IIP Growth Slows, Rupee Falls

123jump.com Staff
12 May, 2008
New York City

Industrial production in March fell to 3% and for the fiscal year ending in the month declined to 8.1% from 11.6% a year ago. The sharp fall in manufacturing sector output dragged the index lower in the month. Rupee fell in trading to 41.63 on the news. Software exporters rose after a weakness in rupee. TCS, Infosys, Wipro and Satyam rose. Ranbaxy gained 5% after it agreed to develop for the U.S. based Merck anti-infection drug.

[R]7:00PM New York, 4:30AM Mumbai - India industrial production in March 2008 declined to 3% and for the fiscal year fell to 8.1% from 11.6%.[/R]

Market Sentiment

Indian shares braved weak industrial production released yesterday and rebounded in the late trading with the 30-share BSE Sensex gaining 0.7% or 123.83 to 16,860.90. On the National Stock Exchange index Nifty rose 0.6% or 30.05 at 5,012.65.

In Mumbai trading, 22 shares in the Sensex index gained while 8 shares declined. India stocks had opened on a lower note as the market tracked the weak U.S. markets on Friday.

Sluggish performance of the manufacturing sector pulled down growth in industrial production to a six-year low to 3% in March and added to the worries that the government and RBI campaign to control inflation may curb the growth in corporate earnings.

Industrial production growth rate falls to a six-year low

India''s industrial production growth fell to 3% in March 2008 from February, slowing from the unrevised 5.3% rise in February, according to data released by the Central Statistical Organization. The industrial production rose at 8.1% for the twelve months ended in March 2008 from the previous year after rising at a rate of 8.7% for the period ending in February.

For the year mining industry recorded a rise of 5%, manufacturing increased 8.6% and utilities gained 6.4% for the twelve months ending in March 2008. In March 2008 mining sector recorded a rise of 3.8%, manufacturing sector gained 2.9% and electricity generation increased 3.7%.

For the fiscal year ending in March 2008, industrial production growth rate decelerated to 8.1% from 11.6% in the fiscal year ending in March 2007. The growth in March 2008 at 3% was sharply lower compared to 14.8% in March 2007 largely on the weak performance in manufacturing sector.

Market turnover

Of the BSE traded shares, 1,746 shares declined, 951 shares advanced and 51 remained unchanged.

Daily turnover on the BSE stood at 5,971 crore rupees and on the NSE turnover was recorded at 13,128 crore rupees.

Reliance Petroleum was the most actively traded stock on the BSE with a turnover of 316.97 crore rupees followed by Cairn India, Reliance Capital, Reliance Industries and Reliance Natural Resources.

Gainers and Losers

Of the BSE index shares, Ranbaxy Laboratories surged 5.4% to 495 rupees and led the gainers in the Sensex index. Local media reports suggested that Ranbaxy Laboratories signed a deal to develop new anti-infective drugs with Merck & Co Inc. Ranbaxy will carry out drug discovery and clinical development through Phase II clinical trials, while Merck will be responsible for the development and marketing.

Grasim led the decliners in the Sensex with a fall of 3.8% to 2,252 rupees.

Satyam Computer Services rose 3.7% to 491 rupees, TCS advanced 1.1% to 927.40 rupees, Wipro surged 1.6% to 509.20 rupees and Infosys Technologies rose 1% to 1,768 rupees.

A depreciating rupee augurs well for IT companies as they derive over 50% of their revenues from exports to US. Rupee in trading fell to 41.63 against one dollar from 41.58 on Friday close.

Reliance Industries gained 1.1% to 2,555 rupees. Earlier last week Reliance Industries shut all of its 1,432 petrol pumps in India after no sales were recorded at stations. The stations, privately controlled could not compete with the subsidized price at gas stations controlled by the government.

Bharat Heavy Electricals gained 1.8% to 1,755 rupees after the company said it has signed a memorandum of understanding with Andhra Pradesh Power Generation Corp for setting up a 125 megawatt coal-based power plant.

NTPC gained 0.3% to 192.50 rupees after its board decided setting up a research and development fund for undertaking activities leading to development of sustainable energy.

Jaiprakash Associates fell 1.8% to 21.46.85, ACC declined 1.3% to 703 rupees and Hindustan Unilever fell 1.4% to 246.95 rupees.

World markets review

In Tokyo Nikkei 225 Index closed higher 88.02 or 0.64% to 13,743.36, in Australia ASX 200 index higher 56.70 or 0.98% to close 5,828.50. In Malaysia KL Composite index increased 7.82 or 0.61% closed to 1,293.09. Market of Hong Kong was closed today.

In Thailand SET index closed lower 4.49 or 0.53% to 842.22 and Indonesia JSE Index edged increased 2.98 or 0.13% to 2,378.00. Sensex index in India increased 123.90 or 0.74% to 16,860.90. Market of South Korea was closed today.

Dow Jones Industrial Average rose 130.40 or 1.02% to a close of 12,876.31, S&P 500 closed up 15.30 or 1.10% to 1,403.58, and Nasdaq Composite Index increased 42.97 or 1.76% to close at 2,488.49. In Toronto TSX Composite closed up 144.88 or 1.01% to 14,666.07.