Increased oil, coal output and restraining gold consumption can contain CAD: FM

In order to  increase production and contain the current account deficit (CAD), Finance Minister P Chidambaram said, the country should get its policies and priorities right as long-term measures and the only way to contain CAD is to increase the domestic production of oil & coal and restrain the consumption of gold.

Chidambaram said the main reason for India's large CAD is that the country has huge dependence on import of certain items like oil, coal and gold. Touching a record high of 6.7% of GDP in the third quarter of 2012-13, India’s CAD is likely to be around 5% in the 2012-13 fiscal. Further, high CAD is also impacting the domestic currency, which recently fell to its lifetime low level of over 58.90 against dollar.      However, as per the apex bank - RBI, India can sustain CAD of around 2.5%.

However, finance minister is of view that India continues to remain a desired destination for FDI and FII, despite recession in major economies. By adding further he said, in spite all probability the government was able to finance the CAD and also added around $3 billion to the forex reserves in 2012-13 and expressed confidence that in 2013-14 also CAD will be financed without dipping into reserves.

Gold could rule flat, pausing for US Fed meet.

Gold prices on domestic and futures market are likely to rule flat on Tuesday as the market looks for direction from a key meeting of the US Federal Reserve. But investors continue to be bearish, further paring their holdings in electronic formats on gold exchange-traded funds.

The US Federal Reserve meets on Tuesday with speculation rife of an imminent paring of pumping cash into the economy. The US Fed buys treasury and other bonds worth $85 billion every month. The speculation has already resulted in the dollar gaining. The movement of the rupee against the Greenback will also have a say on how gold behaves since a weak rupee results in commodities such as gold, crude oil and vegetable oils turning costlier.

In early Asian trade in Singapore, spot gold ruled at $1,384.72 an ounce, while gold futures maturing in August quoted at $1,384.
In the domestic market on Monday, gold for Jewellery (99.5% purity) slipped to Rs 27,840 for 10 gm and pure gold (99.9% purity) to Rs 27, 985.

On MCX, gold August contracts could range between Rs 27,800 and Rs 27,900.
Meanwhile, holdings in the SPDR Gold Trust, the biggest gold-backed exchange-traded product, dropped to 1,003.17 tonnes on Monday, the lowest in 52 months.

Crude Oil

Fears that stockpiles in the US could be lower are likely to drive crude oil up in almost all markets on Tuesday.

It was reflected in early Asian trade where Brent crude for delivery in August was up at $105.59 a barrel, while Western Texas Intermediate crude July contracts rose to $97.84 a barrel.

Oils and Oil-seeds

The oils and oilseeds complex will head lower despite Malaysia reporting higher exports. This is because the weather in the US is conducive to planting more soyabean, while Indian monsoon’s progress is seen positive for soyabean and other oilseeds.

Chicago Board of Trade soyabean for delivery in November quoted at $12.90 a bushel, while crude palm oil in Bursa Malaysia Derivatives Exchange to be delivered in August rose to 2,475 ringgit ($784.5) a tonne in early trade.

Grains complex

Though wheat and corn (industrial maize) slipped last night on favourable weather for the US crop, in early trade CBOT wheat for delivery in September rose to $6.85 a bushel, while corn for delivery in December quoted at $5.40 a bushel.

Rubber

With Thailand, Indonesia and Malaysia, the top three rubber producing nations, not able to decide on curbing exports, rubber is headed lower on fears of supply glut.

On the Tokyo Commodity Exchange, rubber for delivery in November fell to 235 yen or Rs 144 a kg.

Nikkei turns down as market wary ahead of Fed outcome.

Japan's Nikkei average reversed early gains on Tuesday, underscoring the volatility that has roiled the market lately, as investors awaited the outcome of a Federal Reserve meeting for clues on whether it will continue to support the US economy.
 By the midday break, the Nikkei slipped 0.7% to 12,941.80 after trading as high as 13,139.48. It climbed 2.7% on Monday, lifting the index out of a bear market.
 Many investors have been cutting their long Japanese equities and short yen positions on concerns that the Fed will scale back its stimulus this year and after the Nikkei had rallied more than 80 % from mid-November to its 5-1/2 year peak hit on May 23. Since then, trading in Japanese equities has been extremely volatile.

Disappointment over a growth strategy unveiled by the Japanese government recently and worries over slowing growth in China have also contributed to the market tumult.

Underscoring the volatility, since May 23 the Nikkei has had 15 sessions where intraday swings exceeded 2.5%, compared with 16 such trading days for the year up to May 22 and four such days in the whole of 2012. The U.S. S&P 500 only has had one such trading day in 2013, and the Euro STOXX 50 index has 11.

WABAG BAGS INR 262 CRORE ORDER FROM NEPAL.

 VA TECH

WABAG LIMITED, a leading Indian MNC, in a joint venture with Pratibha Industries Limited has won an INR 262 crore order from Melamchi Water Supply Development Board, Nepal. The scope of work comprises
construction of Water Treatment Plant at Sundarijal, Nepal which will
have an initial capacity of 85 MlD and will be designed to be expanded to 170 MlD, and to 510 MLD
at a later stage. The water treatment plant at Sundarijal is part of the Melamchi Water Supply
Project, under the auspices of the Melamchi Water Supply Development Board (MWSDB). The
project has been funded by the Japan International Cooperation Agency (JICA).This Project will treat
water from the Melamchi River and discharge the treated water through pipeline upto battery limits.

  The WABAG Group represents a leading multinational player with a workforce of over 1,500 and has
companies and offices in more than 20 countries. It disposes over unique technological know-how,
based on innovative, patented technologies and long-term experience.