Sensex Drops; Trade Deficit Surges

Mayank Mehta, Chandrasekhar Atreya and Sanjay Barot
01 Jul, 2010
New York City

Stocks in Mumbai declined after current account deficit surged to 2.9% of GDP. India levies carbon tax on coal producers from today. Parabolic Drugs falls below IPO price. BAG Films gains on news it may sell stake and fund sports channel in Hindi.

[R]5:00 PM Mumbai, 8:30 AM New York – Stocks in Mumbai declined after current account deficit surged to 2.9% of GDP. India levies carbon tax on coal producers from today. Parabolic Drugs falls below IPO price. BAG Films gains on news it may sell stake and fund sports channel in Hindi.[/R]

Indian stocks fell after a report by the central bank showed that current account deficit widened more-than-expected. The benchmark index had gained 1% in the quarter to June and the rupee fell to its three-week low.

The Sensex index in India decreased 191.57 or 1.08% to 17,509.33 and CNX Nifty index fell 56.65 or 1.07% to 5,255.85. Among the Sensex 30 stocks, 3 rose and 27 fell.

On BSE trading, 1,416 stocks advanced, 1,369 declined and 106 were unchanged. Metal, IT and realty stocks fell.

Rupee edged lower 29 paisa to Rs. 46.73 against one dollar.

Parabolic Drugs was trading at Rs 72.75 a 3% discount to the initial public offer price of Rs 75 per share.

India’s current account deficit, representing its trade and investment with other nations, rose to 2.9% of GDP against 2.4% a year ago, as the country imported more for its industries and services fetched less income.

The deficit surged to $38.4 billion during the fiscal year ending in March from $28.7 billion a year ago, according to data released by the Reserve Bank of India today.

May exports increased 35.1% to $16.14 billion and rose 27.5% when measured in rupees. Exports in the two months to May rose 37.7% in the dollars and 24.2% in rupees. Imports in the month rose 38.5% to $27.44 billion and in the two month period increased 40.9% from a year ago period.

India joined China and South Korea in reporting that manufacturing growth slowed in June and dropped from a 27-month peak in May as orders and output both grew at a slower pace.

The Purchasing Manager’s Index declined to 57.3 in June from 59 in May, HSBC Holdings Plc and Markit Economics said in their statement today, any reading above 50 indicates an expansion.

India expects to raise Rs 2,500 crore from a carbon tax levy on coal producers after the levy comes into effect from today. This is seen as India’s first step to charge companies for fossil fuel pollution.

“This levy, India’s first step to introduce a carbon tax, will give us Rs 2,500 crore this year alone. A domestic tax should come before a global carbon tax and we have imposed one while others debate the issue,” said Environment Minister Jairam Ramesh in Mumbai on June 28.

Fortis Healthcare Ltd, India’s second-largest hospital operator, has decided to offer about S$3.2 billion for a stake in Singapore’s Parkway Holdings Ltd, it doesn’t already own, as a counter to the partial bid by Malaysia’s sovereign wealth fund.

Fortis said it will pay S$3.80 per share for 74.73% stake it does not own, a 0.5% higher offer than the offer from Malaysia’s Khazanah Nasional Bhd for Parkway.

The Telecom Regulatory Authority of India on Wednesday recommended that the foreign investment limit for broadcast carriage services that include satellite based TV, internet based transmissions and broadband video services may be raised to 74% from the existing limit of 49% for most of these services.

Gainers & Losers

B.A.G Films & Media Ltd advanced 4.8% to Rs 18.10 after the company said it is looking to sell 25% to 30% stake to raise up to Rs 170 crore for its planned Hindi language sports channel.

Cera Sanitaryware Limited gained 8.3% to Rs 267.10 after the company said its board will meet on July 16 to consider a maiden bonus issue.

Fortis Healthcare Limited rose 1.6% to Rs 154.75 after the company launched a bid valuing Singapore hospital operator Parkway Holdings at $3.1 billion or S$4.3 billion, topping a bid by rival suitor Malaysian state fund Khazanah.

Gillanders Arbuthnot & Company Ltd surged 12.6% to Rs 174.05 after the company said its board will meet on July 15, to consider a bonus issue.

Indraprastha Gas Limited added 1.9% to Rs 264.00 after the ministry of petroleum and natural gas approved the company''s proposal to set up a gas distribution network at Ghaziabad in Uttar Pradesh.

Jaiprakash Associates Limited fell 0.1% to Rs 128.30 after the company said cement shipments rose 65% to 1.33 million tons from a year ago.

Kesoram Industries rose 2.3% to Rs 310.55 on reports the company plans to invest Rs 1,125 crore on capital expenditure in the current financial year.

Maruti Suzuki India Limited fell 1.2% to Rs 1,406.45 on profit booking after the stock rose 16.39% in one month to June 30.

Mold-Tek Packaging rose 1.7% to Rs 58 after the company said its shareholders have approved issuing 22.50 lakh fully convertible warrants at Rs 45.40 each to promoter and non-promoter group.

NMDC Limited added 0.7% to Rs 268.00 after the company has raised prices of iron ore fines by 11% or Rs 300 per ton.

Nestle India Limited rose 1.8% to Rs 2,945.70 after the food company plans to buy a local company to expand its business and will announce the acquisition “sooner than later,” Chairman and Managing Director Antonio Helio Waszyk said.

Petron Engineering Construction Limited climbed 4.6% to Rs 426.30 after the company today announced that it has secured a contract of Rs 146 crore from Sepco Electric Power Construction Corporation, China.

Redington (India) Limited dropped 5.4% to Rs 358.95 after a block deal of 1.04 crore shares or 13.1% equity, was struck at Rs 355 on BSE in early trade.

Steel Strips Wheels Limited rose 0.6% to Rs 174.00 after the company achieved sales of 6.40 lakh wheel rims during the month of June 2010 as against 4.86 lakh wheel rims during the month of June 2009, recording a growth of 31.68%.

TVS Motor Company Limited rose 0.1% to Rs 119.50 after the company''s two-wheeler sales increased 36% to 156,685 units from a year ago.