Weekend Highlights – 20 December, 2014

Cabinet approves Goods and Services Tax Bill
The Cabinet has approved the Constitution Amendment Bill on Goods and Services Tax (GST), clearing the way for its introduction in ongoing session of Parliament to bring about long-pending indirect tax reforms. The Bill is likely to be tabled in the ongoing winter session of Parliament that concludes on 23 December. The government aims to roll out the Goods and Services Tax (GST) from 01 April 2016.The revised Constitutional Amendment Bill was brought before the Cabinet after the Centre and states earlier this week reached a consensus on contentious issues, including those related to petroleum product taxation, which were holding up the proposed nation-wide indirect tax regime for about seven years.

Cheap Oil Can Benefit Asia: ADB
The growth outlook for developing Asia remains steady, even though momentum slowed in the second half of 2014, but the declining oil prices represent a golden opportunity for many beneficial reforms, the Asian Development Bank (ADB) says in a new report.In a supplement to its Asian Development Outlook 2014 Update, ADB forecasts gross domestic product (GDP) growth for the region of 6.1% in 2014, down from 6.2% expected in September, and 6.2% in 2015, down from 6.4%. Developing Asia, comprising the 45 ADB developing member countries, grew 6.1% in 2013. Growth projections for Central Asia, East Asia, and Southeast Asia are revised downward. There is no change for South Asia. The Pacific regions growth outlook is adjusted upward.

While growth in the first three quarters of this year were somewhat softer than we had expected, says ADB Chief Economist Shang-Jin Wei, declining oil prices may mean an upside surprise in 2015 as most economies are oil importers.

Recovery in the major industrial economies of the United States (US), euro area, and Japan has been revised down slightly since the Update, as weak third quarter performance in Japan overshadows unexpected strength in the US. GDP growth in the advanced economies is now forecast to average 1.4% in 2014, down from 1.5% forecast in the Update, before picking up to 2.1% in 2015.

The growth moderation in the Peoples Republic of China (PRC) is seen extending into the fourth quarter due to a continued real estate market correction and its spillover to the related sectors like construction. The PRC growth forecast is revised downward to 7.4% in 2014 from 7.5% in the Update, and to 7.2% from 7.4% for 2015.

India is on track to reach the Update growth forecast of 5.5% in FY2014 (ending 31 March 2015) after expanding by 5.7% in the first quarter and 5.3% in the second quarter. By eliminating diesel fuel subsidies, the government has demonstrated its willingness to tackle contentious reforms, but it must extend its efforts to reach the forecast 6.3% growth in FY2015.

Somewhat stronger-than-expected performance in Maldives and Sri Lanka in 2014 is balanced by softness in Afghanistan and Bhutan. Strong domestic demand, supported by healthy remittance inflows, may lead to an upside surprise in Bangladesh in fiscal year (FY) 2015 (ending 30 June 2015).

Growth in several large Southeast Asian economies has been softer than anticipated in the first nine months of 2014, with slight reductions to the projections for Indonesia,PhilippinesSingapore, and Thailand. GDP in the subregion is expected to expand by 4.4% in 2014, down from 4.6% forecast in the Update, and 5.1% in 2015, down from 5.3%.

The slowdown in the Russian Federation is weighing on growth in Kazakhstan and other Central Asian economies. Reduced remittance flows and muted external demand are undermining growth in Armeniathe Kyrgyz Republic, and Uzbekistan. The aggregate growth projections for Central Asia are revised down to 5.1% from 5.6% for 2014 and to 5.4% from 5.9% for 2015.

The Pacific economies are expected to accelerate to 13.4% growth in 2015, led by a burst of output in Papua New Guinea as it enters its first full year of liquefied natural gas exports. The subregion is forecast to grow 5.4% in 2014, modestly higher than expected in the Update as prospects have improved in some economies including FijiSolomon Islands, and Palau.

With oil and commodity prices falling, most developing Asian economies have revised their inflation forecasts downward. The forecast for the region is lowered to 3.2% in 2014 and 3.5% in 2015, from the Updates 3.4% and 3.7%.

Falling global oil prices present a golden opportunity for importers like Indonesia and India to reform their costly fuel subsidy programs, ADB Chief Economist Shang-Jin Wei emphasized. On the other hand, oil exporters can seize the opportunity to develop their manufacturing sectors as low commodity prices tend to make their real exchange rates more competitive.

