India Hikes Petrol Prices; Targets 7% Growth

Mukesh Buch
02 Jul, 2009
New York City

Stocks in India traded sideways after the release of the Economic Survey from the Finance Ministry. The survey focused on the need for infrastructure spending, controlling the budget deficit and simplifying the taxes. Separately, the government increased retail prices of petrol and diesel.

[R]5:00 PM Mumbai, 7:30 AM New York – Stocks in India traded sideways after the release of the Economic Survey from the Finance Ministry. The survey focused on the need for infrastructure spending, controlling the budget deficit and simplifying the taxes. Separately, the government increased retail prices of petrol and diesel.[/R]

The Economic Survey released by the Finance Ministry office focused on tax simplification, encouragement for infrastructure investment and attracting more foreign investment. The survey estimated that the economy may grow at 7% in the current fiscal year if the world economy revises and the growth rate may accelerate to at least 8.5% in next fiscal year.

The survey stressed that the budget deficit should be lowered to 3%.

The survey recommended that dividend distribution tax should be abolished and shareholders should pay the tax.

The government may target to raise as much as $5 billion or 2,500 crore rupees from the asset sales and facilitate foreign investment in insurance and retail industry. The government plan to invest $500 billion over the next five years will be a challenge.

The Sensex index in India increased 13.02 or 0.09% to 14,658.49 and CNX Nifty index decreased 1.5 to 4,339.40. Trading turnover on the BSE increased to 5,972 crore rupees from 5,770 crore rupees and 1,417 shares increased, 1,156 decreased and 87 were unchanged.

Separately, the government increased retail petrol prices by 4 rupees a liter and diesel by 2 rupees a liter.

Wholesale inflation for one year ending on June 20 was negative 1.3% compared to fall of 1.14% at the end of the previous week.

Gainers & Losers

Metals makers closed higher after a rise in copper, zinc and tin prices. Tata Steel Ltd surged 6.2% to 420.40 rupees, Sterlite Industries (India) Ltd. added 3.8% to 634.65 rupees and Hindalco Industries Ltd increased 1.6% to 84.80 rupees.

Oil refiners increased after retail petrol prices were raised by 9.8% ONGC surged 7.1% to 1,126.60 rupees, Indian Oil Corp increased 1.4% to 549.50 rupees and Hindustan Petroleum Corp added 2.8% to 319.95 rupees.

Auto stocks fell after the hike in petro prices. Maruti Suzuki decreased 1.8%, Mahindra & Mahindra declined 0.6% and Tata Motors fell 2.2% and Hero Honda Motors fell 0.9%.

Bajaj Hindusthan completed its private offering and raised 723 crore rupees. Aurobindo Pharma dropped 2.4% to 470 rupees after the block sale of 800,000 shares on the NSE at 460 rupees according to the reports on the Capitalmarket.com.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 63.78 or 0.64% to 9,876.15, Hang Seng index in Hong Kong decreased 200.68 or 1.09% to 18,178.05 and CSI 300 index in China increased 44.46 or 1.37% to 3,282.36. The ASX 200 index in Australia increased 3.30 or 0.09% to 3,877.30. The KL Composite index in Malaysia closed lower 0.69 or0.06% to 1,078.71.

The Kospi Index in South Korea decreased 0.18 or 0.01% to close at 1,411.48. SET index in Thailand closed lower 11.06 or 1.85% to 586.42 and JSE Index in Indonesia increased 5.87 or 0.28% to 2,065.75. The Sensex index in India increased 13.02 or 0.09% to 14,658.49.