Sensex in India Drops 1%; Diesel Prices on Hold

Chandrasekhar Atreya
05 Jan, 2011
New York City

Stocks in Mumbai fluctuated and closed lower. India decides to hold diesel retail prices. Larsen & Toubro after a restructuring will operate under nine independent companies.

[R]5:00 PM Mumbai, 8:30 AM New York – Stocks in Mumbai fluctuated and closed lower. India decides to hold diesel retail prices. Larsen & Toubro after a restructuring will operate under nine independent companies.[/R]

Stocks in Mumbai lost nearly 1% amid weak market sentiments across the globe with financials leading the decliners.

The BSE Sensex drops 0.96% or 197.62 to 20,301.10. The CNX Nifty on the National Stock Exchange dipped 66.55 to close at 6,079.80.

The rupee gained 18 paisa to close at Rs 45.51 to a dollar in Mumbai.

Larsen & Toubro rose more than 1% after the Economic Times reported that the engineering and construction conglomerate would be split into nine independent companies.

Twenty-one months before he retires, L&T Chairman A.M. Naik kicked off a restructuring plan that will divide the Rs 37,000-crore firm into nine virtual companies. Each of these independent companies will have a full fledged CEO, CFO and HR Head, and will manage its own profit and loss account, Naik said.

There will be no further hike in the domestic price of diesel, Oil Minister Murli Deora said today. Last week India deferred a ministerial panel meeting to discuss a possible increase in diesel and cooking gas prices.

Infrastructure Development Finance Co Ltd said today it will open sale of tax-free infrastructure bonds with a face value of Rs 5,000 each on January 17, mopping up to Rs 2,929 crore for the firm.

The second bond sale by the firm in last six months is scheduled to close on February 4 according to a filing.

Mobile players in India are firming up 3G alliances as many service providers are slated to launch high-end services this quarter. So, far Reliance Communications and Tata Teleservices have launched 3G services, only two of the six private operators that won licenses.

Aircel and Tata Teleservices are in talks for a pan-India alliance to use each other’s 3G airwaves, according to media reports.

Both companies have 3G frequencies in all circles except Delhi and Mumbai besides Himachal Pradesh. But they are likely to get spectrum space in the two cities as they are the only bidders for MTNL’s offer to share its 3G network.

The food subsidy bill for 2010-11 could touch Rs 80,000 crore and will add more pressure on the government’s finances, a food ministry official said Tuesday.

The government has currently budgeted Rs 55,578 crore for the current fiscal year.

Indian economy will maintain an 8.4% growth over the next five years, a report by ratings firm Crisil said. The rating agency noted that if certain supply side issues are addressed, it can sustain a 10% growth.

The rating firm highlighted the quantity and quality of physical infrastructure, skill shortages in its bulging population, faltering agriculture and consequent high food inflation, fiscal inflexibility to spend on health, education and physical infrastructure and a governance deficit as the five supply side constraints.