The Indian stock markets had a strong opening to the new year on the occasion of 'Gudi Padva'. The benchmark indices opening in the positive zone, and continue to trade strongly in the green for most of the day. Buying was led by stocks from the capital goods and IT sectors, possibly on the expectation of good yearly numbers. Realty and pharma stocks however did not see much gains.
The BSE-Sensex closed up by around 281 points (1.5%), while the NSE-Nifty was up around 82 points (1.4%). Smallcap stocks however were on a winning streak with the BSE Small cap index seeing gains of around 2.8%. The BSE Midcap Index was also trading strong, seeing gains of around 1.7% respectively. The rupee was trading at 44.43 against the US dollar at the time of writing this.
BHEL was among one of the top gainers in the Sensex on announcing its provisional results for the financial year ended March 2011. It announced a 27% YoY increase in turnover, to Rs 434 bn. Profits saw a 40% YoY surge to Rs 60 bn. The company saw Rs 605.07 bn in order inflows during FY11. During the fiscal, the company's profit before tax increased by Rs 4 bn and turnover increased by Rs 24.6 bn due to a change in an accounting policy on the provision for warranty obligation for construction contracts. The BSE capital goods index was the top sectoral gainer today.
There is no stopping the bleeding of the public sector oil marketing companies. Firms like Indian Oil, Bharat Petroleum and Hindustan Petroleum are expected to lose a tremendous Rs 1.7 trillion on selling fuel at the government administered rates in FY11. They are losing 68% more this time around, compared to when crude previously reached its all time high in 2008-2009. The higher crude prices this time around are mainly on account of the Middle East crisis, which is far from being resolved. The three firms currently lose or under-recover a record Rs 16.8 per litre on diesel, Rs 28.3 a litre on kerosene and Rs 315.9 per 14 kg domestic LPG cylinder. They also lose Rs 4.5 per liter on petrol, even though it has been deregulated.
According to Fitch Ratings, a global rating agency the Indian economy is expected to grow by 8.3% for FY12, from an earlier projection of 8.5%. The slight downgrade was due to the fact that inflationary pressure continues to trouble the nation. This has caused the RBI to tighten its monetary policy and hike key rates 8 times over the past 12 months. The central bank has also warned that it may just increase rates once again if inflation does not ease up. However, the rating agency maintains that the economy will grow by 8% in FY13. Incidentally even China's growth was downgraded to 8.7% in FY12 on account of policy tightening due to inflationary concerns.