Negative close for Indian indices

Indian equity markets had a choppy trading session today. After opening in the red, the markets recovered for a bit during the pre-noon session. However, the recovery was short lived and the indices nose dived into the negative zone again. While the Sensex today closed lower by 111 points, the NSE-Nifty closed lower by 36 points. The BSE Mid Cap and the BSE Small Cap, were not spared either as both closed lower by 1.4% and 1.9% respectively. Losses were largely seen in capital goods and energy stocks.

As regards global markets, with the exception of Singapore and Korea, most Asian indices closed firm today. European indices have opened on a glum note. The rupee was trading at Rs 53.93 to the dollar at the time of writing.

Energy stocks closed the day on a mixed note with Essar Oil and Jindal Drilling closing in the red while Petronet LNG and Gas Authority of India Ltd (GAIL) closed the day in the green. State run Indian Oil Corporation (IOC) has declared that it would invest between Rs 100 bn to Rs 110 bn in the financial year 2014 (FY14). This would be spent towards expanding the company's network. The management has further stated that it would invest Rs 560 bn over the next 5 years. These investments would be made in lines with the 12th 5-year plan. In addition to this amount, it also plans to invest between Rs 35 bn to Rs 40 bn on non plan areas. This would include changing pumps.

Banking stocks have closed the day in the red with Vijaya Bank and Syndicate bank leading the losses. The country's largest bank, State Bank of India (SBI) has declared its third quarter results for the financial year 2012-2013 (3QFY13). The bank saw its interest income grow by 9.5% YoY. This was driven by a 16% YoY growth in advances. This was lower than the 3.8% seen during the same period last year. The net interest income declined by 3.2% YoY during the quarter. The fall in net interest income was offset by the increase in other income during the quarter. As a result, net profits increased by 4.1% YoY. The net interest margin (NIM) stood at 3.4% in 9MFY13. The NPA increased to 2.59% in 9MFY13 from 2.22% in 9MFY12. Capital adequacy ratio for the bank stood at 12.21% at the end of December 2012 as per Basel II.

Indian share markets slide again
01:30 pm

After a brief recovery, Indian share markets slipped below the dotted line again in the post noon trading session. Majority of the sectoral indices are trading negative with auto, capital goods and consumer durable stocks being the biggest losers. IT, metal and FMCG are the only stocks trading positive.

Sensex today is down 37 points while the NSE-Nifty is trading down by 17 points. The mid and small cap stocks are not faring too well either and the BSE Mid Cap is down 1.1% while BSE Small Cap index is down by 1.4%. The rupee is trading at 53.8 to the US dollar.

Majority of the fertilizer stocks are trading in red with Nagarjuna Fertilizers and Southern Petro being the biggest losers. Tata Chemicals, having a presence in chemicals, fertilizers and food additives, has announced merger of its wholly-owned subsidiary Homefield International Pvt Ltd (HIPL) with itself. HIPL was incorporated in 2005 in Mauritius and is the holding company for investments. The amalgamation has been approved by the board meeting and the appointed date of the amalgamation scheme is April 1, 2013. The amalgamation scheme would be subject to regulatory approvals in both India and Mauritius. The stock of Tata Chemicals is currently down 1.3%.

Majority of the Pharma stocks are trading in red with Dishman Pharma and Orchid Chemicals being among the top losers. Biocon Ltd has announced partnership deal with Mylan through a strategic collaboration. As per the deal, both the companies have entered into agreement for the global commercialization of three insulin analog products. Reportedly these drugs are difficult to manufacture and would address the diabetes market. As per the deal, Mylan will have the rights to develop and market Biocon's Glargine (the generic version of Sanofi's Lantus), Lispro (the generic version of Eli Lilly's Humalog) and Aspart (the generic version of Novo Nordisk's NovoLog). Mylan and Biocon will share development, capital and certain other costs related to the products. Mylan will have the exclusive commercialization rights in developed countries of USA, Canada, Australia, New Zealand, and various European countries. Mylan will share the profits from these geographies with Biocon. For the other markets Mylan will have co-exclusive commercialization rights with Biocon. Both the companies have also entered into similar type of agreement for complex Biosimilars. In past also, both the companies have entered into various partnerships. Biocon is trading up by 0.5%.

Indian equity markets come back in green
11:30 am

Indian equity markets have made a comeback in green during the previous two hours of trade. The most noticeable upward movements have been witnessed in the metal and IT sectors while auto and consumer durables have faced the maximum selling pressure.

The BSE Sensex is up by 22 points and NSE-Nifty is up by 2 points. BSE Mid Cap index and BSE Small Cap index are trading lower by 0.67% and 0.90% respectively. The rupee is trading at 53.93 to the US dollar.

Energy stocks are trading on a mixed note with Gujrat State Petronet and Oil and Natural Gas Corporation (ONGC) leading the gains while Bharat Petroleum Corporation Limited (BPCL) and Jindal Drill are leading the losses. Indian Oil Company (IOC) has announced its results for the quarter ended December 2012. The company has reported a 12% YoY growth in net sales and a 33.9% YoY growth in net profit. The growth in net profit was thanks to compensation of Rs 134,750 m received from the government and Rs 81,420 m received from upstream companies to make good the under-recoveries on selling fuels below cost. However, for the nine-month period the company recorded a loss of Rs 95,080 m for the current financial year compared to a loss of Rs 87,160 m for the same period last year because of under-recoveries. The company has requested the Government to compensate for the unmet under-recovery of Rs 132,270 m for the last nine months period, so that IOC can post profits for full year FY13. IOC's share is trading up by 1%.

