Final hour surge

Buying interest in auto, IT, banking and engineering heavyweights helped the indices in Indian equity markets recover from the red and post strong gains in the final hour of the trading session today. All sectoral indices barring the FMCG index ended higher. While the BSE Sensex closed higher by 188 points (up 1%), the NSE-Nifty closed higher by 64 points. While the BSE Mid Cap index gained 0.5%, the BSE Small Cap index ended flat.

As regards global markets, Asian indices closed higher today while European indices have opened in the green. The rupee was trading at Rs 54.53 to the dollar at the time of writing.

Auto stocks have closed the day on a mixed note. On one hand the stocks of Maharashtra Scooters, TVS Motors and Eicher Motors saw gains. On the other hand the stocks of Hero Motocorp and Mahindra & Mahindra were victims of selling pressure. As per the Economic Times, Bajaj Auto has lost its position in the two wheeler industry. Their position as second largest manufacturer in the two wheeler segment has been taken over by Honda Motorcycle& Scooters India (HMSI). As per the latest sales numbers reported by SIAM, HMSI sold a total of 2,606,841twho wheelers in the financial year 2012-2013 (FY13). During the same period Bajaj Auto sold 2,463,863 units. The market leader in the segment is still Hero Motocorp with a sales figure of 5,912,538 units during the year. HMSI has undertaken an aggressive strategy to increase its market share in India. It plans to increase market share through new product launches as well as through aggressive pricing in the coming years.

As per a business daily, eClerx has received the board approval for buyback of equity shares from minority shareholders. The amendment of article enables the company to buy-back of as much as 10% of shares of the total paid-up equity capital and free reserves. The company has recent good revenue growth in recent quarters with much of the growth coming from volumes while pricing remained stable. The management also reiterated that the pricing situation would remain stable, while revenue visibility would decline as the company is engaging itself in more short term projects as compared to long term ones. The stock gained 5% in today's trade.

Indian share markets slip
01:30 pm

Indian share markets pared initial gains and slipped below the dotted line in the post-noon trading session. Majority of the sectoral indices are trading negative with FMCG , metal and realty stocks being the major losers. Only IT and banking stocks are trading in the green.

BSE-Sensex is down 6 points and NSE-Nifty is trading down 12 points. While BSE Mid Cap is down 0.5%, BSE Small Cap index is trading down by 0.3%. The rupee is trading at 54.5 to the US dollar.

FMCG stocks are trading mixed with Godrej Consumer and Jyothy Consumer being among the biggest gainers. However, Marico and Hindustan Unilever (HUL) are among the leading losers. As per a leading financial daily, FMCG companies are resorting to price cuts, discounts and promotions to pull out of demand slowdown as consumers cut back on their disposable spends. Companies like Hindustan Unilever , ITC, Procter & Gamble, Cadbury and Heinz have announced discounts ranging between 10%-70% on premium products in the past two weeks. HUL has reduced the price of its premium soaps Dove and Pears by Rs 5. US food-major Heinz is offering Rs 20 off on Complan milk drink. Cadbury has slashed Rs 100 on 200-gm bars of its chocolate brand Toblerone whereas Heinz has reduced the price of its Complan milk drink by Rs 20. Even popular brands such as Godrej Consumer Products' Godrej No.1 and HUL's Lux have been discounted by 5%-10%. After raising prices in the past year to maintain sales momentum, slowdown in offtake is compelling companies to go in the reverse gear.

Most of the Indian pharma stocks are trading mixed with Lupin Ltd and Elder Pharma being the leading gainers, while Ipca Laboratories and Torrent Pharma are the top losers. Dr Reddy's has announced that the company plans to relocate its North American headquarters and establish R&D centre in Princeton, New Jersey. Dr Reddy's has entered into lease contract with the National business parks on the said locations. The new setup will employ 300 plus people, as the company expects growth in its US business for the upcoming period. The R&D facility will also employ approx. 35 scientists, chemists and support personal. Both the ventures are expected to be completed in 2013. Reportedly, as per GV Prasad - chairman and CEO of the company, the relocation will help the company tap the local talent which will help in growth of the US business. Apart from this, the establishment of the R&D centre along with other centres establishes the company's presence within some leading R&D centres globally. The stock of Dr Reddy was trading up by 0.2%.

Indian Equity markets remain firm
11:30 am

Indian equity markets have remained firm in the previous two hours of trade. Maximum buying interest have been witnessed in the IT and capital goods sectors while consumer durables and FMCG have faced the maximum selling pressures.

The BSE-Sensex is up by 40 points and NSE-Nifty is up by 7 points. BSE Mid Cap index is trading down by 0.28% while BSE Small Cap index is trading down by 0.29%. The rupee is trading at 54.54 to the US dollar.

