The Indus Banker

Friday, March 20, 2009

A dead cat bounce?

The latest rally in the equity markets has been quite frustrating for me, but I am positive of going short further. Firstly, I was expecting Citi to be nationalized this time around after its stock price fell below $1. Then, Mr. Pandit announced that the bank is profitable followed by similar announcements by Bank of America. The market has rallied thereafter for 9 consecutive sessions. Inspite of the Fed's braveheart efforts to buy governments bonds, this is a bear market rally and there is more pain to be seen. I closed some of my short positions, but I am definitely holding on to others to see new lows. Nouriel Roubini has an interesting article on the "dead cat bounce":

Reflections on the latest dead cat bounce or bear market sucker’s rally

Nouriel Roubini | Mar 14, 2009

It is déjà vu all over again. We have already seen this Groundhog Day movie at least six times over and over again in the last year or so: the market starts to rally – this time around about 8% in a week - and the chorus of optimists starts to say that this is the bottom of the economic and financial crisis and that we are at the beginning of a sustained stock market rally that signals the true end of this bear market.

Even before the latest bear market rally started last week I wrote the following on March 2nd:

Of course you cannot rule out another bear market sucker’s rally in 2009, most likely in Q2 or Q3: the drivers of this rally will be the improvement in second derivatives of economic growth and activity in US and China that the policy stimulus will provide on a temporary basis: but after the effects of tax cut will fizzle out in late summer and after the shovel-ready infrastructure projects are done the policy stimulus will slack by Q4 as most infrastructure projects take year to be started let alone finished; similarly in China the fiscal stimulus will provide a fake boost to non-tradeable productive activities while the traded sector and manufacturing continues to contract. But given the severity of macro, household, financial firms and corporate imbalances in the US and around the world this Q2 or Q3 sucker’s market rally will fizzle out later in the year like the previous 5 ones in the last 12 months.

And, as we pointed out here on March 9th:

I have also argued that another bear market rally may occur some time in Q2 or Q3 of this year and may end up like the previous six. Indeed in the last 12-18 every time something dramatic happens (that leads to a lower stock market low) and the government reacts to it with a more aggressive policy action optimists come out and say that this is the dramatic and cathartic event that suggests that a bottom has been reached: they said that after Bear Stearns, after the collapse and rescue of Fannie and Freddie, after Lehman, after AIG, after the TARP was announced, after the G7 communique’, after the $800 fiscal stimulus package was announced last November (the onset of the latest sucker’s rally).

And after a while markets are again “shocked shocked” (to paraphrase the French police inspector in Casablanca) to discover that the macro news are much worse than expected in the US and abroad, that earnings news are much worse than expected not just for financials, realtors, home builders and consumer discretionary firms but also for most other non-financial firms, and that financial markets/firms shocks/news are worse than expected.

And indeed, as predicted, in the last week another bear market rally has started in earnest; the latest rally is just a dead cat bounce. Let us explain next in much detail why this is another bear market rally…

Wednesday, August 6, 2008

Back in business

It's been a while since I have entered a single letter in this space. Many reasons, shouldn't really delve into it. But, I'm back. The focus initially will be primarily on the Indian, US and to a certain extent the Chinese markets. 

The last few months, I have been busy cherry picking some great investment ideas and it has done quite well for me inspite of the volatility in global markets. Volatility, indeed, can work you wonders, but you need to have qualities of a shrewd investor - patience, diligence and more patience. 

Here's a simple article illustrating the fact: 
In a recent report called "How to Stop Worrying and Learn to Love Volatility" (PDF file), Lord Abbett senior economist Milton Ezrati showed how market volatility "can actually help build wealth over time, especially for longer-term investors."

