May Trade Deficit Nears Record, Rupee Rises

123jump.com Staff
02 Jul, 2007
New York City

Sensex in Mumbai trading closed at record level on steady rise in telecom and auto stocks. Software exporters fell on rising rupee. Rupee is likely to trade at elevated levels in the coming months as foreign fund flows continue to pour in stocks market and property investments. May trade deficit rose to $6.22 billion a jump of 50% from April deficit on record import of energy, machinery and consumer products. GMR Infrastructure gain on stock split but reported sharp fall in earnings.

Sensex 30 in Mumbai trading increased 13.75 or 0.1% to close at a record high of 14,664.26. Broker upgrades, monthly trade deficits and strong auto sales affected trading sentiment. The rupee traded as high as 40.66 against dollar hurting software exporters. Trading turnover on BSE was rupees 4,303 crore compared to 4,855 crore on Friday.

Economy News

May month trade deficit was recorded at $6.22 billion, a rise of nearly 50% on larger that expected rise in import. Rupee has advanced to 8% in the current year lifting imports of machinery, technologies and consumer products from China, Japan and European nations. Exports in the month gained 18% to $11.86 billion and imports gained 26.4% to $18 billion. India registered trade deficit of $7.2 billion, record level, in April 2007. Minister of Commerce and Industry, Kamal Nath, expects foreign fund flows of $30 billion in the fiscal 2007.

Economy and Trade minister of Japan, Akira Amari, in a joint press conference with Kamal Nath said that Japan is keen to invest in dedicated freight rail line between Delhin and Mumbai and upgrading airports and seaport in Maharashtra and Gujarat states. Mr. Nath estimated that India needs nearly $450 billion to build and improve infrastructure by 2012.

Gainers

Maruti Udyog reported 24% rise in automobile sales, sixteenth monthly gain, on new auto models lifting company stock 6%. Tractor and utility vehicle maker, Mahindra & Mahindra reported 52% rise in sales, lifting the company stock 1.8%. Tata motors gained 2.2% and Hero Honda increased 0.5%.

Morgan Stanley lifted ratings on Bharti Airtel and Reliance Communications. Mobile telecom subscriptions are still growing at a steady pace of above 5 million new subscribers as carriers invent new ways to attract customers. Bharti jumped 0.2% or rupees 1.40 to 837.50 and Reliance gained 12.65 rupees to close at 529.70. Morgan Stanley raised its target price to 655 for Reliance and 1,056 for Bharti.

Larsen & Toubro jumped 1.8% or 38 rupees to 2,234 on the news in Economic Times that the company is selected as second source for power equipment by the government.

IFCI Ltd. surged 8% to close at 60 rupees with heavy trading volume of 2 crore shares after company scheduling a board meeting to invite strategic investor bid.

Welspun Gujarat Stahl Rohren jumped 7% to 237 rupees on the news that company plans to build a manufacturing plant in the U.S.A.

GMR Infrastructure rose 2.2% after company board approved plans to split its stock face value from 5 rupees to 2 rupees face value. The company also reported fourth quarter net income of rupees 12.37 crores on revenue of rupees 22.75 crores. For the year the company earnings plunged 96% in fiscal 2007 to rupees 2.88 crores on net revenue declie of 42%.

Decliners

Indian Petrochemicals Corp, known as IPCL, lost 1.8% or 6.30 rupees to 336.75 on the news that company will spend nearly $110 million or 400 crores rupees to pay for voluntary retirement of 2,600 employees. The company earnings dropped to $4 million, or 94% on retirement cost.

Bajaj Auto fell 0.1% after reporting scooter sales decline of 12% to 1,87,624 in June from a year ago.

Software export companies fell on rising rupees and worries on wage hikes in the industry. Tata Consultancy Services fell 1.3% or rupees 14.65 to close at 1,134. Wipro ((WIT)) declined 1.1% or rupees 5.50 to 512, however Infosys gained 0.6% to 1,940.

Cement stocks fell after rallying for a week. Grasim dropped 0.6% and Gujarat Ambuja fell 2% on profit taking.