Government signs Euro 625 million loan Agreements with Germany for green energy projects
The Government of India signed Note of Exchange with Government of Germany for financial cooperation to support Green Energy Corridors (GEC) project under Indo German bilateral Development Cooperation here yesterday evening. GEC project in power sector aims to create transmission infrastructure in the renewable energy potential rich states and facilitate evacuation of renewable energy (RE) into the national grid. Government of Germany in the year 2012 had indicated its willingness to support the GEC project with funds amounting to Euro 1 billion over a period of five years under the ambit of Indo-German bilateral development cooperation.Government of Germany has committed funds amounting to Euro 500 million for GEC project this year. With this, the total commitment from Government of Germany for GEC project stands at Euro 750 million. In year 2013, Government of Germany had committed Euro 250 million.

On the occasion, three separate loan agreements were also signed for GEC project amounting to Euro 625 million. A loan agreement was also signed with German Governments Development Bank (KfW) for loan of Euro 76 million to the Government of Tamil Nadu and a loan of Euro 49 million to Government of Rajasthan for intra-state transmission schemes. Power Grid Corporation of India signed loan agreement for Euro 500 million with KfW for inter-state transmission schemes.

During the ceremony, Agreements were also signed by the Department of Economic Affairs with KfW for a grant amount of Euro 2 million to provide technical assistance to Himachal Pradesh Forest Ecosystems Climate Proofing project and also for a grant amount of Euro 2 million for extending technical assistance for the ongoing Tamil Nadu Urban Infrastructure Development Fund project.

Germany and KfW are longstanding partners of India. Since the 1950s, sectors like Energy, Protection of the Environment and Natural Resources and Sustainable economic Development have received KfW support.

Weekend Highlights – 13 December, 2014

CCEA approves scheme for setting up 1000 MW of Grid Connected Solar PV Power projects
The Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister has approved the scheme for setting up of 1000 MW of Grid-Connected Solar PV Power Projects with VGF (Viability Gap Fund) support of Rs 1000 crore, by CPSUs under various Central/State Schemes, in three years period from 2015-16 to 2017-18. The Scheme will have a mandatory condition that all PV cells and modules used in solar plants set up under this Scheme, will be made in India.All States and Union Territories are eligible for benefitting under the scheme.

Solar parks will enable development of solar power in remote areas where land is inexpensive. As a transmission system will be developed for the entire Park, developers will not have to set up their own transmission lines. This will not only save money but will also avoid damaging the landscape of the area as only limited transmission lines would be laid.

Further developers would be able to set up projects quickly as they will not have to get statutory and other clearances.

India will emerge as a major solar power producing country as nowhere in the world are solar parks are being developed on such a large scale. The CPSUs and Government of India organizations will participate in various Central/State Government tenders, from time to time for sale of solar power to the State.

The State Government will first nominate the implementing agency for the solar park and also identify the land for the proposed solar park. It will then send a proposal to the Ministry of New and Renewable Energy (MNRE) for approval along with (or later) the name of the implementing agency. The implementing agency may be sanctioned a grant of upto Rs 25 Lakh for preparing a Detailed Project Report (DPR) of the Solar Park, conducting surveys, etc. The DPR must be prepared in 60 days.

Thereafter, application may be made by the implementing agency to Solar Energy Corporation of India (SECI) for the grant of up to Rs 20 lakhs/MW or 30% of the project cost including Grid-connectivity cost, whichever is lower. The approved grant will be released by SECI as per milestones prescribed in the scheme.

Recovery in Manufacturing Growth Slow but Steady: CII ASCON Survey
The CII ASCON Survey for the July-September 2014 quarter was released at the CII Associations Council Meeting in New Delhi on 5th December 2014. The Survey for July-September 2014 quarter indicates that the economic growth has picked up with more number of sectors showing positive growth trends in the July-September quarter 2014 as compared to July-September 2013. Although the expected growth resurgence is still elusive, industry feels that with governments focused efforts to bolster investments in manufacturing, the growth is inevitable.The CII ASCON Survey, which tracks the growth of industrial sector on a quarterly basis, based on feedback received from sectoral industry associations, shows that out of 59 sectors surveyed, the number of sectors reporting excellent and high growth (>10 %) has shown an increase from 26.08% in 2013 to 30.4% in July-September 2014. At the same time, number of sectors registering low and negative growth for July- September 2014 quarter has marginally gone down from 73.90% in 2013 to 69.48% in July-September 2014.

