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Current Affairs - 23 March 2016

General Affairs 

No Country Can Replicate Ties Nepal Has With Us, Says India
  • No Country Can Replicate Ties Nepal Has With Us, Says IndiaNEW DELHI:  India today downplayed Nepal signing a landmark transit treaty with China along with nine other agreements, asserting that no country can replicate the the "special and privileged" relationship the Himalayan nation has with it.

    External Affairs Ministry spokesperson Vikas Swarup, when asked about the pacts, said relations between India and Nepal have their "natural logic" and that New Delhi was not in the business of "comparison".

    "It (Nepal) is a landlocked country. Nepal is free to explore any option it wants but no country can replicate the kind of relations Nepal has with India which is based on the logic of geography, very close people-to-people ties," he said.

    Nepal and China yesterday signed 10 agreements including a landmark transit treaty to end the land-locked country's total dependence on India while Beijing agreed to extend the strategic Tibet rail link to Nepal to boost connectivity.

    Nepalese Prime Minister KP Sharma Oli is in Beijing where he held talks with Chinese Premier Li Keqiang and other senior Chinese leaders.

    "No other country can replicate the special and privileged relationship Nepal has with India... Our age-old ties with Nepal is unique and special characterised by open border, shared history, geography, close people-to-people contact, mutual security and close economic relationship," Mr Swarup said.

    Mr Oli had visited India last month during which he had said Nepal does not play India or China "card" and there is "no question" of favouring one over the other as it is not a viable "policy option".

    He had also said that "misunderstandings" between India and Nepal "do not" persist anymore, calling it the "most important" outcome of his first visit to India.

    Giving details of economic engagement Nepal has with India, he said "We have at present 26 land customs stations with Nepal of which 10 can handle commercial cargo trucks."

    He said two more trading points are under construction and construction of two more will be undertaken in next phase.

    The spokesperson also referred to the railway connectivity projects as well as road development projects India is undertaking in Nepal's Terai region.

    The MEA spokesperson said two-third of Nepal's global trade involves India and millions of Nepalese people live and work in India while hundreds of thousands criss cross the open border between the two countries daily.

Modi Government Has Failed On All Fronts, Says Mulayam Singh
  • Modi Government Has Failed On All Fronts, Says Mulayam SinghAZAMGARH:  Samajwadi Party (SP) chief Mulayam Singh Yadav today accused the NDA-led BJP government of "failing" on all fronts.

    "It failed to provide jobs to unemployed, cheated traders and failed to secure boundaries of the country," Mr Yadav said while addressing a rally at Sahthiyao in Azamgarh.

    Mr Yadav said that while inflation was at its peak, Prime Minister Narendra Modi was busy in foreign trips.

    He also took his party leaders to task and said they were not taking policies of SP government to the people properly.

    He said that if SP has to come back again in 2017, then the policies of the government have to be taken to the people and the party leaders have to be alert.

    Mr Yadav said that there was no match for SP government and it has "fulfilled" all its promises.

    He said that today gold jewellers were protesting, but the Finance Minister does not have time to listen to them.

    The SP chief said he will raise the problems of jewellers in Parliament.

    Taking a dig at cricket, he said that only those countries, which were under British rule, play the game.

    He said that sports like kho-kho, wrestling and cycling should be played for the development of the country.

    Former Rajya Sabha member Amar Singh said that SP government is developing the state, putting behind the mistakes of 2014 Lok Sabha elections.

Congress Asks Mehbooba Mufti To Clarify On New Confidence Building Measures
  • Congress Asks Mehbooba Mufti To Clarify On New Confidence Building MeasuresJAMMU:  Congress today hit out at PDP, calling the delay in government formation in Jammu and Kashmir an attempt by the party to "test waters" in the Valley, and asked party chief Mehbooba Mufti to clarify what "new" confidence building measures (CBM) have been agreed upon between PDP and BJP.

