Indian and global market news and impact analysis India 1) The government on Wednesday eased foreign direct investment (FDI) norms for the construction development sector, which is expected to provide a substantial boost to the sector in terms of greater foreign capital inflows. Notifying the decision taken by the Cabinet in November, the Department of Industrial Policy and Promotion (DIPP), the nodal agency for all FDI policy, said foreign developers would now be allowed to exit a project only after completion or after completing the basic trunk infrastructure such as roads, water supply, street lighting, drainage and sewage. Besides, under the new policy, the DIPP has also reduced minimum area requirements. Unlike the previous policy, foreign real estate developers can now invest in construction development projects having a minimum floor area of 20,000 sq meters. Earlier the requirement was 50,000 sq meters of built-up area. Similarly, the capital requirement was decreased from $10 million to $5 million. Akash Gupt, executive director at PwC said, “The relaxation of the lock-in period comes as a major relief for the industry. The new rules allow FDI in smaller projects, which is a big relief. Besides, by doing away with the lock-in period, the government has now made the norms much simpler.” 2) Activity in India’s services sector in November expanded at its fastest pace in five months, mainly driven by new order flows. But there was a decline in hiring, the first time in four months, showed the widely-tracked HSBC Purchasing Managers’ Index (PMI) data released on Wednesday. The index rose to 52.6 in the month, compared with 50 in October. A reading above 50 means expansion, while one below that implies contraction. The reading in November, however, was below the series average and sentiment remained subdued, especially with the decline seen in hiring. Markit Economics, which compiles the PMI data, said services growth had little impact on employment during the month. Also, new business sentiment slipped to the weakest since mid-2007, implying continued reforms were needed to sustain growth uptick. Pranjul Bhandari, chief India economist at HSBC said, “Service sector activity grew in November, as new business rose for a seventh straight month. However, despite an uptick in order flows, business sentiment deteriorated. It reminds us that a continued policy action to addresses investor concerns is required for sustaining the growth momentum.” Global 1) The monthly pace of growth in the U.S. services sector slowed a bit more than previously estimated in November to hit its lowest level since April, a survey showed on Wednesday. The final services sector Purchasing Managers Index compiled by information Services Company Markit slipped to 56.2 in November from 57.1 in October. Markit had initially estimated the index at 56.3 in its preliminary reading released in late November. Markit chief economist Chris Williamson said, The slowing is still only modest, and leaves the economy growing at its approximate long-term trend rate. The governments non-farm payrolls data is due on Friday and economists estimate the U.S. economy created 230,000 jobs last month. 2) Activity in the eurozones private sector slowed more sharply than previously estimated in November, according to surveys of purchasing managers, making it likely the currency areas economy will end a disappointing year on weak footing. Data firm Markit on Wednesday said its composite purchasing manager’s index--a measure of activity in the manufacturing and services sectors in the currency bloc--fell to 51.1 in November from 52.1 in October, reaching a 16-month low. That was lower than the preliminary estimate released late last month of 51.4. A reading below 50.0 indicates activity is declining, while a reading above that level indicates it is increasing. Markits survey of 5,000 manufacturers and service providers also showed that a significant revival in activity is unlikely in the coming months, with new orders falling for the first time since July 2013, while employment was unchanged.
Posted on: Thu, 04 Dec 2014 05:02:49 +0000
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