The Survey categorises the growth range in four broad categories, namely excellent (>20%), good (10-20%), low (0-10%), and negative (less than 0%).

The disaggregated analysis of the Survey reveals that most of the high and excellent growth has been registered by segments of white goods, synthetic fiber, consumer non-durables such as imported oils, groundnut oil, rape seeds, along with machine tools and rubber machinery, etc.

The Vehicle industry has witnessed a low to negative growth in most of the segments such as passenger cars, commercial vehicles, utility vehicle, tyres, etc. However, two wheelers and three wheelers have registered excellent growth.

Segments of White Goods industry such as refrigerators, air conditioners, small appliances have registered about 12%-15% high growth rate. The LCD/LED segment has been witnessing a boost and growth has been exceptional pegging above 20% mark. The rural purchase trends and sales in tier 4 & 5 cities have contributed significantly to this growth.

India’s current account deficit rises to 2.1% of GDP in Q2 of 2014-15
India’s current account deficit (CAD) increased to US$ 10.1 billion (2.1% of GDP) in Q2 of 2014-15 from US$ 7.8 billion (1.7% of GDP) in the preceding quarter and US$ 5.2 billion (1.2% of GDP) in Q2 of 2013-14. The increase in CAD was primarily on account of higher trade deficit contributed by both a deceleration in export growth and increase in imports.On BoP basis, merchandise export growth decelerated to 4.9% in Q2 of 2014-15 from 11.9% in Q2 of 2013-14. On BoP basis, merchandise imports increased by 8.1% in Q2 of 2014-15 as against a decline of 4.8% in Q2 of 2013-14, largely due to a sharp rise in gold imports.

Net services receipts improved by 3.4% in Q2 of 2014-15 on a pick-up telecommunication, computer and information services from their level a year ago.

Net outflow on account of primary income (profit, dividend and interest) amounting to US$ 6.9 billion in Q2 of 2014-15 was higher than the corresponding quarter of 2013-14 (US$ 6.3 billion) as well as the preceding quarter (US$ 6.7 billion).

In Q2 of 2014-15, gross private transfer receipts at US$ 17.4 billion were marginally higher as compared with the corresponding quarter of 2013-14.

In the financial account, net flows through foreign direct investment were stable; however, portfolio investment recorded inflows of US$ 9.8 billion as against an outflow of US$ 6.6 billion in Q2 of 2013-14.

Lupin- Launches Authorized Generic (AG) of Celebrex

Lupin- Launches Authorized Generic (AG) of Celebrex: Lupin announced that its US subsidiary, Lupin Pharmaceuticals Inc. (Lupin) has launched the authorized generic for G.D. Searle LLC’s (a subsidiary of Pfizer Inc.) Celebrex® Capsules (Celebrex) 50 mg, 100 mg, 200 mg and 400 mg strengths. Lupin had earlier signed a licensing agreement with Pfizer Inc. regarding Celebrex. Celebrex® Capsules had annual U.S sales of US$2.54bn (IMS MAT September, 2014). Teva is has the 180- day exclusivity on the product and launched the product yesterday. Apart from Lupin there is another AG players like Actavis, thus the product can add conservatively around US$90-100mn on sales and US $18-20mn on the net profit front during the exclusivity period. The numbers will be fully reflected in the 4QFY2015 and 1QFY2016 numbers. Apart from Teva and Lupin, many other generic companies would enter the market post the exclusivity period. We maintain our neutral stance on the stock.

Cadila Healthcare- Recalls anti-hypertension drug from US

Cadila Healthcare- Recalls anti-hypertension drug from US: It has been reported that the Cadila Healthcare is voluntarily recalling 15,144 bottles of its anti-hypertension drug Amlodipine Besylate tablets in the US market, according to the US Food and Drug Administration (USFDA). As per information, Zydus Pharmaceuticals USA Inc, the US-based arm of the company, is recalling the drug due to “discoloration”. The nationwide recall has been initiated by the company on October 1 this year and has been initiated under Class-III which FDA defined as “a situation in which use of or exposure to a volatile product is not likely to cause adverse health consequences”. The tablets, which are indicated for the treatment of hypertension, to lower blood pressure, were manufactured by Cadila Healthcare and distributed by Zydus Pharmaceuticals USA Inc. Since the recall is voluntary and not significant the numbers are unlikely to be impacted greatly. We remain neutral on the stock.

