Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11

2,000 1,500 1,000 500 0
Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11

500 400 300 200 100 0

-10000 -15000


FII Investment Mutual Fund Investment Average BSE Sensex (RHS)

Derivative Segment Cash Segment FII in Derivatives (RHS)


` Thousand crore




` crore


Financial Markets

Table V.8: Key Stock Market Indicators
Indicator 2009-10 1 1. BSE Sensex/S&PCNX Nifty (i) End-period (ii) Average 2. Coefficient of Variation 3. Price-Earning Ratio @ 4. Price-Book Value Ratio 5. Market Capitalisation to GDP Ratio (per cent)@ 2 17527.77 15585.2 11.88 21.32 3.9 98.9 BSE Sensex 2010-11 3 19445.22 18605.18 6.32 21.15 3.7 86.8 2009-10 4 5249.1 4657.76 11.33 22.33 3.7 96.4 NSE Nifty 2010-11 5 5833.75 5583.54 6.4 22.14 3.7 85.1

@: As at end-period. Source: Bombay Stock Exchange Ltd. (BSE) and National Stock Exchange of India Ltd. (NSE).

Chart V.7: Trends in House Price Index

160.0 140.0 120.0 100.0 80.0

Mumbai Lucknow

Delhi Kolkata

Bengaluru Chennai*


* Chennai index is Property Price Index containing both residential and commercial properties

of prices. Even though several hedge funds have booked profits in the global commodity markets in mid-March 2011 following the Japan earthquake, a fresh wave of speculation has arisen immediately after profit-booking as a result of MENA region event risk.

V.21 Domestic debt markets are likely to be conditioned by evolving fiscal and monetary policy considerations as well as possible hardening of global yields. However, the path of fiscal consolidation embarked upon by the Government could help to ease the pressure on long-term bond yields in the G-Sec market, if inflationary expectations are reined in. Sustained growth momentum could, however, continue to exert pressure on interest rates through high demand for credit. The risk of volatile portfolio flows impacting asset prices and exchange rate remains in the face of growing uncertainties in the global markets. The expected change in operating procedures could help improve the transmission of monetary policy on an enduring basis, enabling interest rate channel to work better.
(` crore)

Index (Q4:2008-09=100)

Q1: 2010-11

Q2: 2010-11

Q4: 2008-09

Q1: 2009-10

Q2: 2009-10

Q3: 2009-10

Table V.9: Resource Mobilisation from Capital Market
Category 1 A. Prospectus and Rights Issues* 1. Private Sector (a+b) a) Financial b) Non-financial 2. Public Sector B. Euro Issues C. Mutual Fund Mobilisation(net)@ 1. Private Sector 2. Public Sector # 2008-09 2 14,671 14,671 466 14,205 0 4,788 -28,296 -34,017 5,721 2009-10 3 32,607 25,479 326 25,153 7,128 15,967 83,080 54,928 28,152 2010-11 4 37,620 24,373 3,877 20,496 13,247 9,441 -49,406 -19,215 -30,191

* Excluding offer for sale. @: Net of redemptions. #: Including UTI Mutual fund. Source: Mutual Fund data are sourced from SEBI and exclude funds mobilised under Fund of Funds Schemes.

Q4: 2009-10

Q3: 2010-11


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...Introduction Since the indefinite commercial whaling moratorium was introduced in 1986, the whaling nations have killed around 15,000 whales between them. At the time of writing, the Japanese whaling fleet has just returned from Antarctic waters where a further 300 or so minke whales have been killed for so called ‘research’, in open defiance of world public opinion and the IWC which has never validated the Japanese programme. The meat from those dead whales will end up on sale in Japanese restaurants and on supermarket shelves. Japan is not only defying the global moratorium on commercial whaling, it is killing whales in a sanctuary agreed by the IWC in 1994. Japan has ‘recruited’ many countries to the IWC to support the resumption of commercial whaling using foreign aid packages. If the ban is lost it will be a disaster for whale conservation efforts. This report presents the many reasons why the ban on commercial whaling must be maintained and properly enforced. We cannot wipe away the tragic history of commercial whaling, but we can, and must, prevent its repetition. The Natural History of Whales Whales belong to the order of mammals known as Cetacea. There are about 80 species of cetaceans, including all the dolphins and porpoises, as well as the ten so-called ‘great’ whale species, which have borne the brunt of commercial whaling. Cetaceans are believed to have evolved from land mammals, which adapted to an aquatic existence about 50 million years ago. They are......

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...about the Whaling Debate on whether countries should be allowed to continue to hunt whales or should we leave them protected and my beliefs on the subject. This debate has also focused on issues of sustainability and conservation as well as ownership and national sovereignty. Some of the issues included in these debates is the question of cetacean intelligence this refers to the Cetacea order of mammals, which includes whales, porpoises, and dolphins; and the level of suffering which the animals undergo when caught and killed (The Whale Debate: Whale Wars, 2014). Another hot topic in the debate right now is the right to kill a certain amount of whales for scientific research, Japan kills 1000 minke whales a year and about 100 endangered fin and humpback whales. Whales are mammals the same as we are and they are intelligent and have feelings such as pain and a sense of loss. Before I get into my opinion I will list the pros and cons of this particular activity. There are a few of each so I will start with the reasons for whaling, many indigenous people, such as the Inuit’s of Alaska, rely on whales for food and other materials to survive in such harsh environments and they are...

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Shark Finning remains economically viable it will just continue to occur. To reduce the amount of shark finning in Hong Kong we need to enact more ant-finning regulations. Keywords: finning, Hong Kong, disposable income What are the social and economic factors of shark finning in Hong Kong and how will it have an affect on the remaining population of sharks? Shark fins are a valuable product and a delicacy to people in Hong Kong and many other surrounding populations that are heavily Chinese, but this overfishing has led to a major depletion of the shark species. Although several countries have made the effort to ban shark fishing, if it continues to happen at the current rate there will be a risk of extinction. Hong Kong has only increased their amount of shark fishing because of the recent growth and expansion of their economy. This growth in the economy can be explained by the change in the productivity and also through the performance of their export sector. This rapid expansion in consumer purchasing power due to growth has led to an increase in the demand for shark fins. The social concerns involving the shark fin trade outweigh the economic benefits that Hong Kong would gain from shark...

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