While the Indian economy is projected to grow by 8.8%-9% this fiscal, inflationary concerns are looming over the growth prospects
New Delhi: Finance minister Pranab Mukherjee today said steps have been taken to tame inflation but the government has no magic lamp to bring it down immediately, reports PTI.
"You cannot expect that there is any magic wand or like Aladdin's magic lamp that you rub it and your problem is solved," Mr Mukherjee told reporters here.
He said the Reserve Bank of India (RBI) has taken steps, including tightening of the monetary policy, to control inflation.
Driven by high prices of fruits, milk, meat and eggs, food inflation crossed 17% for the week ended 22nd January. Headline inflation shot up to 8.43% in December from 7.48% in the previous month.
While the Indian economy is projected to grow by 8.8%-9% this fiscal, inflationary concerns are looming over the growth prospects.
Prime minister Manmohan Singh, too, said today that inflation posed a serious threat to the growth momentum affecting the poor and vulnerable sections and favoured waiving mandi, octroi and local taxes, which impede the smooth movement of essential commodities.
In its third quarterly monetary policy review on 25th January, the RBI had increased both short term lending (repo) and borrowing (reverse repo) rates by 25 basis points to mop up excess liquidity from the system.
Besides, the government also took steps like banning exports of onion and abolished duty on its imports. On an annual basis, onion prices rose by over 130% in the third week of January, although recently they have moderated.
But this may be the last leg of the current phase of decline that started in January
The market opened lower this morning, despite positive cues from the global arena. The market was range-bound in early trade, but witnessed a pull-back in the mid-morning session on selective buying. The indices touched their intra-day highs but soon the momentum wore out, and the key benchmarks slipped into negative terrain. Analysts opine that concerns about the rising inflation spooked investors.
We were hoping to see a slow rally, but apparently the bears are not done yet. After staying strong for an hour or so, foreign investors started selling ferociously again today. Their selling quickly brought the indices to the levels from where the market started rallying yesterday. The indices tried to stage a recovery in the afternoon, but the selling pressure that too on the last trading day of the week was just too strong. The market crumbled below the recent lows made on 1st February (Sensex 17,982 and Nifty of 5,402). Today's lows were 17,927 and 5,369, respectively. The advance-decline ratio on the National Stock Exchange (NSE) was 434:1,230.
With this, a fresh downturn has started, which will possibly take the Sensex to 17,600 and the Nifty to 5270. The market is clearly in a bear territory. However, even a bear market is punctuated by rallies. So, don't get too pessimistic. After the current decline is over, a slow and weak rally will start.
The decline also impacted the market breadth on the key indices; the Sensex closed with 29 losers and one gainer, while of the 50 stocks that are traded on the Nifty, 49 ended in the declining list and one stock closed in the green. The broader indices outperformed the Sensex today. The BSE Mid-cap index tanked 1.37% and the BSE Small-cap index tumbled 1.57%.
The sectoral space reversed the trend seen yesterday as all the gauges ended lower today. The BSE Realty (down 3.37%), BSE Fast Moving Consumer Goods (down 3.08%), BSE TECk (down 2.28%), BSE IT (down 2.26%) and BSE Banking (down 2.23%) were the top losers.
Mahindra & Mahindra (down 5.31%), ITC (down 4.23%), Reliance Infrastructure (down 3.76%) Tata Power (down 3.63%) and Hindalco Industries (down 3.58) were the top Sensex losers. Bajaj Auto (up 1.27%) was the lone gainer on the index.
With the government under attack over various scams, prime minister Manmohan Singh today spoke out against corruption, saying that it strikes at the roots of good governance, dents the country's international image and "demeans us before our own people".
Referring to the Group of Ministers (GoM) headed by finance minister Pranab Mukherjee and set up to look into all measures, legal or administrative, to tackle the menace, he said two bills have already been introduced in Parliament relating to judicial accountability and the protection of whistle-blowers.
In Asia, the Nikkei 225 surged 1.08% and the Jakarta Composite gained 0.44%. Media reports of a possible merger between Nippon Steel and Sumitomo Metal Industries boosted material stocks. Good earnings reports from corporates across the region also supported the gains. Most other markets in the region were closed for the Lunar New Year holiday.
Back home, foreign institutional investors were net buyers of stocks worth Rs538.71 crore on Thursday. On the other hand, domestic institutional investors were net sellers of equities worth Rs45.45 crore.
Heavy industries minister Praful Patel today said BHEL (down 0.25%) is likely to be the next candidate to get the coveted Maharatna tag, a move that will provide more financial flexibility to the state-run power equipment manufacturer.
At present, there are four Maharatnas-ONGC, Indian Oil, SAIL and NTPC. A PSU with Maharatna status can invest up to Rs5,000 crore in a project independently, while the limit for Navratna companies is Rs1,000 crore.
FMCG major Hindustan Unilever (down 1.98%) today said there could be further price hikes in its products as input costs, particularly that of commodities, continue to rise.
"We have taken several price increases recently, but if commodity prices continue the way they have, then I suspect there could be further price increases," HUL chief executive officer and managing director Nitin Paranjpe told reporters on the sidelines of an AIMA event.
State-run iron ore miner NMDC (down 1.38%) is likely to seal deals for two Australian iron ore mines in the first week of March, chairman and managing director Rana Som said today.
"We are targeting six assets, primarily three for iron ore and three for coal in Australia, Mozambique and Albania. We have already located and almost finalised acquisition of two assets," Mr Som said.
Omnitech InfoSolutions total revenue for Q3 FY10-11 is Rs81.27 crore compared to Rs57.78 crore for the corresponding period last year
Omnitech InfoSolutions Ltd, India's business continuity solutions provider, said that its profit after tax for the third quarter ended 31 December 2010 stood at Rs14.45 crore compared to Rs10.20 crore in the corresponding quarter last year.
The company's total revenue for Q3 FY10-11 is Rs81.27 crore compared to Rs57.78 crore for the corresponding period last year. The earnings per share (EPS) works out to Rs10.42 for the third quarter ended December 2010, compared to Rs7.76 for the quarter ended December 2009.
On a consolidated basis, the company has delivered revenues of Rs87.99 crore and profit after tax of Rs15.09 crore.
On Friday, Omnitech ended 2.29% down at Rs159.65 on the Bombay Stock Exchange, while the benchmark Sensex declined 2.39% to 18,008.15 points.