Indian share markets remain buoyant

Mon, 24 Feb 01:30 pm

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Indian share markets remained buoyant with indices hovering over the dotted line in the post-noon trading session. Sectoral indices are trading mixed with capital goods, pharma and auto stocks being the biggest gainers whereas power, metal and IT stocks are among the major losers.

BSE-Sensex is up 47 points and NSE-Nifty is trading 11 points up. BSE Mid Cap is trading 0.3% up and BSE Small Cap index is trading up by 0.4%. The rupee is trading at 62.0 to the US dollar.

As per a leading financial daily, corporate investments slipped to a decadal low in FY13. As per Central Statistics Office (CSO), capital expenditure by private companies fell to 9.9% of gross domestic product (GDP) in FY13 after peaking to 18.8% of GDP in FY08. During this period, investments by Indian households have risen to 15.9% of the GDP from 11.7% in FY08. But the breakup of household savings is an interesting feature. The share of savings in financial instruments such as bank deposits, mutual funds, shares, debentures, insurance and pension funds has fallen to 32.4% in FY13 from 52% in FY08, pointing to growing economic uncertainty. To shield from increased economic concerns, Indian households have stepped up investments in land and gold. The share of physical savings in real estate and gold has risen to over 66% in FY13 from 48% in FY08.

Mining stocks are trading mixed. While MOIL and Coal India are trading higher, Gujarat NRE Coke and National Mineral Development Corporation (NMDC) are trading weak. As per a leading business daily, Coal India has forecasted its FY15 coal output to be lower at 507 mn tones (MTPA) compared to its earlier projection of 530 MTPA. It believes its output would be 25 to 30 MTPA higher as compared to FY14 numbers. So this implies output of about 470 to 475 MTPA during FY14 as compared to the company's earlier estimate of 492 MTPA. The main reason for decline in the estimate is due to the problem with securing environmental clearances. Hurdles in environmental clearances saw the company report flat output during FY11 and FY12. As Coal India meets 80% of coal requirements of power sector, the shortfall in output would adversely impact the power industry too. Independent power producers would mostly be affected as its plant load factor hits 60%. Their economic viability would also come under scanner due to high fuel costs from expensive imported coal coupled with lower merchant tariffs unless government takes some serious measures.