Trend is still up

High food inflation data and weak Asian markets weighed on Indian bourses

Indian markets slumped during the day on the back of weak Asian bourses and profit-booking, and on concerns that rising food inflation may force the Indian central bank to push up rates. The Sensex declined 101 points from the previous day’s close, finally ending the day at 16,328, while the Nifty closed at 4,888, down 26 points. However, the market is expected to remain volatile in the near term as traders roll over positions from February 2010 derivatives contracts to March 2010 contracts ahead of the expiry of the near-month February 2010 contracts on Thursday, 25 February 2010. Tomorrow, we expect the markets to remain in positive territory.

At 12:00 hrs IST, the Sensex was trading at 16,392, down 37 points from the previous day’s close. At 14:00 hrs IST, the index was trading 139 points down from the previous day’s close.

At the end of the day, Kisan Mouldings zoomed 6% after the company acquired a new manufacturing unit at Jaipur.

Bharat PetroResources (BPRL), a wholly-owned subsidiary of Bharat Petroleum Corporation, said that Anadarko Petroleum Corporation, US, the operator of the exploration block in Rovuma Basin, Area 1, offshore Mozambique, has announced that the exploration well, Windjammer, which is currently being drilled in the acreage, has reached an intermediate casing point and encountered more than 145 net metres of natural gas pay in multiple high-quality reservoir sands with a gross column of more than 365 meters. BPCL shot up 5%.

During the day, fertiliser stocks witnessed buying interest after the government approved 10% hike in urea prices. The Cabinet also approved the decontrol of fertiliser prices and said that the fertiliser subsidy would go directly to farmers. Chambal Fertilisers was up 3%, Coromandel Industries was up 4% and Zuari Industries was up 5%.

Reliance Industries Limited (RIL) fell 3% following yesterday’s reports that the government has demanded another $2.7 million from RIL towards royalty and profit petroleum payments on gas produced from the Krishna-Godavari basin.

Axis Bank surged 3% on reports the bank has sought the government’s permission to set up a subsidiary in the UK.

Jet Airways India rose 1% on reports that the company plans to sell land in Bandra Kurla Complex, Mumbai, to Godrej Properties.

Dishman Pharmaceuticals & Chemicals gained 1%, after the company formed a strategic partnership with California-based biotech firm, Codexis Inc.

Suzlon Energy has won an order from L&T Infrastructure Development Projects Ltd, to set up, operate and maintain an 8.7MW wind energy project. However, the stock was down 3%.

During trading hours, government data showed that the food price index rose 17.97% for the year through 6 February 2010. The fuel price index rose 9.89% while the primary articles price index rose 16.23% for the year through 6 February 2010. The surge in food inflation for the fourth straight week in early February 2010, heightened worries of headline inflation going past official forecasts and increasing the chance of the Reserve Bank of India (RBI) pushing up rates.

During the day, Asia’s key benchmark indices in Indonesia, Hong Kong, Singapore and South Korea were down between 0.3%-1.24%, while Japan’s index rose 0.28%. As per media reports, the Bank of Japan kept its key interest rate on hold at 0.1% and didn’t issue any new policy initiatives, though it repeated its pledge to do all it can to pull Japan out of deflation.

On Wednesday, 17 February 2010, the Dow Jones Industrial Average was up 41 points while the S&P 500 and the Nasdaq Composite were up 5 points and 12 points respectively. As per reports, the Federal Reserve raised its 2010 US GDP forecast to 3.2% from 3%.

In premarket trading, the Dow was trading 2 points lower.


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No problems with Corolla in India, says Toyota official

Toyota is again facing the heat from US regulators. This time, the Japanese carmaker is facing complaints over steering problems with its popular Corolla model. However, an official from the company has said that there are no issues with Toyota’s Indian cars

Japanese carmaker Toyota Motor Corp is facing the heat over vehicle recalls. Reports indicate that there are problems with the steering mechanism in its Corolla models sold in the US. However, an official from the company’s Indian arm has said that its Corollas sold in India do not face these problems.

“As of yet, no decision has been made on the recall of the Corolla in the US. In case of India, ours is an Asian model, (made by a) different supplier altogether, therefore (there is) no impact on us at all,” said Sandeep Singh, deputy managing director, Toyota Kirloskar Motors India.

Meanwhile, according to media reports, the National Highway Traffic Safety Administration (NHTSA) of the US is likely to open an investigation into a possible flaw in the steering systems for the 2009-2010 Corolla, that may lead to another massive recall for Toyota. A recall of these Corollas could affect 500,000 cars in the US. Last year, Toyota sold about 1.3 million Corollas across the globe, and nearly 300,000 were sold in the US alone.

Earlier, US drivers had complained that the brakes in the Toyota Prius would fail to work at slow speeds. On slick, bumpy or icy surfaces, the vehicle would accelerate. Toyota in turn blamed the glitch on the software within the anti-lock braking system. On the issue of the problem facing the Prius in the US, Mr Singh had earlier told Moneylife that the company would not change its plans to launch the hybrid in India, saying that the error in the brakes occurred only in a certain batch which had been sold in the US.

In the US, the recent developments related with the Corolla have raised fresh concerns for the Japanese carmaker ahead of next week's Congressional hearing about the recalls. Doubts have been raised whether Toyota was quick enough in recalling millions of cars over problems involving accelerator pedals and braking systems.

Toyota has said that it would set aside $2 billion for the cost of the recall of about 8 million vehicles with accelerator problems. It later recalled some vehicles from the 2010 lot of the Prius. According to US media reports, some class-action suits have been filed in the US that could cost the company some $3.20 billion, and this number could rise.

“By the time Toyota is finished with its troubles, the cost in lost sales and legal settlements could reach $10 billion,” said an analyst Douglas McIntyre, writing at a website called




7 years ago

How much money should you have to pay if you intentionally kill someone or produce a defective car tat you know is dangerous and cover it up? I think people should go to prison and the company go bankrupt.

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