Most Asian equity markets have opened the day on a firm note with stock markets in Hong Kong (up 1.3%) and Taiwan (up 1.1%) leading the gains in the region. The Indian equity market indices have also opened the day on a positive note. Stocks in the realty and banking space are leading the pack of gainers.
The Sensex today is up by around 111 points (0.7%), while the NSE-Nifty is up by around 33 points (0.7%). Mid and small cap stocks are also trading in the green with the BSE Mid Cap and BSE Small Cap indices up by around 0.6% and 0.4% respectively. The rupee is trading at Rs 55.67 to the US dollar.
Telecom stocks have opened the day on a firm note with Reliance Communications and Tata Communications trading firm. As per a leading financial daily, telecom major Bharti Airtel has been asked to pay over Rs 7 bn for customs duty evasion under a Customs, Excise and Service Tax Appellate Tribunal (CESTAT) order. The order was issued last week by it Bangalore bench. The allegations include undervaluation of imported goods and non-inclusion of the value of software in the imported goods. The total amount payable by Bharti includes differential duty liability of Rs 2,155.1 m, besides a similar sum of penalty and a redemption fine of Rs 1,890 m for confiscated goods. Further, an interest on the duty liability has also been charged on a per year basis. As per a Government official, if Bharti wants to challenge the charges, it will have to go to the Supreme Court. The stock of Bharti Airtel is trading in the red.
Finance stocks have opened the day on a mixed note with Reliance Capital and Infrastructure Development Finance Company (IDFC). However, Bajaj Finance and LIC Housing Finance are trading in the red. On Thursday, foreign brokerage firm downgraded the stock of India's largest mortgage finance company Housing Development Finance Corporation (HDFC). The reason stated for the downgrade was that the housing lender seemed to have inflated earnings by adopting aggressive accounting practices. As per the brokerage, the earnings for financial year 2010-11 (FY11) and 2011-12 (FY12) were overstated by 38% and 24%, respectively. And as such, the reported return on equity (ROE) for FY11 and FY12 would have been lower by 6% and 4% at 16% and 18%, respectively. However, HDFC has completely rejected the claims made by the brokerage firm. As per HDFC's Vice-Chairman and CEO, the company had been complying with Indian accounting standards and the point raised in the report regarding the reporting of zero coupon bonds has been clarified earlier on several occasions to investors.