    "It was all a drama enacted by PDP over the issue of confidence building measures as a condition before BJP, to be taken ahead of government formation. It was aimed to test waters in Kashmir Valley where they have lost their ground," Jammu and Kashmir Congress chief GA Mir said.

    He asked PDP chief Mehbooba Mufti to clarify the confidence building measures which have been agreed upon with BJP, over which she had delayed government formation in Jammu and Kashmir for over two months.

    "She (Mehbooba Mufti) was instrumental in imposition of Governor's rule, she owes an explanation to the people of the state as to what new things she has been granted by the BJP-led central government over which she delayed the government formation for two-and-a-half months," he said.

    The JKCC leader said that the new government to be formed would be "no different" from the one under Mufti Mohammad Sayeed and the only change will be in chief ministership.

    "BJP has already cleared its stand that PDP will have the chief minister and the government will be formed as per Agenda of Alliance, what new things she has got," Mr Mir asked.

    "We will wait and watch for her to speak on what she was promised or granted by the BJP government apart from Agenda of Alliance," Mr Mir said.

    He said that BJP also created a drama with their statements that no fresh conditions would be accepted from PDP but ultimately they will be forming the government with PDP along with additional conditions.

India To Host 8th BRICS Summit In October In Goa
  • India To Host 8th BRICS Summit In October In GoaNEW DELHI:  India will host the eighth annual Summit of BRICS from October 15-16 in Goa in its capacity as chair of the influential bloc comprising five countries with 42 per cent of the world population and combined GDP of over USD 16 trillion.

    External Affairs Minister Sushma Swaraj made the announcement today during a function where she also unveiled a logo and a website of the Summit.
    India assumed chairmanship of BRICS (Brazil-Russia-India- China-South Africa) from Russia on February 15 and it will last till December 31.

    "I congratulate the Russian Federation for steering the BRICS process commendably that culminated with the 7th BRICS Summit in the beautiful city of Ufa in July 2015. I am happy to share that the 8th BRICS Summit will be hosted in Goa from October 15-16," Swaraj said.

    The External Affairs Minister said India's core-theme during BRICS chairmanship will be building responsive, inclusive and collective solutions for the grouping.

    The logo for the Summit is a lotus having colours from all the five member countries and a traditional 'namaste' in the centre.

    "We will adopt a five-pronged approach during our Chairmanship. It will comprise Institution Building, Implementation, Integration, Innovation, and Continuity with Consolidation (IIIIC or I4C)," she said speaking on the occasion.

    She said India's emphasis would be on institution building, implementation of previous commitments flowing from the past Summits, and exploring synergies among the existing mechanisms.

    The grouping has been pushing for greater economic growth among the member countries and reform of global financial institutions.

    It has set up a the New Development Bank headquartered in Shanghai, with India's K V Kamath at present serving as its chief.

    Swaraj said during India's chairmanship, "over 50 sectoral meetings will be organised at the ministerial, official, technical, and track II levels."

    The minister further said that enhancing "greater people- to-people participation" will be among the top priorities during the BRICS events which would be held "throughout the year across the country".

    "We have planned a series of events including - the BRICS Under-17 Football Tournament, BRICS Film Festival, BRICS Wellness Forum, BRICS Youth Forum, Young Diplomat's Forum, BRICS Trade Fair, BRICS Friendship Cities Conclave besides the think-tank and academic forums," she said.

    "This will give people a greater opportunity to enrich the BRICS process. It would also be an occasion for our BRICS partners to visit different cities and states of India," she added.

PM Modi To Visit Brussels As Part Of 3 Nation Tour From March 30
  • PM Modi To Visit Brussels As Part Of 3 Nation Tour From March 30NEW DELHI:  Prime Minister Narendra Modi will travel to Brussels on March 30 for the long-pending India-EU summit, notwithstanding the string of explosions in the Belgian capital today.

    India announced PM Modi's visit to Brussels which is part of a three-nation tour including to the US and Saudi Arabia as it strongly condemned the attack on the city's airport and metro system in which two Indians were injured.