Till later guys. Adios

Monday, January 21, 2008

‘08 could be the tipping point for voluntary carbon markets

‘08 could be the tipping point for voluntary carbon markets
15 Jan, 2008, 1534 hrs IST,Mehul Verma, INDIATIMES NEWS NETWORK









NEW DELHI: Global warming has been successful in creating a growing consciousness to trade carbon emission. World over experts have been analyzing the carbon markets and various studies are being held out to tap the benefits of carbon. However, there remains a huge untapped potential in the voluntary carbon markets waiting to be explored. Year 2008 could very well be the tipping point for the voluntary carbon markets.

The concept of voluntary carbon markets (VCM) consists of companies, governments, organizations, organizers of international events and even individuals taking the responsibility of their carbon emissions by voluntarily purchasing the carbon offsets.

In fact, the voluntary carbon markets function in a much simpler way as compared to Clean Development Mechanism (CDM), created by Kyoto Protocol. Under the voluntary carbon markets, the carbon offsets may be purchased by retailers or organizations of relatively small size. On the other hand, the CDM market is known for its voluminous trading. Being less complicated in terms of paper work and volume, the voluntary carbon markets offer an ideal platform for mid-size trading business operations.





à





















The second advantage of a voluntary carbon markets over Clean Development Mechanism (CDM), lies in the equality of treatment. Clean Development Mechanism (CDM) favors developed nations over developing nations in terms of fixing emissions norms. Voluntary carbon markets are easier to operate and stand fair chances of growth in developing economies.

According to Dr Anne-Marie, expert on climate change with Lloyd's Register Quality Assurance (LRQA), “The voluntary carbon market refers to any sale or purchase of emission credits or emission reductions that occur outside a regulated market. A regulated market is one set up by governments such as Clean Development Mechanism (CDM) and European Union Greenhouse Gas Emission Trading Scheme (EU ETS).”

Voluntary carbon markets have historically served as sources of experimentation and innovation in the carbon markets. These markets most likely to reach poorer and smaller communities in developing countries faster. This is, in partly, because they are free from red-tapism & bureaucracy and offer a lower transaction cost compared to regulated carbon markets.

No Forwards Trade

In such markets, there are no widely accepted standards, processes for certification and verification, or requirements to list credits on established registries. Even then, the unorganized players of the carbon market stand a better chance to get the ticket to trade as the entry level requirements in this market are simpler.

Reports suggest _ as a part of the consolidation in the market that began to take shape in 2006, various groups- non-profits and industry associations aim at creating rigorous standards and processes as a way of ensuring confidence and quality in the market.

Those carbon markets that may have earned carbon credits before registration stand a fair chance of being transformed into the unorganized carbon market. These credits are normally verified by third-party accredited bodies against the voluntary carbon standard 2007.


However, “Regulated markets like CDM and EU ETS are set up by governments or the United Nations and include registry trading, which allows only regulated credits, so the registries associated with regulated markets would not allow trading of voluntary credits.

“Voluntary markets need registries to track trades to eliminate double trading and also to allow forward trades. Voluntary markets must develop their own registries both because their voluntary carbon units can not be traded on the regulated market registry platform and for credibility and transparency,” according to Dr. Anne-Marie.

“So far the voluntary carbon market has been characterized by being restricted to trading only occurring between buyers of emission units and sellers who are the projects or organizations whose activities have generated an emission reduction (there are no options, forward trades, etc., as occurs in other energy markets). The main reason for this is a lack of a formal register to track trades,” she adds.

Given the Bali road map, both the regulated market (EU ETS, CDM and JI) as well as the voluntary market will grow between now and 2012.

However, the voluntary market growth expectation according to studies by LRQA stresses upon the growing desire of organizations to demonstrate their CSR/sustainable credentials by going carbon neutral, which requires a combination of in-house reductions -- and final offsetting of those emissions that can not be reduced.

For such organizations the voluntary markets offer an opportunity to manage their offset in a credible manner. Organizations’ emissions in this case are not subject to a regulated constraint such as EU ETS;

Finally, the developing markets in USA where there are no regulated markets and where the voluntary market is the way to manage carbon portfolios. The voluntary market is not going to grow to the size of the regulated market, but it will become an important part of the market mechanisms that reduce emissions in the coming days.