Weekend Highlights – 6 December, 2014

M3 growth further decelerates to lowest since January 2013
Money Supply (M3) growth decelerated to lowest since January 2013 to 11% in month of November 2014, same as recorded in the month of October and 12.7% recorded in September. The M3 growth eased amidst deceleration in both time deposits with banks and currency with the public. While demand deposits with banks registered a growth of 13.8% y-o-y. Meanwhile, in the fortnight ended 14 November 2014, the growth in M3 fell by Rs 27.6 billion led by fall in both time deposits and demand deposits with banks while currency with the public increased. The growth in other deposits with RBI also declined.Components

M3 decelerated 6.8% till 14 November 2014 during 2014-15 compared with a 8.6% rise in the same period a year ago. However, the annual growth rate at 11.4% is lower than the 14.2% increase a year ago, mainly due to the deceleration in both time deposits with banks and currency with the public. The growth rate in time deposits with banks increased 11.7% (y-o-y) from 15.4% a year ago, demand deposits with banks, another major component of broad money, increased at 13.8% (y-o-y) from 8.3% a year ago and currency with public decelerated to 7.5% from 10.9% last year. In the fortnight ended 14 November 2014, the M3 eased by Rs 27.6 billion led by fall in other deposits with RBI and time deposits and demand deposits with banks . However, the fall in M3 was restricted by rise in currency with the public by Rs 204.1 billion.

Demand deposit with banks recorded a growth of 3.9% till 14 November 2014 compared with a fall of 2.6% in the same period last year. The annual growth rate as on 14 November 2014 stood at 13.8% compared with a rise of 8.3% last year. On other hand, time deposits recorded a 7.2% growth rate till 14 November 2014 during 2014-15 compared with 10% growth in the same period last year. The annual growth rate as on 14 November 2014 stood at 11.7% compared with a 15.4% increase last year.

One of the major components in money supply, that is currency with the public, recorded a 7.5% annual growth rate as on 14 November 2014 compared with a 10.9% increase last year. In 2014-15, till 14 November 2014 it recorded a 5.8% growth compared with a 7.6% increase in the same period last year. Meanwhile, fortnightly currency with the public increased by 1.6% to Rs 204.1 billion. Sources

Rupee expected to depreciate further to 62.4 in January: ZyFin Research
ZyFin Researchs Forex Forecast indicates that the rupee will weaken further over the coming month to 62.4 by January 2015. This would be a 10-month low against the US dollar (USD) for the rupee. Indian exports have once again come under stress, leading to a run on its USD reserves. Additionally, an uncertain economic recovery is not helping Indias investment rating, thereby leading to a USD outflow. An improving US economy accentuates the threat of reduction in demand for rupee in favour of USD among foreign institutional investors (FIIs).The Reserve Bank of India (RBIs) decision to maintain a high interest regime should, however, help in checking any major volatility in rupee exchange. Furthermore, with economic growth gathering momentum over the course of 2015, we expect the exchange rate situation to improve towards the second half of the year and attain a level of around 58 per USD by October.

The ZyFin Forex Forecast is an estimate of INR-USD exchange rate (monthly average), three months ahead of time. One-of-its-kind in India, it can be used by trade analysts, investors and market participants to devise trading and hedging strategies.

Giving his views on the January number, Debopam Chaudhuri, Chief Economist, ZyFin Research, said, n++2014 remains a volatile year for the rupee exchange rate, despite some significant recovery in Indias current account deficit. With an expected rise in US interest rate regime, there is a high probability of a significant decline in demand for rupee from FIIs in the short run, leading to further depreciation. In this context, the RBIs decision to not cut rates may help reduce the volatility in exchange rate until India regains its position as a lucrative investment destination.n++

FAO Food Price Index remained steady for the third consecutive month in November 2014
The FAO Food Price Index averaged 192.6 points in November 2014, virtually unchanged from October, but 13 points (6.4%) below November 2013. While the price indices of both cereals and vegetable oils rose last month, they fell markedly in the case of sugar and dairy products and remained stable in the case of meat.The FAO Cereal Price Index averaged 183 points in November, up 4.7 points (2.6%) from October, but still 11.3 points (5.8%) down year-on-year. The November increase marked the first significant monthly gain since March 2014, as large supplies and prospects of another good production in 2014 continued to weigh on prices. However, in the past few weeks, international wheat quotations recovered, largely on less than ideal growing conditions in recently sown crops in North Hemisphere countries, while maize received support from gains in the soybean complex. By contrast, rice prices weakened, reflecting the arrival of abundant newly harvested supplies on the market and sluggish import demand.

