Part of the laboured up-move is the occasional fall, that we witnessed today
The market was down today, taking cues from weak global indices due to the debt crisis in Hungary. The Sensex was down 336 points (1.9%), at 16,781 while the Nifty ended at 5,034, down by 101.5 points (1.9%). The indices started the day with a sharp plunge and traded in a narrow range throughout the session. However, the market recovered on reports of the arrival of the monsoon, but that didn't provide much relief and it finally closed in the red.
Asian stock markets were down on Monday after Wall Street on Friday closed at its lowest level since February 2010, on disappointing non-farms payroll data and Hungary's debt problems. Key benchmark indices in China, South Korea, Singapore, Japan, Indonesia, Hong Kong and Taiwan were down by 1.57% to 3.84%.
US stocks were down to their lowest close since February on Friday on low jobs rate and concern over Hungary's debt crisis. The Dow was down 323 points (3.1%) to 9,932. The S&P 500 was down 38 points (3.4%) to 1,065. The Nasdaq was down 84 points (3.6%) to 2,219. Hungary will stick to 3.8% gross domestic product (GDP) budget deficit target agreed with international lenders for this year and will cut expenditures to achieve it, said its economy minister.
Hungary's government also stressed that the nation is not facing any sovereign credit default. An announcement last week by the government official on the poor fiscal health of Hungary worried investors globally dragging down indices in various markets.
Back home, the monsoon has arrived after being halted by a cyclone, and it has reached Kerala, ahead of schedule. The monsoon is expected to cover more areas of southern Karnataka, a big producer of cane and corn, from Monday.
Montek Singh Ahluwalia, deputy chairman of the Planning Commission said that fuel prices must be increased. Oil minister Murli Deora made a strong pitch for raising fuel prices ahead of Monday's meeting, saying it was needed to cut losses of State-run oil companies. The oil ministry is in favour of a gradual increase in fuel price starting with a quick rise in the petrol price and gradual increase in the diesel price.
Foreign institutional investors were net buyers on Friday of Rs100 crore. Domestic institutional investors were the net sellers of Rs126 crore.
Reliance Communications' (RCom) (up 4.6%) board gave its approval to divest 26% in the company to a strategic or private equity investor and explore merger & acquisition opportunities. Maytas Infra (down 4%) has received a contract worth Rs185 crore to build part of the metro rail network in Gurgaon. Maytas will build an elevated viaduct and six stations within 21 months for ITNL ENSO Rail Systems.
Apollo Tyres (up 0.6%) is reportedly gearing up to supply tyres to German carmaker Volkswagen as it looks to expand its global footprint. Pipavav Shipyard (up 0.4%) has received a Rs2,600-crore contract from the Indian Navy to build offshore patrol vessels. The private shipyard will build five vessels, each with a displacement of about 2,000 tonnes.
Reliance Industries (down 2%) may foray into nuclear energy and has indicated to the government that it is keen on generation and distribution of nuclear power.
Bhushan Steel (down 3.4%) plans to raise about $500 million to finance its greenfield projects, which will be raised in one or more tranches from domestic or international markets and may involve one or more currencies.
Nagarjuna Construction Company (down 3.8%) is planning to foray into the hospitality sector through unit NCC Urban Infrastructure, which plans to invest Rs250 crore-Rs300 crore to add hotels, resorts and serviced apartments to its real-estate offerings.
Ahead of the meeting of a ministerial panel on fuel prices, Planning Commission deputy chairman Montek Singh Ahluwalia today spoke in favour of a hike in petrol and diesel rates
An empowered group of ministers (EGoM) today failed to arrive at a decision on freeing auto fuel prices from government control, but discussed the possible inflationary impact such a move would have, reports PTI.
Freeing petrol and diesel prices would have meant an up to Rs3.50 a litre hike in rates.
The oil ministry made a presentation to the EGoM, headed by finance minister Pranab Mukherjee, on the recommendations of the Kirit Parikh Committee that suggested freeing fuel prices from government control.
Oil companies have been selling fuel at less than the imported price and as a result suffer huge losses.
It was noted at the meeting that under-recoveries of oil marketing companies on account of current price structure and burden faced the government by way of compensating the companies during the period 2003-04 to 2009-10 was in excess of Rs3.45 lakh crore.
The possible inflationary impact of rise in the prices of petroleum products was also discussed.
Diesel, which is currently sold at a discount of Rs3.49 a litre, is the nation's most consumed fuel that is used in transport sector and hence has inflationary impact.
Overall inflation is currently close to 10% and is mainly driven by high food prices. A rise in fuel prices could fuel it further.
The eGoM came to the conclusion that further discussion would be necessary before views are firmed up.
A further meeting will be scheduled shortly, but no dates were given for the next meeting.
Ahead of the meeting of a ministerial panel on fuel prices, Planning Commission deputy chairman Montek Singh Ahluwalia today spoke in favour of a hike in petrol and diesel rates.
"For six months, I have been saying we should...I haven't changed my mind," Mr Ahluwalia replied, when asked whether this is the right time to increase fuel prices.
Mr Ahluwalia had told PTI in an interview, "India's international economic reputation requires us to say that fuel prices are going to be linked to global prices. I think that linkage (of fuel prices with global prices) is unavoidable."
However, he favoured providing subsidised kerosene to the poor-stressing on the need for exploring the possibility of giving direct subsidy.
State-owned Indian Oil Corporation, Hindustan Petroleum and Bharat Petroleum currently lose Rs203 crore per day on selling fuel below the imported cost.
They currently sell petrol at a loss of Rs3.35 a litre, while that for diesel is Rs3.49, Rs18.82 for public distribution scheme (PDS) kerosene and Rs261.90 for every 14.2-kg liquefied petroleum gas (LPG) cylinder.
The Rs15,000-crore fund infusion for tier I capital instruments of PSBs would enable them to expand their credit growth by about Rs1,85,000 crore
As many as seven public sector banks (PSBs) may get additional capital from the government shortly, financial services secretary R Gopalan said in New Delhi today, reports PTI.
The banking division has sought the approval of finance minister Pranab Mukherjee in this regard, Gopalan said, adding, "We are seeking the finance minister's approval...
Five-seven banks are to be recapitalised shortly".
The government plans to provide financial support of Rs15,000 crore to public sector banks during the current fiscal. The Cabinet has already approved a capital infusion plan that will increase the lending capacity of state-run banks by Rs1.85 lakh crore.
The exact amount, the mode of capitalisation and other terms would be decided in consultation with the banks at the time of infusion.
The Rs15,000-crore fund infusion for tier I capital instruments of PSBs would enable them to expand their credit growth by about Rs1,85,000 crore. This additional credit availability is likely to benefit employment-oriented sectors, especially agriculture, micro and small enterprises and entrepreneurs.
Last week, the government infused Rs1,500 crore into four public sector banks-Vijaya Bank, United Bank of India, Uco Bank and Central Bank of India-as part of their recapitalisation package. Of the total, Vijaya Bank got Rs700 crore, Uco Bank got Rs300 crore, Central Bank of India and United Bank of India received Rs250 crore each, sources said.
The letter to this effect was issued by the government on 2nd June.
These banks have been instructed to issue perpetual non-cumulative preference shares (PNCPS) in favour of the president, the recently listed United Bank of India had said in a statement. Accordingly, the bank has issued 25,000 PNCPS of Rs1 lakh each on June 4 in the name of the president, it had added.
The fund infusion will enable these banks to maintain comfortable level of capital to risk-weighted asset ratio for supporting credit requirement of the productive sectors.