IT stocks are trading on a mixed note with HCL Infosystems and TCS leading the gains while CMC and Wipro are leading the losses. India's third largest software provider, Wipro's shares will be removed from NSE- Nifty index. Wipro will be replaced by state owned minerals company, NMDC. The change will come in to force from April1, 2013. Wipro's shares have thus faced selling pressures and are likely to continue to face selling pressures in the near term due to portfolio realignment of index-based funds. NSE has stated that the demerger of non IT businesses from IT businesses is the reason for Wipro's exclusion from the Nifty index. The demerger process has been approved by the shareholders of Wipro on 28th December, 2012 and is expected to be completed within the next 4-5 months.

Indian share markets open weak
09:30 am

Barring Singapore (down 0.2%), most major Asian stock markets have opened the day on a firm note with stock markets in Hong Kong (up 0.9%), Japan (up 0.6%) and China (up 0.6%) leading the gains. The Indian share market indices have opened the day on a weak note. Stocks in the auto and healthcare space are leading the losses. However, information technology and oil & gas stocks are trading firm.

The Sensex today is marginally down by around 19 points (0.1%), while the NSE-Nifty is down by around 6 points (0.1%). Mid and small cap stocks are also trading in the red with the BSE-Midcap and BSE-Smallcap indices down by around 0.3% and 0.2% respectively. The rupee is trading at Rs 53.92 to the US dollar.

Steel stocks have opened the day on a weak note with Bhushan Steel and JSW Ispat leading the losses. Leading Indian steel manufacturer Tata Steel has announced its financial results for the quarter ended December 2012 (3QFY13). On a consolidated basis, the company's net total income from operations stood at Rs 321.1 bn, lower by 3% on a year-on-year (YoY) basis. At the bottomline level, the company reported net losses of Rs 7.6 bn, against losses of Rs 6 bn in the corresponding quarter of the previous financial year. The company's poor performance was attributable to weak European operations. On a standalone basis, Tata Steel reported a topline of Rs 93.7 bn during the quarter, a rise of 11.8% YoY from Rs 83.8 bn in 3QFY12. The Indian operations reported net profits of Rs 10.5 bn, lower by 26.4% YoY. The company is now focusing on building a 3 million-tonne plant at Kalinganagar, Odisha, and also on expanding its Jamshedpur unit.

Mining stocks have opened the day on mixed note with National Mineral Development Corporation (NMDC) and Coal India Ltd (CIL) leading the gains. However, Ashapura Minechem Ltd and MMTC Ltd are facing selling pressure. Leading mining giant CIL has announced its financial results for the quarter ended December 2012 (3QFY13). Consolidated net sales during the quarter stood at Rs 173.3 bn, higher by 12.9% YoY from Rs 153.5 bn in 3QFY12. The growth in sales was led by 9.1% YoY increase in coal offtake which stood at 120 million tonnes during the latest quarter. Operating profits declined by 5.8% YoY on account of increases across most major cost heads. Operating profit margins declined from 29.7% in 3QFy12 to 24.8% in 3QFY13. However, higher other income, lower depreciation charges and interest expenses caused the bottomline by 8.9% YoY to Rs 44 bn. Net profit margins stood at 25.4% against 26.3% in 3QFY12. The PSU mining firm has set a coal output target of 464 million tonnes for the financial year 2013-14 (FY14).

More growth or more development?

GDP growth in India has been on a downward spiral. It is now projected to reach a ten-year low of 5% by the end of the 2012-13 fiscal. Gone are the heady days of 8-9% GDP growth. But, is it growth that we should be chasing, or rather development?

It is widely known that India's GDP growth figures are highly imperfect. The index of industrial production (IIP) data is also volatile and unreliable. Industrial growth figures have had to be drastically revised when the annual survey of industries is available with a time lag. In December, India's industrial production unexpectedly shrank by 0.6% for a second straight month, after shrinking 0.8% in November. This data was weighed down by weak investment and consumption demand. This cast doubt over whether India is showing signs of recovery. The monetary policy cut should help somewhat in this matter. Nonetheless, export growth, which accounts for a quarter of GDP, is in the negative this year, from 21% previously. Agricultural output, which accounts for 20% of GDP, is also down by half, also affecting growth rates. This is according to data from an article in the Business Standard (BS).

But, rather than obsessing over changes in the GDP growth number, shouldn't policy makers also look at human development indicators. These points help determine overall well-being in the country. Aren't indicators such as status of women, adult literacy, quality of governance, public expenditure on healthcare, poverty, sustainability, etc important? Shouldn't these deserve a mention? Spending on healthcare, infrastructure and education can be announced in budget after budget. However, if the implementation is poor and there are leakages in the system then the result will always be below par. As per the United Nations, Human Development Index - 2011 (the new one will get published in March 2013), India ranks a low 134 out of 187 countries. While income growth is important, it shouldn't come at the cost of the citizens in the country. Rather than just growth targets, we believe that policy makers must focus on these indicators as well, in order to achieve more balanced and sustainable growth in the country.