ET Art Index

This is the art index created by Osian and Economic Times. Highly questionable but a good repository of some leading contemporary Indian artists. I am sure ET will come out with new indices for the art market - art large cap, art small cap, Deccan art index ;)


Close on the heels of the success of the equity indices, which ET had launched in recent years, ET now unveils its next generation index called the ET Art Index powered by Osian’s – Connoisseurs of Art, the world’s premier Archive on the Indian contemporary fine and popular arts. This index was developed keeping in mind the growing interest in Indian contemporary art across the globe and the need to track its performance vis-à-vis other asset classes like equities, gold and real estate.
The ET Art Index could become an ideal benchmark not only for the fund managers and insurance companies, but also for investors including High Net worth Individuals (HNIs). With increased interest in Indian art and new art funds slated to be launched in the country, the need for a quantitative evaluation of the movement of art prices is now imperative.In order to develop this index, ET and Osian’s have used the transactions of artworks belonging to India’s leading 51 contemporary artists. The transaction value of these 51 artists comprise 88% of the total organized Indian art market in the year 2005 while it was over 91% in the year 1997. Some of the prominent artists included in the art index are Jamini Roy, A.R. Chughtai, M.F. Husain, F.N..Souza, Tyeb Mehta, V.S. Gaitonde, Akbar Padamsee, Ganesh Pyne, J. Swaminathan, J. Sultan Ali, Bhupen Khakhar and the three Tagores - Abanindranath, Rabindranath and Gaganendranath.

ET Art Index is calculated on the basis of the average Square Inch Rate (S.I.R) of works of art of these top artists. Since works of artists are in different media and dimensions, the S.I.R is the appropriate basic unit so as to measure and compare the values of art fairly.

This is calculated by dividing the sale value by the area/volume of the artwork.
The Liquidity and Historical Significance weights have been considered so as to arrive at the final index values. The historical weight for each artist have been given on the basis of a range of criteria such as originality, critical acclaim, exhibition and publication history, collector profile, sales record. However the liquidity weights are given purely based on the total traded value of each artist for the calendar year.

The year 1997 has been taken as the base year for the purpose of calculating the base values. This year was a turning point in the history of the Indian Contemporary Art, according to experts, in which, among other issues, the first professional auction was held by an Indian organisation, HEART. The base value has been converted into 100 to obtain the index figures.

On a Compounded Annualized Growth (CAGR) basis, ET Art Index gave a return of 47.8% since it’s inception in Jan 01, 1998. From a level of 100 on Dec 31, 1997 the index value stood at 2513.1 on March 22, 2006. During the same period, BSE Sensex gave a return of 14% on a CAGR basis. The significant movement of the ET Art Index started in the year 2003, which was also the beginning of the boom period for the Indian equity market.

Ali, J. Sultan
Ara, K.H.
Baij, Ramkinkar
Barwe, Prabhakar
Bawa, Manjit
Bendre, N.S.

Bhattacharjee, Bikash

Biswas, Nikhil
Bose, Nandalal
Broota, Rameshwar
Buksh, Ustad Allah
Burman, Sakti
Chandra, Avinash
Chittaprosad
Chowdhury, Jogen
Chughtai, Abdur Rehman
De, Biren
Dhurandhar, M.V.
Dodiya, Atul
Gaitonde, V.S.
Goud, Laxma
Gujral, Satish
Hebbar, K.K.
Husain, Maqbool Fida
Keyt, George
Khakhar, Bhupen
Khanna, Krishen
Mazumdar, Chittrovan
Mazumdar, Hemendrana
Mehta, Tyeb
Menon, Anjolie Ela
Mookherjea, Sailoz
Padamsee, Akbar
Patwardhan, Sudhir
Pyne, Ganesh
Ramachandran, A.
Ram Kumar
Raza, S.H.
Rodwittiya, Rekha
Roy, Jamini
Sabavala, Jehangir
Sen, Paritosh
Shreshtha, Laxman
Singh, Arpita
Souza, Francis Newton
Subramanyan, K.G.
Swaminathan, Jagdish
Tagore, Abanindranath
Tagore, Gaganendranath
Tagore, Rabindranath
Varma, Raja Ravi



