Lacklustre day of trade

Indian equity markets had a relatively lacklustre day of trade as trading remained rangebound albeit above the dotted line. While the opening was in the positive, the indices managed to hold on to gains during the morning session before a bout of selling activity pushed them into the red. However, this was short lived as they were pulled back into the positive as buying activity intensified. The indices closed firm in the final trading hour. While the Sensex today closed higher by around 37 points, the NSE-Nifty today closed higher by around 17 points. The BSE Mid Cap and the BSE Small Cap also did well to notch gains of 1% each. Gains were largely seen in metals and healthcare stocks.

As regards global markets, barring China, Asian indices closed in the green today while European indices have opened mixed. The rupee was trading at Rs 56.03 to the dollar at the time of writing.

Auto stocks closed mixed today. While Tata Motors and TVS Motors found favour, Maruti Suzuki and Bajaj Auto closed in the red. As per a leading business daily, Bajaj Auto intends to ramp up production of its Pulsar and Discover bikes over the next quarter. Despatches of the new Pulsar 200NS and Discover 125 ST have just begun and the company expects the momentum to accelerate in the coming months. It must be noted that for FY13, Bajaj Auto has targeted overall production of 5 m units from its three facilities. The Pulsar and Discover range will account for a larger chunk of these numbers. During FY12, the company sold a total of 3.8 m motorcycles. Domestic motorcycles volumes stood at over 2.5 m units. The management expects the domestic market to grow at a pace of 6-7% on an overall basis this year. This 6% to 7% growth in volumes in the domestic market would translate to a total of 2.72 m to 2.75 m units. Therefore, to meet its target the company would have to go all out in selling motorcycles in the export markets this year, which could be a tall order.

Energy stocks closed firm today and the key gainers here were Castrol, Essar Oil and Oil and Natural Gas Corporation (ONGC). India and China have been in news together for row over oil exploration rights in South China Sea. However, thanks to high and volatile crude prices, the dispute is giving way to diplomacy. The two have now decided to join hands in their quest for oil and gas assets. The leading energy sector players in the two countries are planning to jointly bid for and explore oil and gas assets abroad. Essentially, ONGC has signed a memorandum of understanding (MoU) with China's China National Petroleum Corporation (CNPC) to explore business opportunities together.

However, too much of optimism on such development may be misplaced. This is not the first time that the two countries have decided to cooperate. Going by the past, a conflict of political and economic interests have over shadowed the steps taken to ensure energy security. That said, the decision makes sense as it will avoid aggressive bids and raising the value of energy assets abroad. Also, China is better off technologically in oil exploration. This can help India to make further inroads in deep water exploration and widen its geographical footprint.

Indian share markets remain buoyant
01:30 pm

Indian share markets continued to trade above the dotted line in the last two trading hours. Most of the sectoral indices are trading positive with pharma, capital goods and power stocks being the biggest gainers. Only IT, realty and FMCG are trading in the red.

The BSE-Sensex is trading up 22 points and NSE-Nifty is trading up 9 points. BSE Mid cap index and BSE Small Cap index are trading up by 0.6% each. The rupee is trading at 55.9 to the US dollar.

The automobile stocks are currently trading mixed. Maharashtra Scooters and Eicher Motors are the biggest losers whereas Tata Motors and TVS Motors are the biggest gainers. As per a leading financial daily, the steep differential in petrol and diesel prices is leading to a shift in consumer preference for diesel car variants. Car companies that are already offering incentives and discounts on petrol cars are now cutting their production to prevent inventory pile-up. Maruti Suzuki has said that its petrol car sales are expected to fall by 50,000 units in FY13. Earlier for three days in May and June, the company had shut production of key petrol models namely Alto, Estilo and A-Star. Going forward, the company will shut production for a week starting June 24. The stock is down 0.9%.

General Motors has been observing no-production days for petrol-only models such as Spark, U-VA minis, Optra and Aveo sedans to align production to reduced demand. Similarly, Toyota Kirloskar has stopped production of petrol cars Liva, Etios and Corolla Altis from June 16 onwards. The company's inventory of petrol cars had swelled up to over 30 days.

Majority of the Indian pharma stocks are trading positive with Fresnius Kabi and Indoco Remedies being the biggest gainers. A leading business daily has reported that Daiichi Sankyo Venezuela (DSV), a subsidiary of Daiichi Sankyo and a group company of Ranbaxy Laboratories would start marketing the latter's products in Venezuela. As per the company, this is part of the hybrid business model. Ranbaxy has been marketing products in Venezuela through a local distributor all this while. It is believed that DSV has already started promotion of Ranbaxy's products in the country. This is a positive move for the company considering that DSV would be able to have a better reach given its size. It may be noted that Venezuela is the third largest pharmaceutical market in Latin America. While DSV has established presence with some of the parent's key products, it would now also focus on expanding Ranbaxy's portfolio of medicines.

Indian equity markets trade strong
11:30 am

Indian equity markets continue to trade strong over the last two hours of trade. Consumer durables and capital goods stocks witnessed maximum buying interest while IT and realty stocks witnessed maximum selling pressure.

The Sensex today is up by 65 points, while the NSE-Nifty today is up by 23 points. BSE Mid Cap index and the BSE Small Cap index are up by 0.79% and 0.87%. The rupee is trading at 55.85 to the US dollar.

