December Fiscal Deficit Falls

123jump.com Staff
31 Jan, 2008
New York City

December fiscal deficit in India declined on 9% higher tax revenues keeping the government to meet its annual deficit target of 3.1% to GDP. Stocks in India fell as investors worried that global economic slowdown may hurt international investors sentiment. More than 60 stocks on BSE are now tradning below 50% of clsoing price at the end of 2007. Hindalco net profit decline 16% on 1.5% decline in revenue.

[R]10:00AM New York, 7:30PM Mumbai – Fiscal deficit in December fell on 9% rise in tax receipts.[/R]

Economic News

December fiscal deficit declined sharply to $19.7 billion on 9% rise in tax collection. The deficit at the end of nine months ending in December 2007 stood at 51.4% of the target of 1.51 trillion rupees. Government expenditures in the period were at 4.74 trillion rupees and revenues were 3.97 trillion rupees with a fiscal deficit of 775.78 billion.

The sharp decline in deficit will improve government’s ability to increase its infrastructure spending and repay external debts.

Market Sentiment

Stocks in India closed weak on Thursday with the Bombay Stock Exchange benchmark index sliding 0.6% or 109 to 17,648. In the broader markets, Nifty fell 0.6%. The 50-share index closed at 5,137 levels.

The market had opened on a firm note after the US Federal Reserve slashed the key interest rate by 50 basis points on Wednesday but it lost ground during the late trading session. It had recovered in the afternoon trade but failed to sustain higher levels as European markets were trading lower after a positive start. Buying was evident in oil and gas stocks while selling was visible realty, banking and healthcare shares.

Of the BSE 1,760 shares declined, 989 stocks advanced while 40 shares remained unchanged. Of the index shares 16 fell while the rest advanced.

ONGC, Hindustan Unilever, Bajaj Auto and HDFC Bank led the positive sentiment in the BSE index with a rise of 2% or more.

Of the NSE-50 stocks, Nalco, Zee Entertainment, Wipro and Idea Cellular were among key gainers with a rise of 4.3% or more.

Hindalco, GlaxoSmithKline, ACC and Punjab National Bank were among key draggers in the broader index with each falling 3.6% or more.

Trading turnover on the BSE was recorded at 5,152 crore rupees while on the National Stock Exchange was at 21,087 crore rupees.

Reliance Industries was the most active stock recording a turnover of 304 crore rupees followed by Reliance Natural Resources, Reliance Energy, Reliance Petroleum and Essar Oil.

International Markets

The U.S. Federal Reserve lowered interest rates by 0.5% to 3%, a second rate cut in eight days. Eight days ago, the Fed had lowered rate by 0.75% ahead of the regular scheduled meeting to calm jittery international markets.

Elsewhere in the Asian region, South Korea rose 2.3%, Japan added 1.9%, Hong Kong fell 0.8%, but Thailand increased 2.7%.

Market Gainers and Losers

Of the BSE shares, Hindalco Industries led the decliners in the Sensex index. The company fell 6% to 165.5 rupees.

Hindustan Unilever led the advancers in the Sensex index with a rise of 5.3% to 207 rupees.

DLF fell 5.2% to 817, ICICI Bank shed 3.1% to 1,148 rupee, and State Bank of India shed 2.8% to 2158.75 rupees.

Infosys surged 1.6% to 1,516 rupees. Wipro and TCS gained 1.7% each to close at 418.9 and 880.3 rupees respectively. Satyam Computers however declined 0.4% to 393.1 rupees.

Bharti Airtel gained 2.7% to 875 rupees and HDFC Bank surged 1.9% to 1,560 rupees. Reliance Industries rose 0.7% to 2,487 rupees.

Earnings News

Bajaj Auto rose 4.7% to 2,375 rupees. Bajaj Auto posted 5.32% fall from a year ago in net profit to 326.81 crore rupees in the third quarter of December 2007.

Reliance Communications slipped 0.5% to 605 rupees after it posted 48.5% rise in consolidated net profit to 1,372.83 crore rupees on 29.8% from a year ago rise in consolidated total income to 4,874.2 crore rupees in the third quarter of December 2007.

Tata Steel gained 0.9% to 730 rupees on reporting 0.5% rise in net profit to 1,068.58 crore rupees on 10.3% rise in total income to 5,040.95 crore rupees during the third quarter of December 2007 over the third quarter December 2006.

Hindalco Industries net profit declined 16% to 542 crore rupees on 1.44% fall in total income to 4,646 crore rupees during the third quarter of December 2007 over the third quarter of December 2006.

National Thermal Power Corporation was down 2.1% to 197.55 rupee. The company announced on Wednesday that it will invest about 4375 crore rupees of $1.1 billion in setting up a power plant in north-east India.

Oil & Natural Gas Corporation advanced 2.53% to 993 rupees on reports that the Director-General of Hydrocarbons has conceded ONGC''s may not be able to meet its drilling schedule on the difficulty of securing rigs.