    "We condemned the attack with strongest possible terms. We stand in solidarity with people and government of Belgium. We offfer our condolences to families of the victims. Terrorism is a global scourge and the attack in Belgium underscores once again the need to counter it unitedly," External Affairs Ministry Spokesperson Vikas Swarup said.

    The prime minister is visiting Brussels to attend the 13th India-EU which had last taken place in 2012.

    The India-EU ties witnessed some strain after the 28-member bloc had not responded to New Delhi's proposal for a brief visit by PM Modi to Brussels, the EU headquarters during his trip to France, Germany and Canada in April last year.

    Brussels will be PM Modi's first stop from where he will travel to Washington to attend the Nuclear Security Summit and then pay a bilateral trip to Saudi Arabia, a key partner of India in the strategically important Gulf region.

    The EU has been India's largest trading partner and two-way commerce stood at $101.5 billion in 2013-14. The FDI equity inflows from EU to India from April 2012 to May 2015 was $24,913 million. In 2014-15, the amount was $ 8,207 million while in 2013-14, it was 9,069 million.

    India and EU are also strategic partners since 2004 and the two sides have been eyeing to seal a free trade agreement talks for which was launched in June 2007.

    The India-EU Summit aims to deepen the India-EU Strategic Partnership and advance collaboration in priority areas for India's growth and development, Mr Swarup said.

    PM Modi will also hold a bilateral Summit meeting with his Belgian counterpart Charles Michel. Belgium is India's second largest trade partner within the EU.

    "The bilateral meeting between the two Prime Ministers will focus on further enhancing the economic partnership," said Mr Swarup.

    From Brussels, PM Modi will leave for Washington to attend the 4th Nuclear Security Summit on March 31 and April 1.

Business Affairs 

    RBI to cut rates by 25 bps on April 5, 50 bps in FY17: BofA-ML
    • The Reserve Bank is likely to go for a 50 basis points rate cut next fiscal year and out of this 25 bps cut may be affected in the policy review meet next month amid slackening economic recovery, says a report.
      The financial services major said it estimated that old GDP growth slipped to 4.6 per cent in the December quarter, well below our calculated 7-7.5 per cent potential. Our lead industrial indicator is slipping as industrial production contracted for three consecutive months through January.
      Declining inflation and negative industrial outlook have strengthened a case for RBI cutting interest rate in its first bi-monthly monetary policy for 2016-17 on April 5.
      "We have raised our RBI rate cut forecast to 50 bps in FY17 from 25 bps earlier. We see 25 bps cuts on April 5 and in August. After all, the recovery is slackening," Bank of America Merrill Lynch (BofA-ML) said in a research note.
      RBI Governor Raghuram Rajan on February 2, left the key interest rate unchanged citing inflation risks and growth concerns.
      According to the global brokerage major, the onus of recovery is now on the central bank, as the government has stuck to its fiscal roadmap.
      "The onus of recovery is now on RBI, with Finance Minister Jaitley cutting his FY17 fiscal deficit target to 3.5 per cent of GDP, in line with the pre-committed fiscal path," the report said adding that small saving rate cuts should also help the monetary policy transmission.
      The report, however, noted the scope for further RBI rate cuts is limited, as the repo rate, at 6.25 per cent, would be well below medium-term average 7 per cent CPI inflation.
      Meanwhile, Rajan on March 12 said the government sticking to fiscal consolidation roadmap of reducing deficit to 3.5 per cent of the GDP in 2016-17 was comforting. On how that would feed into monetary policy, he had said "wait and see".

