GalaTime

• Morgan Stanley: Revisiting India’s Fiscal Stress

The combined central and state government deficit is estimated to have declined to 5.3% as of F2008 from 9.6% five years back. The headline fiscal deficit for the central government is expected to improve to 2.5% in F2009 (budget estimates) from a 6.2% deficit in F2002.

Including the off-budget expenditure items, the underlying F2009 deficit for the central government will be about 6.2% of GDP in F2009, instead of the headline estimate of 2.5%. The combined centre plus state deficit including off-budget liabilities will be about 9.4% of GDP in F2009 as per estimates.

About 85% of the total US$183 billion capital flows that India has received over the past four years have been in the form of non-FDI flows.

. . . the ratio of external public debt to India’s total public debt was only 6.8% as of March 2007.

. . . the total market value of government-owned listed companies is about US$280 billion (24.1% of GDP) currently, compared with US$20 billion (4.1% of GDP) in F2002.

• Bloomberg: India Cheapest BRIC Market, May Get Cheaper on Costs

Investors are showing less faith in India — even after the benchmark Sensitive Index jumped 14 percent from its March low — because companies produce fewer commodities than Russia and Brazil, the nation’s gross domestic product is growing slower than China’s and a scarcity of coal, oil and iron ore drove inflation to a three-year high.

India is also the only BRIC nation where economic growth is forecast to slow for a second consecutive year in 2008.

Overseas fund managers pulled a net $3.03 billion out of Indian equities in the first three months of the year, . . . the first time foreigners have been net sellers on a quarterly basis since the data were first compiled in 2000.

Indian shares are valued at 10.9 times analysts’ estimated 2008 earnings, based on the median of 573 companies analyzed by Bloomberg. That’s the lowest among the four BRIC markets.

About that last bit (P/E of 10.9) - note that the mid cap P/Es are almost 30% less than large cap P/Es.

• Economic Times: Funds now betting on natural resources

The seemingly unstoppable rally in commodities across the planet is driving many leading fund houses to launch schemes that invest in natural resources. Since Indian regulations do not permit mutual funds to invest directly in commodities, fund houses go for schemes that invest in stocks of mining companies.

And since there are not many mining companies on our local bourses, most of these funds propose to invest in companies abroad.

At least five funds, keen on investing in natural resources, are set to hit the market in the coming weeks, as per documents filed with the stock market regulator Sebi. There are two funds from ING and one each from Mirae Asset Management, Tata AMC and HSBC MF.

Getting closer to the commodity peak!