Sensex Gains ; Inflation Rises to 10.16% in May

Mayank Mehta, Chandrasekhar Atreya and Sanjay Barot
14 Jun, 2010
New York City

Annual rate of inflation measured in wholesale price index increased to 10.16% in May compared to 2.67% for a year ago. The index increased 1.7% to 258.1 from 253.7 in April as per a government report released in New Delhi today.

[R]5:00 PM Mumbai, 8:30 AM New York – Stocks in Mumbai traded higher led by Reliance Industries and banks. Government report shows that wholesale price inflation rose to 10.16% in May. Reliance Industries agrees to takeover Infotel, the successful BWA pan-India bidder. BWA and 3G auction together gives a windfall to the government. Sun TV founder plans to buy into SpiceJet Ltd.[/R]

Stocks in India gained, driving the benchmark index to its monthly high, led by Reliance Industries Ltd and banks, after all round business expansion boosted investor sentiments.

The Sensex index in India increased 273.22 or 1.60% to 17,338.17 and CNX Nifty index rose 52.35 or 1.02% to 5,171.70. Among the Sensex 30 stocks, 19 rose and 11 fell.

On BSE trading, 1,620 stocks advanced, 1,177 declined and 100 were unchanged.

Rupee edged higher 26 paisa to Rs. 46.57 against one dollar.

Reliance rose after agreeing to takeover Infotel Broadband Services Private Ltd. Shares in five banks rose 1.1% to 4.91% after the government on June 12 approved an Rs 6,210 crore plan to bolster capital to help them boost lending. Of these, state-run IDBI Bank Ltd gained the most at 4.91%.

Annual rate of inflation measured in wholesale price index increased to 10.16% in May compared to 2.67% for a year ago. The index increased 1.7% to 258.1 from 253.7 in April as per a government report released in New Delhi today.

British banking major, Standard Chartered Plc on Friday made its debut on the Bombay Stock Exchange at Rs 105 a share against its issue price of Rs 104 a unit.

The data on the Index of Industrial Production released in New Delhi on Friday revealed that yet again, the mainstay of the robust growth in April has been manufacturing. Manufacturing sector accounted for nearly 80% of the IIP, expanding by 19.4%.

The keenly contested BWA spectrum auction ended on Friday giving the government a windfall of Rs 38,617 crore. With this the government managed to gross over a whopping Rs 106,000 crore from the entire spectrum auctions for 3G and BWA against the estimated Rs 35,000 crore.

This collection will help the government reduce its fiscal deficit by almost 4.5% and aid it to fund various development and social schemes. In the BWA auction, Internet service provider, Infotel Broadband Services Pvt Ltd, was the only successful pan-India bidder at Rs 12,847.77 crore.

Reliance Industries Ltd, India’s biggest company by market value, on Friday entered into an agreement to acquire a substantial stake in Infotel Broadband Services Pvt Ltd, investing about Rs 4,800 crore by way of subscription to fresh equity capital at par to be issued by Infotel to Reliance.

Infotel Broadband Services had emerged as the successful pan-India bidder for all 22 circles at the recent BWA auction. Post investment Reliance will own 95% of the equity and Infotel Broadband will become a subsidiary of Reliance Industries Ltd.

The newly introduced ‘Base Bank Rate’ replacing the ‘Benchmark Prime Lending Rate’ is likely to be costlier for highly rated corporates raising funds through banks, while small companies would be able to negotiate rates to their advantage, according to a survey report released by FICCI.

These corporates might resort to other low-cost financing options such as commercial paper, qualified institutional placement, and external commercial borrowing, which could result in lower credit offtake of banks, it added.

Hindustan Unilever Ltd, a consumer goods giant, has announced a buyback of its equity shares at a price not exceeding Rs 280 per share totaling Rs 630 crore which would not exceed 25% of the total paid-up capital of the company. The company proposes to buy back shares through open market purchases from time-to-time.

Gainers & Losers

Apollo Tyres Ltd fell 1.1% to Rs 67.25 after the tyre maker announced the closure of its Perambra manufacturing facility owing to the labor unrest at the location.

Atlanta Limited added 3.2% to Rs 312.65 after a consortium of the company secured an order of Rs 114.48 crore from RITES for construction works.

Compucom Software Limited increased 5.0% to Rs 17.70 after the company secured an order of Rs 77.77 crore.

Engineers India Limited rose 1.4% to Rs 320.00 after the ministry of petroleum & natural gas approved disinvestment of 3.36 crore shares or 10% equity through an offer for sale.

Hindustan Unilever Limited rose 0.8% to Rs 254.75 after the company board on Friday approved a share buyback at a price of up to Rs 280 a share.

HCL Technologies Limited rose 2.9% to Rs 379.40 after the company signed $110 million 5-year deal with SGX.

Kavveri Telecom Products Limited climbed 3.4% to Rs 109.85 after the company secured an order from one of the top global equipment makers for supply of RF products for an undisclosed sum.

MSP Steel & Power Ltd increased 6.2% to Rs 43.15 after the company tied funding of Rs 120 crore for its thermal power plant project at Raigrah district in the state of Chhattisgarh.

Prajay Engineers Syndicate Limited climbed 3.1% to Rs 29.80 after the company announced that one of its subsidiaries has got foreign investment of Rs 700 million for its ongoing construction and development project at Hyderabad.

Reliance Industries Limited rose 1.5% to Rs 1,064.00 after the private sector conglomerate announced its four-pronged growth strategy that hints at the oil & gas giant’s entry into the sectors like telecom, power, pharmaceuticals and financial services.

Dr. Reddy’s Laboratories Limited fell 3.6% to Rs 1,410.05 after a US court restrained the drug maker from distributing a generic version of allergy drug Allegra-D.

Sterlite Industries (India) Limited rose 2.4% to Rs 650.80 after the company fixed 22 June 2010 as the record date for a 2-for-1 stock split and a liberal 1 to 1 bonus.

SpiceJet Limited fell 1.2% to Rs 55.35 after the founder of Sun TV Kalanithi Maran and his unlisted aviation firm Kal Airways have agreed to buy 37.7% in SpiceJet Limited and will make an open offer for a further 20%.