Rising Oil Import Bill, Sensex Up

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

Mumbai stocks rose after declining for the four sessions in a row. A drop in oil helped market sentiment. Finance Minister Chidambaram refuted that the government is likely to increase income taxe or add a charge to software exports to cover a rising import bill of oil. A sharp rise in international price of crude oil has put government in a tight corner to balance the inflation and keep trade deficit in check. Tata Motors and Mahindra & Mahindra fell after earnings declined.

[R]10:00AM New York, 7:30PM Mumbai - Finance Minister dismisses tax proposal, Sensex gained first time in five days.[/R]

India market update

India''s benchmark index gained for the first time in five days, lifted by gains in software companies in mixed trading. A steep decline in crude oil prices in European and Asian trading also added the market positive sentiment.

The market also got a momentum after Finance Ministry on Wednesday issued a statement dismissing reports about new tax proposals to cover losses to the state controlled oil companies from fixed prices at pump stations.

Market Sentiment

At close, the 30-share BSE Sensex gained 1.5% or 249.78 to 16,525.37. On the NSE, the S&P CNX Nifty rose 1.2% or 58.55 at 4918.35. Of the BSE traded stocks, 1,312 shares rose, 1,358 stocks declined and 86 stocks were unchanged.

Trading Statistics

Daily turnover on the BSE stood at 5,390 crore rupees and on the NSE at 13,387 crore rupees.

Chambal Fertilisers & Chemicals was the most active stock on the BSE with a turnover of 291.49 crore rupees followed by the recently listed Bajaj Finserve and Reliance Industries, Reliance Capital and Reliance Power.

Finance Minister skirts the idea of new taxes

The finance minster office refuted the media speculation that government is planning to add surcharge to the income tax in the near future to cover losses from a steep rise in international price in oil.

India controls retail prices charged by state controlled oil companies to make energy affordable to large segment of population. The taxes collected at the retail outlets are not passed on to the state controlled oil companies. The oil refining and marketing companies are suffering heavy losses as crude oil prices have surged nearly 100% in the last nine months.

The policy makers and cabinet members are debating ways to pass on the recent hike in crude oil prices to consumers without stoking already record level of inflation. Consumers are sensitive to the recent run up in fuel and food prices and the coalition government is worried that another hike in fuel prices will hurt its prospects at the nation election in the near future.

Oil Minister Murli Deora said on Tuesday that the government is considering a proposal to impose a levy on income tax and create a special fund that will be used to cover losses at state controlled oil companies. But later the additional secretary in the oil ministry, S. Sundareshan, added that the idea of a levy is not popular with policy makers.

Gainers and Losers

ITC gained 6.2% to 222.05 rupees, the biggest rise in three months after the company increased prices on some its cigarette brands.

Cement stocks were in demand after the Union government partially lifted a ban on cement exports. Ambuja Cements gained 6.7% to 104.10 rupees, Ultratech Cements surged 3% to 655.20 rupees and ACC rose 2% to 668.65 rupees.

Reliance Industries rose 1.2% to 2,521.80 rupees. ICICI Bank rose 0.9% at 820.20 rupees.

Larsen & Toubro fell 1.3% to 2,709.10 rupees ahead of its quarterly results on Thursday.

Tata net profits falls

Tata Motors advanced 1.30% to 634.75 rupees after it reported a decline in fourth quarter profit on higher steel costs. Tata said net profit fell to 5.36 billion rupees in the three months ended March 31 from 5.77 billion rupees a year earlier.

Tata Motors said that the company is in the final stages to raise 72 billion rupees to pay for Jaguar and Land Rover division acquisition from Ford Motor Company. Tata Motors on March 26 agreed to buy the U.K. based companies. The deal is expected to close by the end of second quarter.

Mahindra & Mahindra profits decline

Mahindra & Mahindra reported quarterly net earnings declined 6.4%, hurt by increased raw materials prices including steel and other metals. Mahindra said net profit in the latest quarter declined to 2.21 billion rupees from 2.36 billion reported a year earlier.

Mahindra, which has a venture with a unit of Navistar for trucks and buses, earlier this month said it would raise 7 billion rupees from a placement of convertible debentures equivalent to 3.7% stake with a fund controlled by Goldman Sachs.

World markets review

In Tokyo Nikkei 225 Index closed lower 183.87 or 1.32% to 13,709.44, in Hong Kong Hang Seng index decreased 32.53 or 0.13% closed to 24,249.51. In Australia ASX 200 index lower 66.30 or 1.16% to close 5,648.10. In Malaysia KL Composite index decreased 13.66 or 1.07% closed to 1,260.58.

In South Korea Kospi Index decreased 19.59 or 1.07% to close at 1,805.64, in Thailand SET index closed lower 22.61 or 2.64% to 832.99 and Indonesia JSE Index edged increased 36.77 or 1.53% to 2,433.77. Sensex index in India increased 249.78 or 1.53% to 16,525.37.

In London FTSE 100 Index closed higher 11.10 or 0.18% to 6,069.60, in Paris CAC 40 Index increased 64.55 or 1.32% to close at 4,971.11 and in Frankfurt DAX index higher 75.18 or 1.08% to close at 7,033.84. In Zurich trading SMI increased 56.53 or 0.76% to close at 7,474.50.