Talks Of Financial Reforms Lift Stocks in India

Mayank Mehta
17 Jul, 2009
New York City

Stocks in Mumbai surged after the government suggested that it will reform financial services industry to attract more investors in the infrastructure development and insurance industry. Air India will receive $510 million in equity infusion from the government.

[R]5:30 PM Mumbai, 8:00 AM New York – Stocks in Mumbai surged after the government suggested that it will reform financial services industry to attract more investors in the infrastructure development and insurance industry. Air India will receive $510 million in equity infusion from the government.[/R]

Stocks in Mumbai trading surged after the government said it will reform the banking and pension funds law to attract more investors. The prospects of financial reforms lifted stocks. The government controlled companies also surged on the talks of privatization.

The Sensex index in India increased 494.67 or 3.47% to 14,744.92 and CNX Nifty index surged 143.55 or 3.39% to 4,374.95. Among the Sensex 30 stocks, 27 rose and 3 fell.

On BSE trading, 1,824 stocks increased, 828 decreased and 82 were unchanged.

National Aviation Company of India Ltd, the parent of Air India will receive equity infusion of 2,500 crore rupees or 25 arab rupees ($510 million) from the Central government according to Civil Aviation Minister Praful Patel. The national carrier has accumulated losses of 7,500 crore rupees.

The thinly capitalized airline is struggling to pay for 49 of the 111 planes it ordered from Boeing and Airbus SAS. The airline has equity capital of only 150 crore rupees.

Gainers & Losers

Colgate-Palmolive (India) Limited rose 2.0% or Rs.12.45 to Rs.644.05 after the market leader in oral care said first quarter sales rose 14.8% to Rs.468 crore from Rs.407.6 crore a year ago. Net profit for the quarter rose 43% to Rs.103 crore compared to net profit of Rs.72 crore are a year ago.

Exide Industries Limited advanced 8.9% or Rs. 6.30 to Rs. 76.90 after the country’s largest lead acid storage battery manufacturers said first quarter total income fell 0.5% to Rs.903.46 crore from Rs.908.45 crore a year ago. Net profit for the quarter rose 49% to Rs.122.40 crore compared to net profit of Rs.82.20 crore are a year ago.

India Infoline Ltd sank 3.1% or Rs.4.25 to Rs.130.75 after the stock brokerage firm said first quarter sales fell 5% to Rs.256.3 crore from Rs.269.0 crore a year ago. Net profit for the quarter rose 4% to Rs.51.7 crore compared to net profit of Rs.49.5 crore are a year ago.

JK Tyre & Industries jumped 12.75% to Rs. 91.50 after net profit rose 101.3% to Rs. 40.75 crore in first quarter June 2009 over first quarter June 2008.

Nakoda Textile Industries Ltd rose 5.7% or Rs.2.35 to Rs.43.40 after the largest players in the fully drawn yarn segment said second quarter sales rose 28% to Rs.251.10 crore from Rs.195.57 crore a year ago. Net profit for the quarter rose 56% to Rs.5.57 crore compared to net profit of Rs.3.57 crore are a year ago.

Opto Circuits (India) Ltd fell 2.5% or Rs.3.90 to Rs.166.00 after the healthcare equipment maker said first quarter sales rose 30% to Rs.230.35 crore from Rs.177.36 crore a year ago. Net profit for the quarter rose 32% to Rs.59.26 crore compared to net profit of Rs.44.88 crore are a year ago.

VST Industries surged 7.19% to Rs 363.25 after net profit jumped 125.7% to Rs 24.10 crore in first quarter June 2009 over first quarter June 2008.

Wyeth Limited surged 1.6% or Rs.5.80 to Rs.623.25 after the pharmaceutical company said first quarter sales rose 21.8% to Rs.114.67 crore from Rs.94.15 crore a year ago. Net profit for the quarter rose 9.8% to Rs.29.15 crore compared to net profit of Rs.26.55 crore are a year ago.

Finance Secretary Ashok Chawla said on Friday the government's record market borrowing of 4,51,000 crore rupees in the current fiscal year would not pressure bond yields and interest rates. Chawla also said that he sees economic growth of around 7% in the current fiscal year and expects inflation to be between 2% to 3% by end March 2010.

Axis Bank Limited added 6.6% or Rs.52.75 to Rs.851.75 after net profit rose 70.24% to Rs 562.04 crore on 33.64% rise in total income to Rs 3864.13 crore in first quarter June 2009 over first quarter June 2008.

HDFC Bank advanced 3.6% or Rs.50.40 to Rs. 1,435.30 after net profit rose 30.52% to Rs 606.11 crore on 21.86% rise in total income to Rs 5,136.75 crore in first quarter June 2009 over first quarter June 2008.

ICICI Bank rose 6.8% or Rs.47.40 to Rs.742.45. State Bank of India surged 4.1% or Rs. 67.30 to Rs.1,674.65.

State Bank of Travancore was locked at 5% upper limit at Rs 442.45 after net profit jumped 336.7% to Rs 179.59 crore in first quarter June 2009 over first quarter June 2008.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 51.16 or 0.55% to 9,395.32, Hang Seng index in Hong Kong increased 443.79 or 2.42% to 18,805.66 and CSI 300 index in China higher 18.57 or 0.53% to 3,519.81. ASX 200 index in Australia increased 5.20 or 0.13% to 4,000.80. The FTSE Bursa KL Composite index in Malaysia closed higher 12.02 or 1.08% to 1,120.90.

The Kospi Index in South Korea increased 7.88 or 0.55% to close at 1,440.10. SET index in Thailand closed higher 13.37 or 2.29% to 596.11 and JSE Index in Indonesia decreased 11.60 or 0.55% to 2,106.35. The Sensex index in India increased 494.67 or 3.47% to 14,744.92.