The FAO Vegetable Oil Price Index averaged 164.9 points in November, up 1.2 points (0.7%) month-on-month, but 16.9% below November 2013. Last months rise was mainly driven by an improvement in palm oil prices, following production slowdowns in Malaysia and Indonesia and steady global import demand. Quotations for sunflower oil also remained firm on lower than anticipated global production. Continued weakness in soyoil prices prevented the index from appreciating further.

The FAO Dairy Price Index averaged 178.1 points in November, down 6.2 points (3.4%) from October and 72.7 points (29.0%) less year-on-year; the substantial fall in international milk product prices over the past 12 months compares with a more modest year-on-year decline for the FAO Food Price Index overall. Since the beginning of the year, when prices were exceptionally high, quotations for dairy products have fallen, mainly as a result of increased export availability and a reduction in the pace of importation by some of the major markets, especially China and the Russian Federation.

SPARC receives Complete Response Letter (CRL) from USFDA for Latanoprost NDA

SPARC receives Complete Response Letter (CRL) from USFDA for Latanoprost NDA : Sun Pharma Advanced Research Company Ltd. (SPARC) today announced that the U.S. Food and Drug Administration (FDA) has issued a Complete Response letter to its New Drug Application (NDA) for Latanoprost BAK-free eyedrops. While the FDA did not seek any additional information for supporting clinical data, it sought additional information on certain labeling and other deficiencies for processing the NDA. SPARC believes that this additional information request from the FDA can be addressed on priority.

A complete response letter provides a more consistent and neutral mechanism to convey that USFDA’s initial review of an application is complete and that they cannot approve the application in its present form.  It provides a more consistent approach to informing applicants of changes that must be made before an application can be approved, with no implication regarding the ultimate approvability of the application.

Latanoprost BAK-free is a preservative-free, once-a-day formulation of the glaucoma medication Latanoprost using SPARC’s novel Swollen Micelle Microemulsion (SMM) technology. Unlike conventional glaucoma eyedrops, Latanoprost BAK-free does not cause or aggravate Ocular Surface Disease (OSD). Prostaglandin analogues like latanoprost are the first line of treatment for glaucoma. Market estimates place Latanoprost usage at as high as 55% of the US glaucoma market. Swollen micelle microemulsion technology, or SMM, helps to solubilize drugs that have limited or no solubility, and cuts out the need for a preservative.

In terms of sales the, Gluacoma products sales in US (it constitutes around 40% of the global ophthalmic market) at ~ US$2bn, with Prostaglandin products constitute 55% of sales, growing was growing at 6.0% in 2013. Thus the Latanoprost BAK-free address a market opportunity of around ~US$3bn globally. While, the NDA for the product was filled by SPARC in 4QFY2013-14 in US, while in ROW it has filed in 4 Emerging markets with 5 more planned in FY2015. Conservatively, assuming a 15% market share the product can conservatively gross globally around sales of US $600mn and net profit of around US $180mn annually. On EPS front, it can add around ~`4.5 to Sun Pharma’s earning. Since, the product is yet not commercialized we maintain our numbers and view on the stock.

Ranbaxy Lab’s Dewas plant banned by Germany

Ranbaxy Lab’s Dewas plant banned by Germany: It has been reported, that Ranbaxy Lab’s has been barred from exporting antibiotics cephalosporin produced at its Dewas plant to Germany for non-compliance to ‘good manufacturing practice’ norms. The German health watchdog has also communicated its latest regulatory action against Ranbaxy to the European Medicines Agency (EMA).Germany’s regulator issued a non-compliance report for the Dewas facility where Ranbaxy manufactures cephalosporin antibiotics, after an inspection in June this year, according to European Medicines Agency. As per the notice, the German regulator found various deficiencies at the plant including unsatisfactory investigations and deficiencies concerning design and operation of clean rooms. Germany (15- month sales of `224.0cr in FY2014) accounted for 1.7% of global sales. While the current action will not that greatly impact the company, however a potential similar action from other members of the EMA could be a possible threat as the EMA economies almost account for 16.5% of its sales in FY2014.  We remain neutral on the stock.