Sunday, November 25, 2007

TECHNOLOGY & SUNLIGHT: SOLVING INDIA'S ENERGY, WATER, AND ENVIRONMENTAL CHALLENGES TO CREATE A GREEN, PROSPEROUS FUTURE

Quite a dated article, but definitely indicative of the macro numbers and the need for alternative energy in India.




by Ed Ring
March 17, 2007

India at night from outer space -
already glowing with energy and light

To ensure India will have adequate energy and water supplies in the future...

The first step is to predict where India's population will level off. Assume India's population is going to peak at around 1.3 billion people. This may be somewhat underestimating reality, but everything that follows can be proportionately increased based on higher population projections.

Next, determine how many units of energy (expressed in millions of BTUs per year), and how many cubic meters of water per year, on average, are required to sustain the lifestyle for a citizen of a fully industrialized nation. Currently, on average, each Indian citizen consumes 25 million BTUs of energy per year and consumes not quite 500 cubic meters of water. In the European Union, which provides a useful comparison, the average energy consumption is well over 150 million BTUs per citizen per year, and just over 500 cubic meters of water.

It is safe to assume India will employ more energy efficient "leapfrog" technologies as she industrializes, meaning that it will not be necessary to achieve increases in per capita energy consumption all the way to the levels of the Europeans. This is also a safe assumption because much of Europe's energy consumption is required for heating during their much colder winters.

...assume that India's per capita energy production will need to get to at least 50% of that currently enjoyed by Europeans. Taking into account projected population increases, this means India's total national energy production per year will need to quadruple from 25 quadrillion BTUs per year to 100 quadrillion BTUs per year.

India's water production per person would not have to increase, but overall supply will still need to keep pace with population growth, meaning India will eventually need to divert 667 cubic kilometers of water per year, up from 500 cubic kilometers per year today. Bear in mind that abundant energy leads to abundant water, since a cubic meter of seawater can be desalinated for a mere two kilowatt-hours (ref. "Photovoltaic Desalinization").

DELIVERING ABUNDANT FRESH WATER
TO EVERY CORNER OF INDIA

With India's future water challenges, the problem isn't so much one of supply, it's more a problem of uneven distribution. The north and east of India enjoy abundant supplies of water, but the south and west of India are relatively arid. It is important to note that if the proposed aquaducts, reservoirs and pumping stations were built, India's major river interlinking projects, through a system of reservoirs and aquaducts, (ref. India's Water Future) could then move water in cubic kilometer volumes relatively cost effectively. Once the costs of the interlinking system are borne, the biggest ongoing cost is the energy required for the pumps. But to pump a cubic kilometer of water up a 250 meter lift, which is what it would take to get water from the Ganges basin to the Deccan Plateau, would only require 100 megawatt-years of power. To pump 50 cubic kilometers of water per year from the Ganges basin upwards 250 meters into aquaducts flowing south and west, which is more than the most ambitious of India's current interlinking projects, would only require about 5 gigawatt-years of electricity. This amount of electricity represents only about one-half of one percent of India's current total yearly energy production (all sources).

HOW MUCH ELECTRICITY WOULD BE REQUIRED
TO PUMP WATER FROM THE GANGES TO THE KRISHNA BASIN?
As the table indicates, it would take 3.8 gigawatts of electricity (representing about 2.7% of
India's estimated 2005 electrical generating capacity of about 140 gigawatts), running constantly,
to pump water 250 meters uphill at a volume of 38 cubic kilometers per year. Put another
way, a 250 meter lift will require about 100 megawatt-years for each cubic kilometer pumped.