        Sensex rises 45 pts, gains capped post Brussels attack
        • Sensex rises 45 pts, gains capped post Brussels attackThe benchmark Sensex on Tuesday closed in the positive territory for the third straight day, but the day's gain was limited to just 45 points after deadly terror attacks in Brussels sent markets globally into a tailspin.
          The closing was a fresh 11-week high of 25,330.
          The modest rise came on the back of investors sticking with their buying activity amid sustained foreign inflows.
          In a trade marked by choppiness, the 30-share barometer opened higher, but quickly slipped into the red zone after profit-booking in recent gainers kicked in. A decisively weak trend overseas after the explosions at the Brussels airport and a local metro station dragged the broader index further down.
          However, buying towards the fag end wiped off the losses as the gauge settled at 25,330.49 with a moderate gain of 45.12 points, or 0.18 per cent.
          It had gained 608 points in the previous two sessions on increasing prospects of RBI lowering interest rates and continued foreign capital inflows.
          The NSE Nifty-50 slid further as profit-booking weighed, but managed to close above the 7,700 level at 7,714.90, a gain of 10.65 points, or 0.14 per cent.
          In sync with the overall trend, the broader markets displayed a firm trend, with the mid-cap index rising 0.52 per cent and the small-cap index 0.27 per cent.
          "The government's new Defence policy and the interest rate cut on small savings plan has been a welcome note to the market. On the global front, the series of blast in Brussels has hit the European market," said Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas.
          Traders said sentiment remained positive as investors have been building up bets in anticipation of a policy rate cut by RBI in its policy review early next month.
          Foreign portfolio investors (FPIs) net purchased shares worth Rs 1,396.33 crore on Monday, provisional data showed.
          BHEL topped the list of gainers with 4.29 per cent, Hero MotoCorp 3.01 per cent, Tata Steel 2.16 per cent, M&M 2.12 per cent, HDFC 1.77 per cent, TCS 1.24 per cent and RIL 1.19 per cent.
          Defence stocks in particular were lapped up after the new Defence Procurement Procedure (DPP) focusing on India-made products and fast-tracked acquisition process was cleared.
          Shares of Reliance Defence and Engineering surged 3.94 per cent, Astra Microwave Products 2.42 per cent, BEML 2.09 per cent and Bharat Electronics 1.22 per cent.
          In the 30-share Sensex space, 16 advanced while others led by Dr Reddy's, ITC, Adani Ports and Hindustan Unilever lost.
          The BSE realty index rose the most by climbing 2.68 per cent, followed by consumer durables 1.60 per cent, power 1.23 per cent, capital goods 1.19 per cent and auto 1.08 per cent.
          In the rest of Asia, Japan's Nikkei ended 1.94 per cent higher while Hong Kong's Hang Seng shed 0.08 per cent.
          European shares turned lower after explosions in Brussels.

          'Residential sector to attract $1 bn this yr'

          • Residential property in India is expected to receive $1 billion investment this year, given its attractive rate of returns averaging at a high of 20-22 per cent per annum, an industry expert said in Singapore on Tuesday.
            "Private Equity funds in Indian real estate sector has already raised $420 million in the first two months of this year, compared to $520 million for the whole of last year," said Rubi Arya, executive vice-chairman of the Mumbai-based Milestone Capital Advisors.

            Mid-segment housing and affordable housing can take returns to as high as 20-22 per cent per annum through hybrid investing, that is capital security plus equity upside, she said.
            "We feel that with the Real Estate Bill mandate, availability of deals for Private Equity firms will certainly go up," she said, adding that the reforms in the real estate sector will also help further accelerate fund raising and investment opportunities both for residential and commercial sectors.
            "With such positive developments, the India story is growing by leaps and bounds and it is just a matter of time when this sector begins its upward journey once again, albeit after a prolonged period of gloom," she added.
            Costs on real estate construction are seeing stability with fuel prices down, which leaves developers with overall margins for positive growth.
            "Investors can look forward to far higher transparency and ease of doing business with developers with the recently passed real estate bill. This has led to a lot of warming up of Non Resident Indians (NRIs) and Foreign Direct Investments towards Indian real estate," she noted.
            The availability of foreign capital will naturally increase with the government permitting NRI investments into domestic Alternate Investment Funds.
            The Real Estate Investment Trusts will soon see listings by developers and thus lifting the commercial reality market to a highly profitable investment climate, according to Arya.
            Milestone manages $800 million or 25 million sq ft residential, warehousing, commercial and office spaces since it began operating as PE funding concern in 2008.

