Stock Surge in India Ignores Rising Deficit

123jump.com Staff
01 Oct, 2010
New York City

Stocks in Mumbai traded sharply higher after the international agencies and brokers lifted economic growth outlook on better than expected monsoon. The domestic auto sales surged in August. Exports and imports increased in the months and current account deficit tripled in the first fiscal quarter.

[R]5:00 PM Mumbai – Stocks in Mumbai traded sharply higher after the international agencies and brokers lifted economic growth outlook on better than expected monsoon. The domestic auto sales surged in August. Exports and imports increased in the months and current account deficit tripled in the first fiscal quarter.[/R]

Indian stocks surged and lifted the index to its largest weekly gain in more than five months after IMF raised estimate of India’s growth on a better-than-forecast monsoon. Traders ignored the surge in current account deficit and the decline in purchasing managers’ index.

The BSE Senses Index gained 1.87% or 375.92 to close at 20,445.04. The CNX Nifty on the National Stock Exchange rose 1.9% to 6,142.25. The index gained 1.99% in the week, fifth week of gain in a row.

Indian rupee advanced to its strongest level in nearly five months after central bank data showed capital inflows more than offset a record current account deficit in the first quarter of current fiscal year.

Rupee climbed 0.7% to close at 44.48 to a dollar in Mumbai trading, extending the week’s advance to 1.3%. The currency surged 4.7% in September, the most since May 2009. Rupee closed at 44.49.

Indian government’s fiscal deficit fell by 16.93% to Rs 151,425 crore during the period April-August 2010, from a year earlier, on increased revenues from the auction of 3G spectrum.

August exports increased 22.5% to $16.64 billion and rose 18% when measured in rupees. Exports in the five months to August rose 28.6% in the dollars and 21.8% in rupees. Imports in the month rose 32.2% to $29.68 billion and in the five month period increased 33.1% from a year ago period.

India’s current account deficit tripled in the June quarter as imports soared, raising the specter of volatile currency when the tide of overseas fund inflow will turn. Interest rate differentials between the domestic market and the developed nations raised the external debts too as companies found it beneficial to borrow in dollars.

Current account deficit in the quarter to June widened to $13.7 billion from $4.5 billion a year ago, a data released by the RBI showed.

Monsoon rains were 37% below normal in the week to September 29, the weather office said on Thursday, suggesting that the rainy season maybe finally drawing to a close after its persistence raised concerns of crop damage.

Sales of cars at Maruti Suzuki India Ltd rose to a record in September for a second month of rise as new models and an accelerating economy boosted demand.

Maruti sold 108,006 vehicles in India and overseas in September, 30% more than a year ago, the New Delhi-based automaker said in a statement on Friday. Exports increased 9.8% in September to 12,858 units.

GMR Infrastructure is in talks with Axis Bank Ltd for a possible loan of about $360 million to fund an airport project in Maldives.

GMR’s Maldives venture may sign the 12-year loan by the end of October, Sidharth Kapur, CFO for airports said in interview from New Delhi. The debt maybe syndicated to overseas lenders and multilateral agencies, he said in the interview.

The purchasing managers’ index in India fell to 55.1 in September from 57.2 in August, HSBC Holdings Plc and Markit Economics said in a statement Friday. The index grew at the slowest pace in 10 months.

Mumbai International Airports Ltd signed an agreement with three public sector oil companies to set up an aviation fueling facility at the airport.

MIAL and three oil companies including BPCL will form a new entity called the Mumbai Aviation Fuel Farm Facility Private Ltd, to bring the scattered oil fueling and storage stations at the airport under one umbrella, freeing up more than 50% of the 74,000 square feet held by the oil companies at the airport.

Gainers & Losers

Archies Limited soared 8.3% to Rs 177.55 after the retailer of gift items, greeting cards, perfumes and stationary fixed November 3 as the record date for a 5-for-1 stock split.

ADF Foods Limited slumped 5.3% to Rs 82.50 on profit booking after the stock rose 9.55% to 87.20 in a single trading session on September 30.

Ahluwalia Contracts (India) Limited surged 5.9% to Rs 218.80 extending gains for the third straight day, after the firm secured construction orders aggregating Rs 476 crore.

Bajaj Auto Ltd. increased 4.9% to Rs 1,543.70 after the two and three-wheeler vehicle maker was added to the CNX Nifty index.

Cadila Healthcare Limited soared 6.3% to Rs 697.50 after the joint venture Zydus Nycomed commissioned a newly-expanded active pharmaceutical ingredients manufacturing facility at Navi Mumbai.

Delta Corp Limited spurted 5.1% to Rs 82.65 after the diversified company’s foreign fund bought 0.61% stake in the company on September 30.

Firstsource Solutions Limited surged 6.8% to Rs 28.70 after the transaction processor received a five-year outsourcing contract worth up to $100 million from UK-based Barclay Plc''s unit Barclayscard.

Hindalco Industries Limited increased 3.8% to Rs 204.25.

KSK Energy Ventures Limited rose 1.9% to Rs 177.40 after the generator of power and mining issued and allotted ten crore compulsorily redeemable preference shares at Rs 10 per share aggregating Rs 100 crore to L&T Infrastructure Finance Company.

Maruti Suzuki India Limited increased 2.8% to Rs 1,482.60 after vehicle sales rose 29.6% to 108,000 units in September.

Nikhil Adhesives Ltd surged 10.9% to Rs 45.85 after the polymer emulsion maker extended gains on third day, after Gujarat Industrial Development Corporation allotted five acres plot to the company at Dahej-2 industrial estate to set up a new plant.

NMDC Limited soared 5.5% to Rs 277.00 on speculative buying after the National Stock Exchange introduced futures and options contracts on the stock with effect from October 1.

Punj Lloyd Ltd rose 3.7% to Rs 131.40 after the energy and infrastructure service provider secured an order worth Rs 614 crore from PUB, the national water agency of Singapore for construction of new waterworks.

Parenteral Drugs (India) Limited surged 19.9% to Rs 298.30 after several block trades on the Bombay Stock Exchange.

Rural Electrification Corporation Limited gained 6.3% to Rs 364.20 after the Reserve Bank of India notified the company''s resolution to enhance foreign investment limit in the company.

Steel Strips Wheels Limited rose 3.3% to Rs 298.85 after the automotive wheel rim maker said it achieved the record monthly production and sales in September.

Steel Authority of India Limited spurted 8.9% to Rs 223.35 after the steel maker planned a capital spending of Rs 12,254 crore for the current year ending March 2011 as against the capital of expenditure of Rs 10,606 crore in the previous year.

Tirupati Inks Limited plunged 14.7% to Rs 36.65 after the printing ink maker got a 25% premium over the public offer price of Rs 43 per share.

Tata Motors Limited rose 1.1% to Rs 1118.85 after the automobile maker said it will launch Aria, the first cross-over between a multi-utility and sports utility vehicle on October 11.

TVS Motor Company Limited gained 2.8% to Rs 73.75 after vehicle sales grew 31% to 188,005 units in September.

Transgene Biotek Limited increased 2.2% to Rs 58.20 after the diagnostic service provider''s board approved raising up to Rs 500 crore.