Water supply in India, regardless of whether or not there are a few interlinking projects on a national scale, will be managed, overwhelmingly, using decentralized solutions. Both innovation and traditional methods can combine and evolve, proliferating via an information enlightenment nurtured by internet communications, to produce thousands of water management projects: cisterns in buildings, contour berms to collect and percolate runoff, refilling underground aquifers with runoff, and smaller but numerous new reservoirs (ref. "Harvesting Water"). It is important to emphasize that as India generates more energy, more uses for water will be required. India is challenged not only to redistribute water on a national scale, but also to use water much more efficiently.

...plant biofuel crops in the desert...
Strip mining the lands for biofuel is driving a
new round of global deforestation - especially in
the tropics - of catastrophic proportions.

When forests are regrown, more tigers and other wildlife may survive. Equally important however is the role forests play in increasing water supplies.

One often overlooked but decisive contribution to water supply and storage is through reforestation. India has lost about 90% of her forest cover. Watersheds need to be reforested everywhere, and when they are, the springs will flow again, and the water tables will rise. Forests moderate heat, they increase cloud formation and rainfall, they protect topsoil, and they nourish aquafirs. Do you want more fresh water? Then reforest India. (ref. "Profitable Reforesting," and "Reforesting Brings Rain").

Not only on the land, but just offshore, reforesting needs to be a priority for India. The best way to protect India's coast from tidal surges is to replant the mangrove forests (ref. "Mangroves Stop Tsunami"). Mangrove deforestation has occurred on a massive scale worldwide, and can be reversed simply by planting more mangroves.

Most projections of India's future energy supplies are almost completely reliant on increasing conventional energy production, and they are also far too low. An interesting side note is that India's most ambitious plans for nuclear power don't amount to more than about 3% of India's projected energy production (ref. "India's Nuclear Power"). India cannot plan to simply double energy production, they must quadruple it. To do this, conventional sources (including nuclear power) are not sufficient. A breakthrough is required, and that breakthrough is almost here.

SOLAR ELECTRICITY IS THE
MOST PROMISING RENEWABLE

There is only one source of renewable energy that can quickly get built and installed and can produce 50 quadrillion BTUs or more per year, and that is solar energy, photovoltaic energy in particular (ref. "Power the World With Photovoltaics," "Photovoltaic Powered Cars," and "The Photovoltaic Revolution). India needs a photovoltaic array on every rooftop. Today photovoltaic cells, in the whole world, produce at most 10 gigawatt-years of electric power per year, which at 3,416 BTUs per kilowatt-hour, equates to only .3 quadrillion BTUs. Given worldwide energy production is over 400 quadrillion BTUs, photovoltaic power today is a drop in the bucket. But that is about to change.

CHINA, INDIA, USA, EUROPE - KEY VARIABLES 2005
India's terribly inefficient energy intensity (BTU's per unit of GNP)
is reason for hope - through more energy efficiency, quantum
increases in energy output may not be necessary for India to
achieve first world per capita economic status

Photovoltaic manufacturing relies on supplies of polysilicon, which have never been reliable. But there are new designs that require far less silicon, or no silicon at all. These next generation photovoltaic cells are called "thin skin," a catch-all term describing several technologies which all use a far thinner coating of photo-electric material. There are companies claiming to have this technology all over the world, including India. (ref. "Thin Film Photovoltaics," "Crystaline Photovoltaics," and "The Photovoltaic Boom). It is vital that photovoltaic technology be the top priority of India's alternative energy research and development community, as well as for investment in manufacturing. There is no other plausible way to produce, within a decade, a quantity of energy sufficient to lift the Indian economy to sustainable prosperity. Even if the thin film breakthroughs don't occur, India should invest in polysilicon manufacturing for the production of conventional crystaline photovoltaics. Even at current costs, conventional photovoltaics make long-term economic sense, and the greatest cost to their manufacture is energy, which can be produced by photovoltaics themselves. Conventional photovoltaics now have an energy payback of 20+ to one.