Engineering shares are trading on a mixed note with Voltamp Transformers and Welspun Corp leading the gains while BGR Energy and Manugraph India are facing the maximum selling pressures. According to a financial news medium, Siemens has signed a contract worth Rs 1 bn with Bangladesh Steels Re-Rolling Mills (BSRM), the largest steel manufacturing company in Bangladesh. Siemens will build a Gas Insulated Switchgear (GIS) substation and will implement the project on a turnkey basis. Apart from the GIS, Siemens will also provide high-performance, reliable, cost-competitive and energy-efficient technologies such as control relay panels and a substation automation system. The project is expected to be commissioned in 15 months. This is the first private sector funded GIS substation project in Bangladesh and BSRM has plans of using the GIS substation to provide power to its new 1MTPA steel plant. Siemen's share is trading up by 0.14%

Steel shares are also trading on a mixed note with Tayo Rolls and JSW Steel leading the gains while Jindal Steel and Maharashtra Seamless are facing the maximum selling pressures. According to a financial news medium, Tata Steel seems to be firing on all cylinders. It has registered its best ever performance in FY13 in Hot Metal, Crude Steel, Saleable Steel production and total sales. The Company's sales of Flat product in FY13 have increased by 20.2% to 4.5 million tonnes as compared to 3.7 million tonnes in FY12 while the Company's Flat Products division has achieved its highest ever annual high end product sales of 190 kt to Auto customers as compared to 155 kt in FY12. Further, the Company's Long Products division has also achieved its highest ever sales of 3 million tonnes as compared to 2.9 million tonnes in FY12 while at the same time recording its highest ever annual retail sales of 1.2 mt as against 1.1 mt in FY12. The Company's Ore Mines & Quarries (OMQ) division has also achieved its highest ever iron ore dispatch of 15.0 million tonnes as compared to 13.2 million tonnes in FY12. Tata Steel's share is trading up by 0.33%.

Indian share markets open firm
09:30 am

Asian stock markets have opened the day on a mixed note with stock markets in Singapore (down 0.4%) and China (down 0.3%) leading the losses in the region. However, markets in South Korea (0.8%) and Japan (up 0.6%) are trading firm. The Indian share markets indices have opened the day on a firm note. Stocks in the information technology and realty space are leading the pack of gainers. However, auto stocks are trading weak.

The Sensex today is up by around 52 points (0.3%), while the NSE-Nifty is up by around 11 points (0.2%). Mid and small cap stocks are also trading in the green with the BSE Mid Cap and BSE Small Cap indices up by around 0.1% and 0.3% respectively. The rupee is trading at Rs 54.6 to the US dollar.

Engineering stocks have opened the day on a mixed note with Crompton Greaves and KSB Pumps leading the losses. However, Ingersoll Rand and Opto Circuits are trading in the green. In a bid to de-risk its business model, state-run power equipment manufacturer Bharat Heavy Electricals Ltd (BHEL) is planning to diversify into new areas. The company's Rs 150 bn Tiruchirappalli (Tiruchy) Complex currently manufactures boilers for the power sector. It is now gearing to enter sectors such as defence, oil, gas and others. It has been decided by the complex to ear mark 20-25% of its capacity for the new business. As a start, the complex received some trial orders from Defence Research and Development Organisation (DRDO) in Avadi, near Chennai to supply 50 thermal pressure components for the battle tanks produced by DRDO for Defence. It is said that DRDO requires 250-300 such components every year. The estimated value of this is said to be about Rs 1 bn. Other than defence, the company is also exploring options to supply various components in the oil, gas and refineries space. It must be noted that in 2012-13, the complex spent around Rs 4,150 m on R&D and generated revenues of about Rs 32 bn.

Oil & gas stocks have opened the day on a mixed note with Gujarat Gas and Oil & Natural Gas Corporation (ONGC) leading the losses. However, Essar Oil and Indraprastha Gas are trading firm. As per a leading financial daily, Mukesh Ambani-led Reliance Industries Ltd (RIL) has discovered a new gas reservoir in the Krishna Godavari- D6 basin. Last year, the company had taken permission from the government to drill and explore further in the block, where its D1 and D3 fields are producing natural gas. It must be recalled that the block's output had started impressively. However, it had dropped rapidly after June 2010. It was said that the deep-sea reservoir turned out to be geologically more complex than expected. Though the details of the potential output are not known yet, the new discovery is said to be significant and might help revive the gas output from the region. Besides RIL, Cairn India has also announced the 26th oil discovery in its Rajasthan block. These ongoing new discoveries present fresh hope for India's energy sector.

It is time to gear up for economic reforms

1991. The year when a wave of liberalization hit the Indian economy and old economic policies made way for the new. It was not an easy transition. But it was required nonetheless on account of severe economic crisis that hit the economy. On hindsight, the change was for the better and it did pay us as seen from the period of growth in the following years.

Around two decades have passed since then. We have another crisis staring us in our faces. And it is time to learn another lesson and take further strict measures. The Indian economy has hit a rough patch with GDP growth touching new lows and inflation at all time highs. To make things worse, the country is stuck with the problem of twin deficit - fiscal deficit and current account deficit (CAD). With limited resources, hampered productivity and policy bottlenecks, the future prospects look quite grim.

All this has not happened in a day. The Government has been well aware of the long term consequences of absence of proper planning, lack of right policy framework and fiscal profligacy. However, it has been shying away from biting the reform bullet to protect political interests. It is only over the period of last six months that some action on long pending issues such as fuel pricing has been taken to avoid ratings downgrade. However, these are not enough to bring the economy out of the woods.

For the economy to grow without inflation rearing its ugly head, we need to bring in reforms so that the investment in the country gets a boost and we have enough production capacity to meet growing consumption. Unfortunately, what has been happening so far is quite the contrary. The Government has been focusing more on welfare programmes, even at the cost of investment leading to an economic imbalance. Now that the first few steps on the reform front have been taken, we believe the Government should focus on effective implementation of the same. Otherwise, the country has very little hope.