Sun Pharmaceutical & Ranbaxy Lab Merger Update

Sun Pharmaceutical & Ranbaxy Lab Merger Update: FIPB unit of Ministry of Finance, Department of Economic Affairs, approved the proposal of the Company for issuing equity shares of the Company to the non-resident investors of Ranbaxy Laboratories Limited pursuant to the merger of Ranbaxy Laboratories Limited into Sun Pharmaceutical Industries Limited through the scheme of arrangement between Ranbaxy Laboratories Limited and Sun Pharmaceutical Industries Limited, which is a positive news for the company.

However, on the other side, the main approval from the Competition Commission of India (CCI) has hit a roadblock. It has been reported by Cogencis, that the Competition Commission of India has rejected the proposed merger between Sun Pharmaceutical Industries Ltd and Ranbaxy Laboratories Ltd in its current form and has suggested remedial steps to the companies to secure its nod.  It has reoprted that letters have been sent to the two companies, the competition watchdog has suggested certain steps that the two companies could take to avoid dominance in their markets and comply with the watchdog's norms. While the exact nature of the concerns the competition panel has with the merger are not know , neither the remedies suggested, though it could include selling some businesses. Besides this, the competition panel has also asked Sun-Ranbaxy to suggest alternate solutions, if the ones suggested by the panel are not found suitable by them. This possibly could delay the merger process and the timleines. However, on lack of clarity on the nature of objections, we currently retaining the numbers and remain neutral on Sun Pharmaceuticals & Ranbaxy Labs.  

Weekend Highlights – 29 November, 2014

Government Issued Dated Securities Worth Rs.1,54,000 Crore During the Quarter Taking The Gross Borrowings to Rs.3,52,000 Crore
During Q2 of Fiscal Year 2014-15 (FY15), the Government issued dated securities worth Rs.1,54,000 crore taking the gross borrowings for HY1 of FY 15 to Rs.3,52,000 crore (58.7 per cent of BE), as compared to Rs.3,44,000 crore (59.4 per cent of BE) in H1 of FY 14. Net market borrowing (including repurchases) during the first half of FY 15 at Rs.2,76,887 crore or 56.0 per cent of BE was higher than Rs.2,69,265 or 55.6 per cent of BE in the previous year. The government repurchase securities worth Rs.18,805 crore during September 2014 to prematurely redeem the Government Stocks by utilizing surplus cash balances. Auctions were reduced by Rs.16,000 during Q2 of FY 15 from the proposed auction calendar for H1 FY15 in March 2014, after review of Central Governments cash position. During the quarter, emphasis on re-issues was continued with a view to build up adequate volumes under existing securities imparting greater liquidity in the secondary market. One new benchmark security of 10 year maturity (8.40 per cent GS 2024) was issued during the quarter on July 28, 2014. The amount issued under new securities constituted Rs. 32,000 or 20.8 per cent of total issuances during Q2 of FY 15. The weighted average maturity (WAM) of dated securities issued during Q2 of FY15 at 14.70 years was higher than 14.13 years for dated securities issued in Q1 of FY15. The weighted average yield of issuance during Q2 of FY15 also declined to 8.67 per cent from 8.92 per cent in Q1 of FY15, reflecting moderation in yields during the quarter. Liquidity conditions in the economy remained comfortable during the quarter, barring period of advance tax outflows, with the liquidity deficit, as reflected by net borrowings from RBI, remaining near the Reserve Banks stated comfort zone. The cash position of the Government during Q2 of FY15 was comfortable during the quarter barring a few occasions, when it took recourse to WMA.The Public Debt (excluding liabilities under the Public Account) of the Central Government provisionally increased by 2.7 per cent in Q2 of FY 15 on Q-o-Q basis as compared with an increase of 3.7 per cent in the previous quarter (Q1 of FY15). Internal debt constituted 91.7 per cent of public debt as at end-September 2014, while marketable securities accounted for 83.9 per cent of public debt. About 28.4 per cent of outstanding stock has a residual maturity of up to 5 years, which implies that over the next five years, on an average, 5.68 per cent of outstanding stock needs to be rolled over every year. Thus, the rollover risk in the debt portfolio continues to be low. The implementation of budgeted buy back/ switches in coming quarters is expected to reduce roll over risk further.