India can have a green and prosperous future

Other than photovoltaics, solar electricity via solar-thermal arrays is surprisingly cost-competitive and space-efficient (ref. "Solar Thermal Power," and "Saharan Solar Power") The space-efficiency of solar energy collection units (electric and thermal) enables decentralized energy development. Alternative technologies in general support the design of each home or building being adapted to collect and store solar, wind, or even geothermal energy. In a modern green structure, thermal energy from any source can be stored on-site and converted back into electricity, as well as used for space heating and water heating. Thermal energy can even by used as an energy source for refrigeration. Clearly the design of buildings to acquire and store energy is another area where technology, tradition, and innovation can significantly address India's future energy challenges.

Just as the potential for nuclear power to address India's energy needs may be overstated - as well as the risks therein, the potential for biofuel is overstated as well, and the risks of biofuel are decidedly understated (ref. "IPCC Report & Deforestation," and "Biofueled Global Warming"). Biofuel can provide an important supplemental fuel, but even at 2,500 barrels of oil per square kilometer per year - which would be an excellent yield - there is not enough land in India to begin to rely on biofuel to replace conventional fuels, let alone provide the fuel necessary to quadruple India's energy output. As it is, biofuel crops are beginning to crowd out food crops, pushing up the price of food. Biofuel crops also can provide the reason for further deforestation. Biofuel crops make sense as a supplemental fuel, not as a comprehensive energy solution. Biofuel crops make sense in arid regions where any crop is a welcome bulwark against desertification, and biofuel will eventually be extracted from virtually all municipal waste, but under no circumstances should a forest be cut down just to grow biofuel.

India's green and prosperous future will require education, infrastructure, innovation, pluralism, and enlightened, adaptable environmentalism.

Addressing India's energy and water needs requires servicing five interrelated industrial sectors; agriculture, manufacturing, transportation, buildings and shelter, and waste management (ref. "The Electric Car Revolution," "Clean the Ganges," "Organic Farming in India," and "India's Energy Future""). In all these areas, green technology and high technology, working together, can provide answers. Often solutions will embrace traditional practices as much as adopt scientific breakthroughs, and working synergistically within all these dimensions is necessary to quicken progress. It should be a source of inspiration that India can complete the process of industrialization today, meaning she can leapfrog obsolete legacy technologies that often hamper innovation in the west.

To produce so much more energy, to collect and distribute so much water, India's challenges are daunting but achievable. The key is to balance large scale projects that are often costly and difficult to manage ecologically, with smaller projects that can be adopted at the scale of individual homes or communities. And at both scales, the solutions will be easier if there is a faith and reliance on India's world-class intellectual and scientific community to provide assistance through high technology.

About the Author: Ed "Redwood" Ring is the Editor of EcoWorld, reporting on clean technology and the status of species and ecosystems. This story was originally published in the January-March 2007 issue of "TerraGreen" Magazine, published by the Energy and Resources Institute in New Delhi, India (www.teriin.org). In his spare time, Mr. Ring grows and gives away trees, especially his beloved Redwoods.

Saturday, June 9, 2007

Making Mumbai an International Financial Centre??? - Long way to go

The Trader Monthly magazine has come up with a ranking of the top cities for traders and financial houses to live in. 50 locales were ranked based on a mix of work and lifestyle factors, exploring everything from the breadth of local financial-services infrastructure to time-zone considerations. Mumbai incidentally is 46th on the list and these were the specific comments:

"#46 Mumbai Lots of lows in the burgeoning financial powerhouse: the dearth of entertainment options and the utter lack of non-super-humid days, to name two. "

Incidentally, Dubai's made a major foray into the trading world.