Auto stocks are trading in the green led by Tata Motors and Hero Motocorp. According to a leading financial daily, Maruti Suzuki has sought more land from the state government of Gujarat for phase two of its expansion in the state. The company has already signed an agreement with the Gujarat government for setting up a manufacturing facility at Hansalpur near Mehsana. It has been allotted 700 acres of land for phase one. The company has sought another 300 acres for phase two. The land could be used to house the company's vendors or for the company's own capacity expansion plans. The company said that it would invest Rs 40 bn in the first phase to set up a 250,000 units per annum plant by 2015-16.

Engineering stocks are trading in the green led by Shanthi Gears and Bharat Bijlee. According to a leading financial daily, Bharat Heavy Electricals Limited (BHEL) is going to set up a fabrication unit in Bhandara, Maharashtra. The company plans to set up a fabrication unit at a cost of Rs 10 bn along with a photovoltaic manufacturing plant with an investment of Rs 30 bn. These units will be located near Sakoli in Bhandara district. BHEL is setting up this fabrication unit to deal with logistical problems that it faces while transporting heavy equipment from its fabrication unit in Tiruchirapalli, Tamil Nadu to the rest of the country. The photovoltaic plant will provide direct and indirect employment to around 2000 people.

Indian equity markets open in green
09:30 am

Most of the Asian equity markets have opened the day on a positive note with markets in Indonesia (up 0.7%), Hong Kong(up 0.4%) and Japan (up 0.7%) leading the gains in the region. However, markets in China (down 0.1%) were trading in red. The Indian equity market indices have opened the day on a positive note. Sectoral indices are trading mixed with stocks in the Consumer Durables and Power space leading the gains while stocks in the Software and realty sectors are witnessing selling pressure.

The Sensex today is up by around 29 points (0.2%), while the NSE-Nifty is up by around 7 points (0.1%). Mid cap stocks and Small cap stocks are trading in the green as well with the BSE Mid Cap index and BSE Small Cap index up by around 0.3% each. The rupee is trading at Rs 55.95 to the US dollar.

Mining stocks have opened in the green with Sesa Goa and Ashapura Minechem Ltd leading the gainers. As per a leading financial daily, Coal India Ltd (CIL) has been allocated 116 mines by the Government for expansion to help it increase its production capacity. The company has plans to take production capacity to 556 million tonnes (MT) by 2016-17 and is in the process of earmarking about Rs 300 bn for capacity expansion during the 12th Five-Year Plan (2012-17) period. The company had asked for 138 mines but was told by Coal Ministry to recast its plans. In a separate news, CIL may witness a 7% hike in wage cost this year on account of a hike in dearness allowance. As a result, the salary bill is expected to go up by Rs 17.5 bn. It is to be noted that a hike in dearness allowance burden (from 27% to 50% of basic pay) was prime reason of a 30% price hike in 2011.The stock is trading in the red.

Cement stocks have opened the day on a negative note with Ambuja Cement and Madras Cement leading the losses. As per a leading financial daily, the Competition Commission of India (CCI) is likely to impose a fine of about Rs 30 bn on major cement players for alleged cartelisation and price manipulation. The order is expected to be announced in a few days. A certain top official of CCI has said that the competition watchdog had the power to impose a fine of 10% of the average three year turnover of the company. However, the penalty for cement players is likely to be in the range of 5-8% of the last three year's average turnover. The main reason for the likely lower fine is the overall sluggishness in the economy and cement being an important input in key sectors. Cement players are taking refuge in the fact that cartelisation is always difficult to prove on account of a lack of solid evidence. The allegations of the CCI are mostly based on circumstantial evidence.

Time for govt. to walk the talk

If history is any indication, G20, a group of 20 major economies that account for more than 80% of the global world product (GWP), has consistently failed to live up to its promises. And we as a country seem to be confirming this trend. In a recent address during the Plenary Session of the seventh Summit to G20, the Prime Minister has suggested a reform agenda tackling the issues of subsidies and fiscal deficit.

However, judging by the policy actions or rather the lack of them in the recent past, the scenario back home is starkly different. Forget the over ambitious target of getting back the growth rate of 8-9%. With domestic growth slipping to 9 year lows in the last quarter and the Eurozone crisis gaining new dimensions, we will be lucky to reach even 7% growth this year.

The problem is not ignorance of the issues. What is pulling us down is knowing the right thing to do and choosing not to do it. Take diesel prices for example. The deregulation of diesel prices is long overdue. However, the Government is still choosing to buy time on the pretext of Unique Identification Numbers; the pan India implementation of which will take a long time. Meanwhile no one has a clue as to how the Government will deal with the rising subsidy bill. The weakness in crude oil prices will hardly be of help if rupee keeps falling at the current pace.

The Prime Minister sounds optimistic on reviving the investor's interest in the economy and containing fiscal deficit. How he intends to do that now without letting inflation rear its ugly head is an issue he has chosen to ignore in his recent address to G20. While an overall weakness in the global markets has led to a slowdown in the capital inflows, the Government has only helped the trend by sitting silent on various reforms and policy measures. The claims of the Government that it is focusing on infrastructure investment sound shallow when distorted policies are so obviously crowding out private investments. All we have to say is that we have had enough of speeches. It is time to walk the talk. We need to take control of domestic issues first if we seriously wish to be taken seriously on the global stage.