          BigBasket raises $150 million in funding led by Abraaj Group
          • Grocery delivery service BigBasket has raised $150 million in fresh funding in a round led by UAE's Abraaj Group as the company looks to expand its services into smaller cities, the investor said.
            Existing investors Bessemer Venture Partners and Helion Advisors along with International Finance Corp and Sands Capital participated in the round, Abraaj said in a statement.
            Online grocery sales is a fast-growing segment in India's e-commerce industry as more consumers log in to the Internet for their purchases.
            Rival Grofers, an app-based service that connects local stores to customers, raised $120 million from Japan's Softbank last year to expand operations.
   Inc, which is aggressively investing in India, also launched a grocery delivery pilot in Bengaluru late last year.

            Realty, metals lead post-Budget rally, but fundamentals yet to catch up; stay cautious on banks, say experts
            • Realty, metals lead post-Budget rally, but fundamentals yet to catch up; stay cautious on banks, say expertsStocks of banking, realty and metal spaces have led the sectoral charts in the post-Budget rally that lifted the BSE benchmark by over 7 per cent this month.

              While Budget 2016 may have triggered bounce in these stocks, strengthening hopes of an interest rate cut by Reserve Bank of India (RBI) in the run-up to monetary policy review on April 5 - at a time when global central banks too are turning dovish -have also propped these counters by up to 13 per cent.

              The banking benchmark BSE Bankex has gained 12.88 per cent, the most by any BSE sectoral index in the post-Budget rally, followed by the BSE Realty (up 12.31 per cent). The BSE Capital goods and the BSE Metal index too have rallied 10.99 per cent and 9.97 per cent, respectively, in March.

              Here's what experts have to say on these outperforming sectors:

              Banking space

              Banking stocks warrant a pause, say experts. They believe one should adopt a wait and watch policy as things may look up only June-July onwards.

              Jimeet Modi, CEO, Samco Securities said banking theme is hard to play at the current juncture and that the trigger for pushing up the stocks are lacking, especially among the public sector banks.

              "The private sector players are trading at fair valuation and offers little margin of safety, however, at the same time, the PSU pack is beaten down hard, offering value but the triggers for  the stock price appreciations are lacking," said Modi.

              "PSU banks still have one more year to come clean on the stressed loans, who knows how many worms are still hiding and in addition the recapitalization efforts are below optimum requirements for maintaining the growth momentum," he added.

              Stocks to look at: G Chokkalingam, Founder & Managing Director, Equinomics Research & Advisory recommend following stocks:

              Private banks like Axis and HDFC Bank, apart from a few select PSU banks like State Bank of Bikaner, Vijaya Bank and Syndicate Bank which have relatively lower net NPAs within PSU pack and still growing business in a decent manner provide some margin of safety.

              Realty space
              The BSE Realty index, which lost nearly 22 per cent year-to-Budget, has gained over 12 per cent in the post Budget period. However, R Sreesankar, Head-Institutional Equities at Prabhudas Lilladher believes rally in the realty stocks is not fundamentally driven, but witnessing a mere trading bounce.

              "For a sustained rally, you need to see increased number of home buyers coming back into market. Affordability factor and Indian economy logging slightly better growth is also important," said Sreesankar.

              Gaurang Shah, Vice President, Geojit BNP Paribas believes Real Estate Bill is a positive for the realty sector.
               "Once Real Estate Bill is sealed and signed by the President, it will bring in a lot of discipline and corporate governance in the realty sector. It will enbale consumers to have more rights," said Shah.
              The expert suggested differentiating between men and boys among realty stocks. "One should pick companies whose balance sheets are strong, debt is nil or less, completion of project is on time and realisation per square feet meets industry parameter or is above than that.

