India reflects strong Asia

Wed, 20 Jan 09:30 am

   Previous Close   

   Pre-Open   

   11:30 am   

   01:30 pm   

   Closing   

The Indian markets have started today's session on a strong note. The benchmark indices opened above the breakeven mark and have managed to hold on to their gains since then. Other key Asian markets are also trading in the positive with Japan (up 0.5%) leading the pack of gainers. However, China is currently in the red. The US markets closed 1% higher yesterday.

Currently in India, heavyweights from the BSE-Sensex are trading in the green with power and software stocks witnessing buyers' interest. The BSE-Sensex is trading higher by around 75 points, while the NSE-Nifty is up by about 30 points. Buying interest is also being witnessed among mid and small-cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading higher by 0.9% and 1.1% respectively. The rupee is trading at 45.91 to the US dollar.

Media stocks have opened the day on a strong note. Gainers here include Entertainment Network and TV Today. Zee Entertainment declared its 3QFY10 results yesterday. The company's topline declined by 3% YoY during the quarter. Advertising revenue grew by 1% YoY, while subscription revenue grew by 9% YoY. However, revenue from syndication, film distribution and education sales declined by 73% YoY. Operating margins improved to 29.6% in 3QFY10, up from 22% in 3QFY09 due to lower programming and operating cost. Other income declined by 20% YoY during the quarter. Excluding exceptional items, bottomline grew by 42% YoY during the quarter. This was on the back of higher operating margins and lower interest costs.

Energy stocks have opened the day on a strong note. Gainers here include MRPL and Gujarat Gas. As per a leading business daily, the government has agreed to provide Rs 120 bn as cash subsidy to compensate the public sector oil marketing companies (OMCs) for selling cooking fuels at regulated prices. Indian Oil will get Rs 70 bn while BPCL and HPCL will get Rs 25 bn each. It may be noted that the practice so far was to issue oil bonds as compensation. While the cash subsidy will help the OMCs reduce their under recoveries, it still falls short of their estimated losses of around Rs 300 bn for FY10. The government has the difficult task of containing the fiscal deficit, which goes up due to subsidies, as well as keeping fuel prices low. In our view, the only long-term solution is a gradual deregulation of fuel prices.