Weak Wholesale Inflation in India

123jump.com Staff
03 Sep, 2009
New York City

Wholesale inflation declined at a slower pace in the latest read and is expected to turn positive in the next few weeks. Markets may come under pressure if inflation accelerates. Thermax India is the latest company to win more power projects as the nation accelerates infrastructure investment.

[R]6:00 PM Mumbai, 8:30 AM New York – Wholesale inflation declined at a slower pace in the latest read and is expected to turn positive in the next few weeks. Markets may come under pressure if inflation accelerates. Thermax India is the latest company to win more power projects as the nation accelerates infrastructure investment.[/R]

Indian markets gained momentum after a dull opening led by gains in realty, metals and banks. The revival of the monsoon rains played into investors’ sentiment. Recently listed power projects initial public offerings are not well despite heavy marketing by NHPC and Adani Power.

The wholesale price index for the week ended August 22 showed a decline of 0.21% compared to a fall of 0.95% at the end of 52 weeks in the previous week. The consumer prices are still gaining with the sharp rise is food prices.

The Sensex index in India decreased 69.13 or 0.4% to 15,398.33 and CNX Nifty index fell 14.80 or 0.3% to 4,593.55. Among the Sensex 30 stocks, 21 rose and 9 fell. On BSE trading, 1,398 stocks advanced, 1,347 declined and 92 were unchanged.

The government has appointed committee to look into the compensation practices for financial brokers and agents. The committee is expected to propose to eliminate up front commission by the end of April 2011 that will affect 3 million agents that work with 188 million investors.

Gainers & Losers

Ashok Leyland added 0.6% or Rs.0.25 to Rs.39.50 after the commercial vehicles maker said sales declined 0.7% to 4,784 units in August compared to a year ago month.

Berger Paints India Limited fell 8.1% or Rs.5.80 to Rs.65.40 after the paint manufacturer said it plans to sell its stake in Berger Paints China.

Cadila Healthcare Limited the pharmaceutical company rose 6.2% or Rs.28.15 to Rs.478.00.

Golden Tobacco Ltd increased 4.9% or Rs.4.35 to Rs.92.10 after the company is in discussion with Godrej Properties.

Great Offshore Limited increased 3.6% or Rs.19.20 to 546.15.

Gwalior Chemical Industries Limited decreased 1.7% or Rs.1.75 to Rs.97.50 after the German specialty chemicals group LANXESS completed the acquisitions of the chemical businesses and production assets belonging to Gwalior.

Mahanagar Telephone Nigam Limited gained 1.1% or Rs.1.05 to Rs.94.35 after the telecom operator is looking to acquire a stake in Nigerian Telecommunications Ltd.

McNally Bharat Engineering Company Ltd increased 0.4% or Rs.0.85 to Rs.186.20 after the company is rumored to consider right issue.

Parsvnath Developers Limited gained 2.7% or Rs.3.20 to Rs.120.30 after the indebted home builder is looking to sell a stake in the Delhi based housing project for $100 million of shares and lower its debt by one third. According to an interview with Chairman Pradeep Jain, the company is looking to place $100 million or 500 crore rupees with overseas investors.

Rama Paper Mills Limited soared 7.4% or Rs.0.87 to Rs.12.61 after the company increased its annual production capacity to 60,000 from 40,000 tons.

Reliance Communications Limited advanced 5.6% or Rs.15.65 to Rs.291.70.

Shares of three airline operators rose 0.80% to 1.73% on reports domestic airlines are contemplating airfares hike by increasing the fuel surcharge. Kingfisher Airlines increased 1.7%, Jet Airways added 1.0% and Spice Jet closed up 0.8%.

Sterlite Industries (India) Limited, the non-ferrous metals and mining company jumped 3.4% or Rs.21.85 to Rs.657.00.

State Bank of India added 0.6% or Rs.11.85 to Rs.1,747.15 after the bank offered farm loans for crop and irrigation loans at discounted interest rate.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 65.82 or 0.64% to 10,214.64, Hang Seng index in Hong Kong increased 239.68 or 1.23% to 19,761.68 and CSI 300 index in China higher 161.04 or 5.57% to 3,051.96. ASX 200 index in Australia decreased 8.60 or 0.19% to 4,429.60. The FTSE Bursa KL Composite index in Malaysia closed higher 5.65 or 0.48% to 1,173.66.

The Kospi Index in South Korea increased 0.37 or 0.02% to close at 1,613.53. SET index in Thailand closed higher 11.42 or 1.75% to 665.54 and JSE Index in Indonesia increased 36.32 or 1.59% to 2,322.25. The Sensex index in India decreased 69.13 or 0.45% to 15,398.33.