Eurozone PMI rose ahead in march to 54.2.

Eurozone business activity powered ahead in March, with eurozone services PMI rising to 54.2 from 53.7 in February, while the composite figure increased to an 11-month high of 54 from 53.3. "Ireland and Spain continued to lead the charge, backed up by a fast-improving German economy," says Markit, but "rates of expansion in Italy and France were modest in comparison." The PMIs indicate Q1 GDP growth of 0.3%, although "the pace of expansion looks set to gather pace." The euro was -0.6% at $1.0853 at the time of writing.

RBI kept repo rate unchanged.

The market remained lacklustre post announcement of RBI policy. The Reserve Bank of India kept repo rate unchanged at 7.5 percent and cash reserve ratio at 4 percent.

RBI says retail inflation will remain below 6 percent in FY16. "CPI inflation is expected to fall to 4 percent by August but firm up to 5.8 percent by year-end."

The Reserve Bank says GDP growth under new methodology is seen at 7.8 percent in FY16.

 RBI feels the outlook for growth is improving gradually. Comfortable liquidity conditions should enable banks to transmit the recent reductions in the policy rate into their lending rates, thereby improving financing conditions for the productive sectors of the economy.

Oil jumped more than 5% on monday- Hedge funds increased bullish oil bets.

Oil prices jumped more than 5 percent on Monday as traders reassessed how quickly Iran might increase exports after a preliminary nuclear deal and anticipated that a months-long rise in U.S. crude inventories may be slowing.

Brent crude's rally followed Thursday's nearly 4 percent tumble after Iran and six world powers announced a framework agreement on the OPEC member's nuclear programme. But initial expectations of a quick recovery in oil exports were tempered by views that it could take longer than expected to roll back sanctions.

Hedge funds increased bullish oil bets by the most in four years as negotiators worked to reach a deal over Iran’s nuclear program. Speculators boosted their net-long position in crude by 21% during the seven days ended March 31, CFTC data show, the biggest percentage increase since March 2011. Short positions declined by the most in three months.

Transfer Pricing: Entire law on determining ALP of transaction of loan of money to AE discussed

CIT vs. Cotton Naturals (I) Pvt. Ltd (Delhi High Court)

The question whether the interest rate prevailing in India should be applied, for the lender was an Indian company/assessee, or the lending rate prevalent in the United States should be applied, for the borrower was a resident and an assessee of the said country must be answered by adopting and applying a commonsensical and pragmatic reasoning. We have no hesitation in holding that the interest rate should be the market determined interest rate applicable to the currency concerned in which the loan has to be repaid. Interest rates should not be computed on the basis of interest payable on the currency or legal tender of the place or the country of residence of either party. Interest rates applicable to loans and deposits in the national currency of the borrower or the lender would vary and are dependent upon the fiscal policy of the Central bank, mandate of the Government and several other parameters. Interest rates payable on currency specific loans/ deposits are significantly universal and globally applicable. The currency in which the loan is to be re-paid normally determines the rate of return on the money lent, i.e. the rate of interest

External debt of India rose US$ 6 billion QoQ, to US$ 462 billion by end of Dec'2014.

   

India's external debt rose to USD 462 billion at the end of Dec'2014, up from USD 456 billion at the end of Sep'2014. This is 8% higher than USD 427 billion, a year ago. The increase was driven by Commercial borrowings, which now constitute 37% of total external debt (up from 20% in Sep'04).

Forex reserve at the end of Dec'2014 was USD 322 billion (This has risen to USD 340 bn recently).

Forex reserves currently at US$ 340 billion; Looks adequate.  Forex reserve as a percentage of total external debt increased to 70%. As a percentage of non-Rupee debt, forex reserves rose to 95% from 91% in Sep'2014, a key positive for the Rupee (NYSEARCA:INR) as it lowers the pressure on the forex reserves.

Source: Ministry of Finance

Commercial borrowings constituted 37% of total external debt, followed by Deposits from non-resident Indians' deposits ((24%)) and Short term debt ((19%)):

Source: Ministry of Finance

Decrease in share of non-INR debt is a positive.

        

Forex reserves might see pressure if maturing forex debt does not get refinanced by fresh forex borrowings.

        

Rupee to trade at 61-63 in the near-term; Year-end target at INR 65/USD.

U.S. equity-index futures dropped with the dollar on weaker-than-estimated data on hiring and manufacturing

U.S. equity-index futures dropped with the dollar on Thursday, the last trading day of the week for many markets before the Easter holiday season. Despite many investors sitting on the sidelines prior to the weekend, markets are preparing for the monthly U.S. jobs report for clues on monetary policy. The figures will follow yesterday's weaker-than-estimated data on hiring and manufacturing, which fueled speculation that the U.S. economy is slowing and bolstered the case for keeping interest-rates lower for longer.

Euro area manufacturing PMI hits 10 month high in march

Euro-area manufacturing expanded faster than initially estimated last month, helped by growth in Spain and Italy and a stronger performance in Germany. Beating an earlier "flash" reading of 51.9, Markit's Purchasing Managers Index hit a 10-month high in March, rising to 52.2 from 51 in February. Economic momentum in the eurozone is picking up as the ECB continues its €60B a month QE program and a weaker euro aids exporters.