Infrastructure Stocks Shine in India

123jump.com Staff
19 Jun, 2009
New York City

Stocks in Mumbai closed up as expectations run high on infrastructure spending ahead of the government budget. Suzlon calls bond holders meeting. The market regulator Sebi simplifies guidelines and permits anchor investor concept in rights offerings.

[R]5:00 PM Mumbai, 7:30 AM New York – Stocks in Mumbai closed up as expectations run high on infrastructure spending ahead of government budget. Tata Steel increased steel prices on a rise in demand. Suzlon calls bond holders to meeting. The market regulator Sebi issues revised guidelines and permits anchor investor concept in rights and public offerings.[/R]

Stocks in Mumbai trading surged on the expectations of higher capital spending on infrastructure and a government plan to provide accelerated depreciation for capital investment.

The Sensex index in India increased 256.36 or 1.80% closed to 14,521.89 and CNX Nifty added 61.70 or 1.45% to 4,313.10.

Trading on the BSE declined to 5,916 crore rupees from 7,163.33 crore rupees and on the NSE declined to 18,636 crore rupees from 20,841 crore rupees. Of the 30 stocks in the Sensex, 24 increased and the rest fell.

The market regulator, Securities and Exchange Board of India issued a number revisions related to the public offering process and registration of mutual funds.

On the BSE, 1,346 shares increased, 1,292 declined and 66 were unchanged.

The government is looking to provide accelerated depreciation up to 35% in the first year followed by 15% annual charge for plants and machinery. The move will increase corporate earnings.

Sebi Revisions

The Sebi simplified disclosure requirements of the rights offering of stocks and companies are required to disclose only new information that is not in the initial prospectus at the time of listing.

The Sebi also permitted companies that are in the process of raising capital to pre-disclose and allocate stocks to what is called anchor investor. The prior agreement with an anchor investor will allow the issuer to gather offering momentum and may facilitate the capital raising.

Registration fees for market intermediaries like brokers and financial advisors will be cut in half. The mutual fund entry load, a way to compensate the fund management company will be removed.

Gainers & Losers

Telecom stocks rallied after the telecom minister suggested that the reserve price auction for the 3G spectrum will be announced as early as next week.

Bharti Airtel edged up to close at 805.60 rupees, Idea Cellular gained 2.7% to 80.30 rupees and Reliance Communications Limited added 2.1% to 305.15 rupees.

Software exporters increased after U.S. economic reports suggested economic stabilization. Infosys Technologies increased 2.9% to 1,771.10 rupees, Tata Consultancy increased 0.3% to 380.85 rupees and Wipro Limited added 0.8% to 380.70 rupees.

Tata Steel Ltd surged 5.8% to 411.75 rupees after it increased prices on steel products between 500 rupees and 750 rupees. Steel Authority of India and Jindal Steel have no plans to raise prices at least for another week.

Infrastructure stocks rallied on a continued speculation that the government will increase spending on roads, bridges and power plants.

Larsen & Toubro Limited surged 5.7% to 1,496, Bharat Heavy Electricals added 2.8% to 2,090 rupees and Reliance infrastructure soared 5.1% to 1,262.25 rupees.

Suzlon Energy soared 10.5% to 111 rupees after the company announced a meeting of bond holders on June 25.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 82.54 or 0.85% to 9,786.26, Hang Seng index in Hong Kong increased 144.27 or 0.81% closed to 17,920.93, CSI 300 index in China higher 22.57 or 0.74% closed to 3,080.00. ASX 200 index in Australia increased 7.50 or 0.19% closed to 3,899.60. The KL Composite index in Malaysia higher 5.09 or 0.48% closed to 1,059.50.

The Kospi Index in South Korea increased 7.58 or 0.55% to close at 1,383.34.SET index in Thailand closed higher 18.55 or 3.25% to 588.98 and JSE Index in Indonesia increased 39.48 or 2.02% closed to 1,990.47. The Sensex index in India increased 256.36 or 1.80% closed to 14,521.89.