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Markets will remain closed on May 13, 2021 on account of Id-Ul-Fitr (Ramzan Id).

India Inc feels the heat
Fri, 1 Jun Pre-Open

We have been talking about the slowdown in different economies across the globe for quite some time now. And the Indian economy is no exception. But if you look at the new data out in the streets, the situation looks to be going from bad to worse. Recently released Gross Domestic Product (GDP) growth number for the fourth quarter of the last financial year 2011-12 (4QFY12), just at 5.3%, is the worst performance of India's economy in nine years. This is a clear sign of the deepening slowdown.

And if you glance at the March quarter results, declared by companies across various sectors recently, the flavour is more or less the same. The aggregate sales of over 2,000 companies (excluding oil marketing companies, refineries and banks) grew by just 10.3% during 4QFY12. This is the worst performance of the last ten quarters. This validates the fact that the demand environment is getting worse by the day.

And it is not just the poor performance at the topline level. The inflationary pressure has eaten away the profits of the companies as well. So much so that the above mentioned sample of the companies witnessed a de-growth of 2% at the net level during the same period.

Reasons for this poor show are well known. Besides economic uncertainties in the developed countries, stubborn inflation , high interest rates and policy paralysis are to name a few. Now the bigger question is how long this grim picture would prevail. And the answer is equally disappointing.

Many industry experts do not see any respite in the near future. And there are valid reasons for the same. Considering the prevailing inflationary pressure, the chances of rate cuts are not very promising. In the worst case, the Reserve Bank Of India (RBI) may take a U-turn and can again start tightening the policies. The free fall of the Indian currency is adding to the woes. This has made the external borrowings more costly. In additon, the rupee depreciation is putting extra pressure on the economy which is already facing huge trade deficit.

All this calls for some concrete steps from the government side. No doubt, the government does not have control over each and every thing. However, it can always manage issues such as widening fiscal deficit, supply side problems and policy paralysis in a better way. Mere focusing on social welfare schemes would be of no help in this deteriorating situation.

Till something good happens, expecting Indian firms to do well in next few quarters would be like setting wrong expectations!

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1 Responses to "India Inc feels the heat"

Harleen Kaur Sethi

Jun 2, 2012

I do not understand one thing. We keep talking about government not functioning well and so on. But we fail to understand that the situation is far better than those in the outside world. Bigger economied like U.S. and Europe are paralyzed due to recession. India is still in a much better situation. And when the government does take concrete steps, either the public or the political parties criticixe it. Recently, when the government did increaes the rate of petrol, why are we there too support it. Increasing the petrol prices will in fact reduce the burden on the government. India is facing the problem of high fiscal deficit and reducing subsidies is an important issue to be considered here. It is not possible to reduce the problems if we keep crapping over things and when the time comes to sacrifice a bit, we back out.

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Stock Market Updates

Sensex Trades Over 300 Points Lower, Dow Futures Down by 128 Points (Today's Market)

May 12, 2021 12:30 pm

BSE Sensex is trading down by 328 points, while the NSE Nifty is trading down by 89 points.

GODREJ AGROVET Share Price Up by 9%; BSE FMCG Index Down 0.1% (Today's Market)

May 12, 2021 12:14 PM

GODREJ AGROVET share price is trading up by 9% and its current market price is Rs 577. The BSE FMCG is down by 0.1%. The top gainers in the BSE FMCG Index are GODREJ AGROVET (up 8.5%) and GSK CONSUMER (up 5.1%). The top losers are GILLETTE INDIA (down 0.2%) and ITC (down 0.2%).

Sensex Dips 300 Points, Nifty Falls Below 14,800; Godrej Consumer Zooms 10% (Today's Market)

May 12, 2021 09:30 am

Indian share markets open lower. The BSE Sensex opened down by 325 points, while the Nifty is trading lower by 84 points.

SIEMENS at All Time High; BSE CAPITAL GOODS Index Up 0.7% (Today's Market)

May 12, 2021 09:36 AM

SIEMENS share price has hit an all time high at Rs 2,096 (up 7.5%). The BSE CAPITAL GOODS Index is up by 0.7%. Among the top gainers in the BSE CAPITAL GOODS Index today are SIEMENS (up 7.5%) and HONEYWELL AUTOMATION (up 0.1%). The top losers include CARBORUNDUM UNIVERSAL (down 0.1%) and SCHAEFFLER INDIA (down 0.4%).

CADILA HEALTHCARE at All Time High; BSE HEALTHCARE Index Down 0.1% (Today's Market)

May 12, 2021 09:36 AM

CADILA HEALTHCARE share price has hit an all time high at Rs 640 (up 1.1%). The BSE HEALTHCARE Index is down by 0.1%. Among the top gainers in the BSE HEALTHCARE Index today are CADILA HEALTHCARE (up 1.1%) and ABBOTT INDIA . The top losers include TORRENT PHARMA (down 0.1%) and SANOFI INDIA (down 0.1%).

BLISS GVS PHARMA Share Price Down by 6%; BSE HEALTHCARE Index Down 0.1% (Today's Market)

May 12, 2021 09:34 AM

BLISS GVS PHARMA share price is trading down by 6% and its current market price is Rs 124. The BSE HEALTHCARE is down by 0.1%. The top gainers in the BSE HEALTHCARE Index are SUN PHARMA ADV. RES. (up 2.0%) and AJANTA PHARMA (up 1.9%). The top losers are BLISS GVS PHARMA (down 5.6%) and DISHMAN CARBOGEN AMCIS (down 7.8%).

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