              Stocks to look at: Godrej Properties, Mahindra Lifespace, Oberoi Realty, Shobha and Prestige Estates

              Auto sector
              Modi of SAMCO Securities feels the auto stocks in the two wheeler segment looks promising as the revival in the rural purchasing power would be the trigger for them to outperform in the next few quarters.
              "The two wheeler segment had its share of consolidation in the past few quarters and is ripe for a rally in the medium term," said Modi.
              But, Chokkalingam held a different view and said auto sector would see some headwinds in the short term due to imposition of cess, stiff competition from Honda (an unlisted entity) in the two-wheeler space.

              Stocks to look at: Maruti in the passenger car segment looks attractive due to its recent correction. One can also look at tyre stocks like MRF.

              Capital goods sector
              Capital goods sector had lost over 22 per cent year-to-Budget, but gained 11 per cent after Finance Minister Arun Jaitley announced a slew of measures and allocated handsome amount to build rural infrastructure.

              "The capital goods segment although will get a boost from the government spending program of Rs 2 lakh crore, but the huge debts and weakened fundamentals of the companies itself will not result in a sustained capital appreciation in the capital goods sector," said Modi.

              Sreesankar believes a lot of private investment will be needed to boost the capital goods sector, which hasn't happened as anticipated.

              "A huge amount of government spending has gone into infrastructure, within which stocks linked to road infra will see better scenario immediately," said Sreesankar adding this may not be the case for others which requires large amount of private capital investment as well.
              Stocks to look at: 
              • The rural electrification and the solar power initiatives will lead to growth opportunities for the transmission and distribution companies like KEC and Power Grid in the medium to long term.
              • Crompton Greaves as it had fallen very badly last week, making it quite attractive in terms of valuation.
              • In cement space, Ultratech, Ambuja and Shree Cement look promising.    
              • Larsen & Toubro, NBCC and Engineers India       

              Metal stocks

              Metal stocks have finally found investor favour and have rallied nearly 10 per cent since Budget. But, if analysts are to be believed the rally will not sustain in the metal space.

              "Nothing has changed at ground level for metal stocks. The upmove in the global commodity market pushed these stocks up, which will correct no sooner do the world commodity prices plunge. If someone has to buy metal stocks, she can buy them with two years plus horizon," said Shah.

              However, Modi believes the base metal pack have a very good risk to reward ratio from the long term perspective.
              On steel stocks, Chokkalingam said the rally will not be sustained as steel consumption is still growing in single digit and the adverse impact of China's over capacity (though it has proposed to cut down capacity by about 150 million tonnes) would haunt the global steel industry for another 2 to 3 quarters at least.

              The expert believes the March quarter results would be disappointing for many steel companies.

            General Awareness

            World Water Day – March 22 2016

              • The day observed annually & Internationally and an opportunity to learn more about water linked issues, be inspired to tell others and take action to make a difference.
                • The day being observed from 1992 and in 22 March 1993 as the first World Water Day Observed.
                • The day recommended by United Nations Conference on Environment and Development in Rio de Janeiro. The occasion of World Water Day is also used to highlight requiredWorld Water Dayimprovements for access to WASH (water, sanitation, hygiene) facilities in developing countries.
                Theme: Water and Jobs
                • The theme of this year isWater and Jobsdirecting on how enough quantity and quality of water can change workers’ lives and livelihoods – and even transform societies and economies.
                • Over 1.5 billion people – work in water related sectors and nearly all jobs who work in water are often not recognized or protected by basic labour rights. 
                Nearly 1.8 billion people will face water scarcity by 2025: UN 
                Around 8 billion People will face absolute water scarcity by 2025 and an estimated two-thirds of the world’s population could be living under water-stressed conditions.
                • A board discussion held at the UN headquarters emphasized that conservation forests is an essential way to manage global freshwater resources and to avoid water shortages
                • Three-fourths of the fresh water that people use every day comes from forested catchment areas and more than 6 billion people live on the forests for food, water, medicines and fuel.
                United Nations:
                • Headquarters: New York
                • Founded: 1945

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