Stronger policy response needed to avoid risks to growth, especially in the euro area, says OECD in latest Economic Outlook
Modest global economic forecasts, continuing high unemployment, and downshifts in potential output should spur governments with a greater sense of urgency to fully employ monetary, fiscal and structural policy levers to support growth, notably in Europe, according to the Economic OutlookThe Economic Outlook draws attention to a global economy stuck in low gear, with growth in trade and investment under-performing historic averages and diverging demand patterns across countries and regions, both in advanced and emerging economies.

n++We are far from being on the road to a healthy recovery. There is a growing risk of stagnation in the euro zone that could have impacts worldwide, while Japan has fallen into a technical recession,n++ OECD Secretary-General Angel Gurria said. n++Furthermore, diverging monetary policies could lead to greater financial volatility for emerging economies, many of which have accumulated high levels of debt.n++

Global GDP growth is projected to reach a 3.3% rate in 2014 before accelerating to 3.7% in 2015 and 3.9% in 2016, according to the Outlook. This pace is modest compared with the pre-crisis period and somewhat below the long-term average.

The euro area is projected to grow by 0.8% in 2014, before slight acceleration to a 1.1% rate in 2015 and a 1.7% rate in 2016.

A prolonged stagnation in the euro area could drag down global growth and have knock-on effects on other economies through trade and financial links. A scenario in the Outlook shows how a negative shock could lead an extended period of very low growth and very low euro inflation, resulting in unemployment remaining at its current unacceptably high level.

n++With the euro zone outlook weak and vulnerable to further bad news, a stronger policy response is needed, particularly to boost demand,n++ said OECD Chief Economist Catherine L Mann. n++That will mean more action by the European Central Bank and more supportive fiscal policy, so that there is space for deeper structural reforms to take hold. A Europe that is doing poorly is bad news for everyone.n++

Agreement on TDA a big deal – USTR Froman
Ahead of the minister level meeting of the Trade Policy Forum (TPF), the first in four years, US Trade Representative Mr Michael Froman described the agreement reached by India and the US on the World Trade Organizations Trade Facilitation Agreement (TFA) aimed at unlocking progress at the World Trade Organization (WTO) as a n++big dealn++.n++The TFA is a big deal which will be effective in reducing the cost of doing business for developed countries by 10 per cent and that for developing countries by 14 per cent, adding billions of dollars to the world economy,n++ Mr Froman said, addressing a packed house of senior industry leaders of FICCI and senior officials and representatives of the US Embassy.

Mr Froman informed the audience that India and the US were working side by side in Geneva to address the outstanding issues relating to the TFA and the agreement with India would help to move forward with full implementation of the TFA. Mr Froman also said that the agreement would facilitate entry of small businesses in the global supply chain. Small business enterprises help to generate employment and command 40 per cent of Indian exports. India would be a big beneficiary of this agreement which creates a win-win scenario.

Mr Froman said that the agreement which also reflects shared understandings regarding the WTOs work on food security, is in sync with US commitment to address big needs of Indias food security. Attributing the success of the breakthrough to the personal involvement of President Obama and Prime Minister Modi, Mr Froman said, India and the US can look forward to working with all WTO members to reach a consensus that enables full implementation of all elements of the landmark Bali Package, including the Trade Facilitation Agreement.

Welcoming the restart of the TPF, the premier bilateral forum for discussion and resolution of trade and investment issues between the two countries, Mr Froman pointed out that this was the first trade policy forum in four years, marking an important development in the historic turn in the India-US relations.

Describing Prime Minister Narendra Modis visit to the US in September and his Madison Square meeting as a blockbuster eventn++, Mr Froman highlighted the importance of the forthcoming visit of the US President Barack Obama which would mark the first ever presence of a US President in the Indias Republic Day celebrations as well as the first time that a US President would visit India twice in a tenure. India, US relations are being increasingly defined by strategic dialogue, high technology and higher education and this piece of engagement should not come as a surprise given President Obamas commitment to deliver for successful partners.

Dr Reddy’s Lab (DRL) gets 483 from USFDA for its API facility

Dr Reddy’s Lab (DRL) gets 483 from USFDA for its API facility: DRL received 483 observations for its unit 6 of Vizag plant. The Vizag plant, which manufactures active pharmaceutical ingredient (API) and bulk drugs, was visited by the US Food and Drug Administration last week. According to the company 483 observations are unlikely to affect the production of the company and therefore, it will continue as per normal routine. We maintain our neutral stance on the stock.

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