Inflation in India Eases; Reserves Rise

123jump.com Staff
20 Mar, 2009
New York City

Foreign exchange reserves of India rises by $1.4 billion. RBI will unveil its credit policy on April 21. Retail inflation eases to 10.79% in February. In trading, telecom stocks fell on lower text message tariff and L&T declined after the settlement with Grasim on cross holdings.

[R]10:00AM New York, 7:30 PM Mumbai - Foreign exchange reserves of India rises by $1.4 billion. RBI will unveil its credit policy on April 21. Retail inflation eases to 10.79% in February.[/R]

Indian stocks dropped in choppy trading led by realty stocks over weaknesses in the sector.

However, losses were pared by buying by foreign institutional investors. Provisional data shows FIIs bought shares worth 23 crore rupees yesterday.

In Mumbai, the BSE 30-share Sensex Index declined 0.4% or 35.07 to 8,966.68, and the CNX Nifty was flat at 2,807.05.

Of the stocks traded on the BSE 1,214 gained, 1,273 dropped, and 64 were unchanged.

Trading Statistics

Daily turnover on the BSE fell to 2,929 crore rupees from 3,977.84 crore rupees yesterday.

Foreign Exchange Rises $1.4 billion

Reserve Bank of India reported that the country’s foreign exchange reserves increased for the first time in five years to $1.4 billion in the week ended March 13 due to the revaluation of non-dollar reserves in assets and on dollar purchases by the central bank.

Total foreign exchange reserves including gold and SDR climbed $249 million to $249.3 billion.

Foreign currency assets increased $1.4 billon, the value of gold in reserves gained $862 million on the marked increase in global bullion prices.

In addition, reserves with the IMF in reserves declined $5 million and the value gold and SDR in reserves remained unchanged during the week.

RBI to Unveil Credit Policy on April 21

Separately, the central bank reported that it will unveil its annual credit policy to stimulate the economy for 2009 to 2010 on April 21.

IMF says the ability of the government to pump prime the economy through increased expenditure is currently limited.

Retail Inflation Eases to 10.79% in February

India’s retail inflation, gauged by the Consumer Price Index for farm laborer and rural laborers, has dropped to 10.79% in February, a decline from 11.62% and 11.35% respectively in January.

Inflation for food articles is at 7.35% for first week of March, while inflation for sugar and gur is 22.4%, pulses 11%, cereals 10.2%, milk 7.1%, spices 6.2%, fruits 5.9% and vegetables 4%.

The central bank forecasts retail inflation to drop sharply over the month on declines in fuels and rent prices.

Gainers & Losers

Reliance Industries decreased 0.5% to 1,338.55 rupees.

Energy stocks soared after oil prices soared 7.2% to $51.6 per barrel. Oil & Natural Gas Corporation rose 3.4% to 755.05 rupees.

Telecommunication stocks were mixed on speculation that companies might lower text message tariff by 40% from May for customers outside their home network as the regulator cautioned against overcharging.

Bharti Airtel fell 0.4% and Reliance Communications rose 1.1%.

Bharat Heavy Electricals shed 2.3% on news the company’s advance tax declined 33.3% to 400 crore rupees in the fourth quarter ended March from the comparable period a year ago.

Larsen & Toubro plunged 4% notwithstanding news that L&T and Grasim Industries will finally settle their protracted legal dispute over Grasim’s 0.6% stake in L&T and the latter’s 11.5% stake in Ultratech, the Birla group cement firm.

Akruti City dropped 27.8% after the company was remover by the NSE from its derivative index.

Financial stocks declined on fears over the health of the global economy. ICICI Bank fell 4.5% and State Bank of India dipped 1.5% to 953.55 rupees. HDFC Bank rose 0.9% to 837.70 rupees.

Tata Motors fell 6.2%.

Dabur India fell 1.9% on news the company is looking for a buyer for its ''new-u'' retail chain.

IT stocks gained. TCS plunged 1% to 509.80 rupees, HCL Technologies lost 0.2% to 104.235 rupees and Wipro tumbled 0.9% to 30.70 rupees.

Infosys Technologies rose 0.1% to 1,297.35 rupees.