"For the true-blue speculator, Dubai’s unique mix of boomtown adrenaline, gushers of money and seemingly boundless opportunity make it like no other place traders might want to be. "

Below is the top 10 ranking:
1) Chicago
2) London
3) New York
4) Dubai
5) Miami
6) Boston
7) Dublin
8) Los Angeles
9) Toronto
10) Sao Paulo

Wednesday, May 9, 2007

3G may turn it around for telecom

Rajesh S Kurup / Mumbai May 3, 2007
The outlook for the telecom sector is robust for the current financial year due to the huge capital expenditure plans announced by service providers, increase in telecom penetration and infrastructure sharing becoming more prevalent.

If the government keeps its promise of releasing more spectrum, we will witness the onset of third generation mobile telephony, which enables high-speed data transfer. If it becomes popular, the average revenue per user, which has been declining for most operators, may well go up significantly.

The largest private telecom company, Bharti Airtel, has announced a capital expenditure of $3.5 billion (about Rs 15,000 crore) this financial year, while the second largest, Reliance Communications, has announced Rs 10,000 crore. AV Birla group's Idea Cellular has announced a capital expenditure of about Rs 12,000 crore for the next two years.

Other players too have large plans. These include Hutchison Essar (Rs 7,200 crore), state-owned Bharat Sanchar Nigam Ltd (Rs 4,715 crore), Tata Teleservices (Rs 4,150 crore), Aircel (Rs 3,680 crore), MTNL (Rs 1,970 crore) and Spice Communications (Rs 1,285 crore).

According to an analyst, the majority of the capital would be used for the expansion of services in the country, resulting in faster rollout of services, especially in the rural and semi-urban areas, connecting the length and breadth of the country in the next 24 months. However, the results would emerge within the next two quarters, or latest by the end of this year.

Indian telecom companies are also looking at increasing the pace of erection of passive infrastructure or towers. Reliance is committed to setting up another 8,000 towers, in addition to its existing 12,000 BTSs, and Bharti Airtel has announced an addition of 30,000 BTSs to its existing 40,000 towers. GTL Infrastructure is looking at adding 400 towers a month to its existing 1,200 cell sites.

The emergence of tower sharing, after a recent Telecom Authority of India (Trai ) notification that a BTS can be shared among three players, would result in faster rollout of services. Analysts expect the Indian telecom sector to witness one of its fastest growths during this financial year, especially during the last two quarters of the year.

The industry is also expecting a fall in handset prices that would help in driving telecom penetration. The present telecom penetration stands at an abysmal 14.3 per cent, compared with other developing nations across the world. For example, the telecom penetration in Pakistan stands at around 27 per cent, more than double of India.

The prices of entry-level handsets have fallen to around Rs 1,000 from Rs 4,000 three years ago. Analysts and industry sources expect a further reduction in prices to around Rs 800-900 that would drive telephony growth in the country.

Macquarie Research has raised its wireless subscriber forecast to 425 million subscribers by March 2010, up from our earlier forecast of 400 million. This is based on higher wireless penetration expectations for each of the 23 wireless circles in India.

According to an analyst firm, this would drive revenues and EBITDA margins for the companies in the telecom space.

Another important factor is the country's strong economy that is expected to grow at around 9-10 per cent during the year. The rising income levels of Indian households would provide a "huge impetus" for the wireless sector growth in the country.

Industry expects a monthly net addition of around 7.5-7.7 million per month for the next two years, compared with the existing 6.6 million per month.

Moreover, the entry of Vodafone would also bring in more value-added services and features to the country, that would make other Indian companies launch newer customer-friendly services. If spectrum is released this quarter, as is expected by the industry, it would result in the rollout of 3G services in the country. For the sector, the current year and the next could well turn out to be the best years.

About Me

My photo
I am an investment banker based in the far east, Hong Kong. My education and work has taken me to numerous countries around the world, and that imbibes me a very strong passion for traveling, exploring new places and cultures. I am curious about history and how different societies have evolved over time. Two other interests of mine are hiking, and I have just put up a new blog related to this, and also an activity that was introduced to me as a child, but have seriously got into it just recently - yoga.