Stocks Fight Rising Inflation

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

The latest read on wholesale inflation for twelve months period ending two weeks ago rose to 7.83% from 7.61% in the previous week. The rising inflation in food, energy, fuel and manufactured products prices have put consumers in a tight spot. Government sought and received as much as 5% price reduction in cement prices will help but similar relief is not likely in fuel prices and other industrial products. Sensex 30 index added 0.5% to 17,434.

[R]10:00AM New York, 7:30PM Mumbai - Inflation nears 8% mark and rupee drops to 13-month low.[/R]

Market Sentiment

Stocks in India rallied on Friday despite inflation on the rise. Market rise was supported by gains in the Asian and European markets. Banking and metal advanced on renewed buying.

In Mumbai trading, the 30-share BSE Sensex rose 0.5% or 81.40 at 17,434.94. In the NSE trading, S&P CNX Nifty gained 0.8% or 42.45 5,157.70.

Of the BSE traded shares, 1,521 shares gained, 1,160 shares fell while 86 shares remained unchanged. Among the 30-member Sensex pack, 16 shares gained while 14 shares fell

Turnover

Daily turnover on the BSE stood at 6,085 crore rupees.

Aishwarya Telecom was the most active stock on the BSE with the turnover 357.30 crore rupees followed by trading in Housing Development Infrastructure, Steel Authority of India, Reliance Industries and Reliance Communications.

Inflation heading towards 8% mark

The latest statistics show that the wholesale price inflation rate, India''s most widely watched measure increased rose 7.83% in 12 months to May 3, higher than previous week''s 7.61%.

The surprise jump, stemming from higher prices of industrial fuel, metal products and food items, comes after a number of measures by the government and the central bank to calm price pressures in Asia''s third-largest economy.

The 10-year bond yield rose two basis points after the release to 7.88% and the partially convertible rupee weakened to 42.73 per dollar from 42.64.

Industrial output growth slowed to an annual 3% in March a significant slowdown from February of this year and from a year ago month as well.

Government to further cut cement prices, rules out reduction in crude oil import duty

The government said on Friday that it expects to further cut in cement prices for taming inflation, but rule out reduction in imports duties on crude oil, claiming the measures would not have any impact on retail prices of petroleum products.

A day after cement producers agreed to cut prices between 3% and 7.5% per bag of 50Kg, finance minister P. Chidambaram said there was a big scope for further reduction in retail prices.

In the past two months, government has taken various fiscal measures such as cutting import duties on edible oils besides banning exports of cement and non basmati rise to contain inflation. The minister said the proposal to cut duty on crude oil will not have impact on administered prices.

Gainers and Decliners

Ranbaxy Laboratories gained 3% to 509.50 rupees and led the advancers among Sensex stocks. Housing Development Finance Corporation fell 1.6% to 2,750 rupees and led the decliners from the Sensex pack.

Sterlite Industries gained 2.1% to 891.10 rupees and Tata Steel surged 1% to 890.50 rupees.

Steel Authority of India climbed 8% to 187 rupees on reporting 24.97% rise in net profit to 2,376.76 crore rupees on 30.42% increase in total income to 13,855.25 crore rupees in the fourth quarter ended over the same quarter last year.

Bharti Airtel fell 1.1% to 846.50 rupees. Bharti and MTN have been discussing possible merger of two companies. Bharti Airtel is prepared to acquire 51% stake in the company but MTN management wants it to buy the entire company.

Infosys fell 1.3% to 1,867.10 rupees and Wipro declined 0.7% to 505.50 rupees.

The Indian rupee fell to a 13-month low against the dollar today, 16 May 2008. A depreciating rupee augurs well for IT companies as they derive over 50% of their revenues from exports to US.

NTPC lost 0.2% to 191.35 rupees on reports the Finance Ministry has turned down its proposal for selling 4.75% stake through follow-on public offer. The Government holds 89.5% in the utility.

Ambuja Cements lost 1.1% to 110.90 rupees.

Reliance Update

Reliance Communications gained 2.7% to 605.10 rupees and Reliance Industries was up 0.7% to 2,641.45 rupees.

L&T to build rigs

Larsen and Toubro on Thursday said it will build assets for the offshore segment that is facing shortage of assets. L&T, which has a base in Oman, plans to build jack-up rigs, semi-submersibles and Floating Production and Storage Offloading vessels for the offshore segment in Oman.

Larsen & Toubro gained 0.6% to 2,997 rupees.

SEBI clears Reliance Infratel IPO

SEBI approved Reliance Infratel initial public offering controlled by Anil Ambani Group, the telecom infrastructure division of Reliance Communications Ltd. Reliance Infratel will offer 10% equity to the public valued at between 5,000 and 6,000 crore rupees.

Asian Markets

In Tokyo Nikkei 225 Index closed lower 32.26 or 0.23% to 14,219.48, in Hong Kong Hang Seng index increased 105.15 or 0.41% closed to 25,618.86. In Australia ASX 200 index higher 40.30 or 0.68% to close 5,931.00. In Malaysia KL Composite index increased 6.52 or 0.50% closed to 1,300.67.

In South Korea Kospi Index increased 3.17 or 0.17% to close at 1,888.88, in Thailand SET index closed higher 14.72 or 1.72% to 870.33 and Indonesia JSE Index edged increased 19.03 or 0.78% to 2,468.84. Sensex index in India increased 81.40 or 0.47% to 17,434.94.