Strong buying during the last hour led the markets to close the day on a strong note. The BSE-Sensex closed the day with gains of about 220 points. The NSE-Nifty ended higher by 60 points. Stocks from the consumer durables, and pharmaceuticals sectors were amongst the top gainers while those from the metal and capital goods spaces were the key under performers. As for midcaps and smallcaps, they both ended the day on a flat note.
As regards global markets, Asian indices ended on a firm note. European indices opened on a weak note. The rupee was trading at Rs 66.33 to the dollar at the time of writing.
Stock of power companies ended the day on a weak note with National Hydroelectric Power Corp. (NHPC Ltd), Tata Power and Adani Power leading the losses. A leading business daily recently reported that Tata Power is facing a crisis on the back of the company have foreign loans to the tune of US$ 1.4 bn. These loans were taken on at a time when the exchange rate was closer to the Rs 45 levels. Until last year, the company had hedged its position at Rs 55-56 levels. However, it does seem that the company now has to go in for longer hedges given the weakening rupee against the dollar. It is believed that if the company goes ahead and hedges all of its exposure it would add substantially to the cost. This would eventually have to be passed on to the buyers i.e. electricity boards. But with higher tariffs, the demand for higher power would be lower given that the SEBs have themselves been hiking prices due to their own financial woes.
As per a leading business daily, India's fiscal deficit has crossed about 63% of the full year estimate. That too just in the first four months of the current fiscal year! As per the data released by the Controller General Accounts (CGA), the deficit stood at Rs 3.4 trillion. During the budget earlier this year, the finance minster had estimated the deficit to stand at Rs 5.4 trillion. The figure stood at 51.5% during the same period last year. What makes matters worse is that as per the budget estimates, the country's nominal growth rate (not adjusted for inflation) was expected to remain at 13.5%. However, the with real GDP numbers coming in lower than expected, the growth is likely to come in lower. As such, a key concern remains that of the deficit figure coming in way higher than what was anticipated at the start of the year. With the government going ahead with the food security bill, it it bound to make matters worse.