India to Lift Interest Rates; Reliance, ICICI Net Surge

Chandrasekhar Atreya
24 Jan, 2011
New York City

Stocks in Mumbai traded higher. ICICI Bank third quarter profit rose 30.5%. Insurance industry regulator confirmed that public offering guideline for life insurance companies will be ready in this fiscal year. New power plant addition target may be revised lower.

[R]5:00 PM Mumbai, 8:30 AM New York – Stocks in Mumbai traded higher. ICICI Bank third quarter profit rose 30.5%. Insurance industry regulator confirmed that public offering guideline for life insurance companies will be ready in this fiscal year. New power plant addition target may be revised lower.[/R]

Mumbai stocks traded higher, led by banks, metal stocks and capital goods after ICICI Bank and Reliance Industries reported better than expected earnings.

Reserve Bank of India highlighted the inflation pressures and said that the latest bout of inflation is driven a demand-supply mismatch. However, investors are increasingly worried that the central bank may be behind the curve as the nation grapples with a double digit increase in food inflation for the third fiscal year in a row.

The latest October-December Macro Economic Development report noted that inflation pressures driven by supply side constraint remain entrenched and are likely to persist in the near and medium terms.

Reserve Bank is schedule to decide the rate increase tomorrow and economists are widely anticipating an increase in rate. The central bank also noted in its report that inflation is ahead of target range between 5% and 6%.

The Sensex in India rose 0.77% or 145.49 to close at 19,153.02. The CNX Nifty gained 46.75 to close at 5,743.25.

The rupee closed unchanged at Rs 46.65 per dollar in Mumbai today.

Reliance Industries Limited, India's largest private sector conglomerate third quarter turnover increased 6% to Rs 62,399 crore from Rs 58,848 crore in the comparable period a year ago. Net profit in the quarter rose 28% to Rs 5,136 crore compared with Rs 4,008 crore last year. Earnings per share rose Rs 15.7 compared to Rs 12.3 in the same quarter a year ago.

ICICI Bank Ltd reported a 30.5% surge in quarterly net profit today beating expectations on growing demand for credit and rising fee income.

Third quarter net rose to Rs 1,440 crore from Rs 1,100 crore a year earlier, with net interest income rising 12% to Rs 2,310 crore.

Churchill Mining of U.K., whose shares are traded in the Alternative Investment Market in London is negotiating with several Indian power companies to sell its assets, a senior executive of the company said in Mumbai today.

Paul Gerard Mazak, Executive Director of Churchill, confirmed the plans to sell and the negotiations with Indian companies, in an e-mail to ET. The company owns thermal coal mines in Indonesia and Australia.

Hero Honda Motors Ltd said today it executed a final and binding licensing agreement with Japan’s Honda Motor Co paving the way for the Japanese company to exit the joint venture.

The agreement pertains to existing and new products that Hero Honda Motors will offer the Indian market once the sale of the Japanese firm’s stake to Hero Group is concluded.

IRDA, watchdog for insurance in India, said the guidelines for public float of life insurance companies will be ready in this fiscal year, while non-life insurance may take more time.

“Initial Public Offering guidelines for life insurance companies will be out soon, certainly before this fiscal. Non-life will take time,” Insurance Regulatory Authority of India Chairman J Hari Narayan told reporters in New Delhi.

Law and order issues, technical glitches and equipment supply delays may force the government to scale down the power generation capacity addition target for the current five year plan once again to 55,000 megawatts from 62,000 megawatts set earlier.

“I think 62,000 megawatt looks unlikely. Maybe we can do about 55,000 megawatts,” a power ministry official said today in New Delhi.

India topped the consumer confidence survey for the fourth quarter of 2010, improving on its reading third quarter reading at 129, a survey by the Nielsen Company showed on Sunday.

The index was however below the record 137 registered in the second half of 2006, the highest reading for any country since the Nielsen consumer confidence index survey was launched in 2005.

Sun Pharmaceutical Industries Ltd, India’s largest drug maker by market value, is seeking more acquisitions in the U.S. to boost its sales and presence in the world’s largest pharmaceutical market, Chairman Dilip Sanghvi said in an interview on January 21 in Mumbai.

Sun Pharmaceutical, which made 13 purchases in the past 14 years, including the $454 million acquisition of a majority stake in Israel’s Taro Pharmaceuticals Inc, needs to buy a bigger U.S. company to attain critical scale, Sanghvi said. The company already owns about 77% stake in Detroit-based Caraco Pharmaceutical Laboratories Ltd.