The key benchmark indices slipped in the red after firm opening tracking positive Asian stocks. Auto stocks fell while PSU OMCs rose after the hike in fuel prices by the government yesterday. Index heavyweight Reliance Industries was weak. The BSE 30-share Sensex was down 73.75 points or 0.5%, off close to 170 points from the day's high. The Annual economic survey is scheduled to be presented today, 2 July 2009.
India's Finance Minister Pranab Mukherjee will present the economic survey, which states the nation's economic performance during the fiscal year ended March 2009, in parliament. India's wholesale price index (WPI) in the 12 months to 20 June 2009 will be announced by the government today. Inflation based on the wholesale price index declined 1.14% in the year through 13 June 2009. The decline was however, smaller than a 1.61% fall in the year through 6 June 2009. Inflation had dipped to negative in early June 2009 for the first time since 1977-78.
Days before the Union Budget is presented, the government yesterday, 1 July 2009 announced a hike in petrol and diesel prices but left kerosene and LPG prices untouched. The price of petrol has been hiked by Rs 4 a litre while diesel price has been increased by Rs 2 per litre. Terming it an ad hoc price hike, the Union petroleum minister, Mr Murli Deora, said it would be applicable from midnight on 1 July 2009. After the increase, petrol in Delhi will cost Rs 44.62 a litre and diesel Rs 32.86 a litre. Investors expect the Congress party, emboldened by its recent unexpected strong election victory, may soon consider a proposal to end state controls on transport fuel prices, one of many important reforms expected from a government now unshackled from the constraints of its erstwhile Communist partners.
Many equity analysts have been raising earnings forecasts of India Inc on hopes that the new government will provide thrust on the infrastructure sector and push economic reforms to boost growth.
Asian stocks were trading mixed today, 2 July 2009. The key benchmark indices in China, Hong Kong and Taiwan rose by between 0.9% to 1.25%. While, Key benchmark indices in Japan, Singapore and South Korea fell by between 0.17% to 0.55%.
Trading in the US index futures indicated Dow could fall 17 points at the opening bell today, 2 July 2009.
US markets shut in the green but off highs yesterday, 1 June 2009 after a barrage of economic reports. The Dow gained 57.06 points, or 0.7%, to 8,504.06. The S&P 500 index rose 4.01 points, or 0.4%, to 923.33. The Nasdaq composite index was up 10.68 points, or 0.6%, to 1,845.72.
In economic news, the June 2009 ISM manufacturing index rose to 44.8 from 42.8 in May 2009, slightly higher than expected. Meanwhile, the ADP employment change report showed more than-expected job losses for June 2009 at 4,73,000 jobs.
Back home, the near-term major trigger for the stock market is the Union Budget 2009-10 on 6 July 2009. The Rail Budget will be presented by Railway minister Mamta Banerjee on Friday, 3 July 2009. As per media reports, another fare cut is unlikely because Lalu Prasad's Interim Railway Budget in February 2009 has already strained the Indian Railways' finances. Lalu Prasad had announced a 2% reduction in passenger fares. Similarly, any increase in freight rates looks unfeasible because of the current economic downturn. With the present economic conditions not providing much scope for either large-scale fare concessions or an across-the-board increase in freight rates, the highlight of the Railway Budget for 2009-10 is likely to be a big push to public-private partnership (PPP) initiatives to enhance the Indian Railways' capacity to earn higher revenues on a sustainable basis.
The Union Budget 2009-2010 attains significant importance in the wake of the global financial crisis. Despite the country being relatively unharmed compared to the West, the UPA government will have many tasks on its to-do list, which includes boosting growth and demand, continuing to maintain liquidity, balancing inflation and also containing the country's worrying fiscal situation.
The Government has made its intention clear to push for reforms and pursue the disinvestment agenda, which was met with stiff opposition in the UPA's previous stint when the Left parties were members for a major part of the five-year tenure. The Congress party had in its manifesto released before polls promised to go ahead with disinvestment while retaining a majority holding in the state-run companies. Disinvestment programme was earlier put on backburner due to stiff opposition from the Left front.
Also the passage of the Bill to amend the Insurance Act, 1938 is likely to be touched upon in the budget. Apart from raising the foreign investment ceiling to 49%, from 26% at present, the Bill had proposed to do away with the stipulation on Indian promoters having to mandatorily sell a part of their holdings after 10 years of operation.
With infrastructure bottlenecks plaguing the economy, expectations are rife that the upcoming Budget will provide a big stimulus to this core sector, particularly roads and ports. A big push to Public Private Partnership (PPP) projects in infrastructure may be also on the cards.
For the power sector, the Budget may contain significant increases in spending, including for generation, rural electrification, and for minimising transmission and distribution losses. Other measures which the Budget may announce on infrastructure would be to give greater flexibility to the Infrastructure Investment and Financing Company (IIFCL), which has been set up as a refinancing facility for infrastructure projects, to deploy funds.
At 10:24 IST, the BSE 30-share Sensex was down 73.75 points or 0.5% to 14,571.72. The Sensex opened 48.84 points higher at 14,694.31. At the day's high of 14,740.52, the Sensex rose 95.05 points in early trade. The Sensex lost 76.82 points at the day's low of 14,568.65 in early trade
The S&P CNX Nifty was down 23.95 points or 0.55% to 4,316.95.
The market breadth, indicating the overall health of the market, was strong. On BSE, 602 shares rose as compared with 383 that fell. 34 shares remained unchanged.
Among the 30-member Sensex pack, 19 fell while rest advanced.
From the Sensex pack, TCS, Infosys Technologies, DLF and Reliance Communications fell by between 1.26% to 1.47%.
The BSE Mid-Cap index gained 0.04% and the BSE Small-Cap index gained 0.48%.
India's largest private sector firm by market capitalisation Reliance Industries (RIL) fell 0.76% to Rs 2,041.75, as it may move the Supreme Court against a recent unfavourable high court order on gas sales. RIL said on Tuesday, 30 June 2009, it could not sign a gas supply agreement with Reliance Natural Resources (RNRL) as there was no clarity on government approval for the terms. RIL said it wanted the terms such as price, quantity and tenure to be subject to government approval.
The Bombay High Court, in its order dated 15 June 2009, had directed that Anil Ambani's RNRL will get assured gas supply of 28 million metric standard cubic metre per day (mmscmd) of gas from RIL's Krishna-Godavari basin for 17 years at $2.34 million per metric British thermal unit (mmbtu). This is 44.28% less than the price fixed by the government for gas sale from the RIL block in the KG basin at $4.2 million per metric British thermal unit.
PSU OMCs rose as government hiked petrol and diesel prices yesterday. BPCL, HPCL and IOCL rose by between 2.3% to 3.47%.. Higher fuel prices will reduce underrecoveries at the state-run oil firms on domestic sale of petrol, diesel, LPG and kerosene at a controlled price.
India's largest oil exploration firm by sales ONGC rose 2.51%after company's chairman and Managing Director R. S. Sharma said on Thursday state-run Oil and Natural Gas Corp's fuel subsidy burden for the current year will be significantly lower than the previous year, if the crude prices stay around the current level. Gail India jumped 2.62%.
India unexpectedly raised gasoline and diesel prices by as much as 10 percent on Wednesday. India's government-controlled fuel pricing regime forces state-run producers such as ONGC to partially subsidise state oil marketing companies to sell products at low prices to consumers.
Auto stocks fell on worries fuel price hike may hamper auto sales. . India's top small car maker by sales Maruti Suzuki India fell 0.85%. The company's total vehicle sales rose 22.63% to Rs 75,109 units in June 2009 over June 2008. Maruti's domestic sales rose 9.5% to Rs 61,773 units, while exports soared 175.8% to Rs 13,336 units in June 2009 over June 2008. The company announced on 1 July 2009.
India's largest tractor maker by sales Mahindra & Mahindra fell 0.33% even as its domestic sales jumped 24% to 22,526 units in June 2009 over June 2008.
India's largest commercial vehicle maker by sales Tata Motors fell 0.8%. Tata Motors on Wednesday reported a 3.91 % decline in its total sales to 45,399 units in June 2009 over June 2008.The company reported a net loss of Rs 2505.25 crore in the year ended March 2009 as compared with net profit of Rs 2167.70 crore in the year ended March 2008. The results were announced on 26 June 2009.
India's largest bike maker by sales Hero Honda Motors slipped 0.57% despite a 23.7% surge in sales to 3,65,734 units in June 2009 over June 2008.
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