Sensex sheds 119 points, ends at 16,601

Higher advance tax figures from India Inc—suggesting greater profit growth and improving economic prospects—fail to uplift Indian markets

The Sensex declined 119 points from Friday’s (18 December 2009) close, ending the day at 16,601, while the Nifty declined 35 points to 4,953, despite reports of higher advance tax figures from India Inc for the third quarter.

Among index heavyweights, Reliance Industries Ltd (RIL) rose 1%. As per reports, stock market regulator Securities and Exchange Board of India (SEBI) has asked the government to consider appropriate action against RIL for allegedly routing funds to dummy companies for buying large quantity of its shares in 2000.

Ranbaxy Laboratories remained flat even after the company said it will launch hypertension drug Olmesartan Medoxomil developed by the company’s parent, Daiichi Sankyo, in six African countries.

Nava Bharat (Singapore), a subsidiary of Nava Bharat Ventures, has acquired 65% equity stake in Zambia-based Maamba Collieries Ltd (MCL). The stock shot up 6%.

Prime Focus rose 3% as it earned $18 million for providing visual effects in a recently released film, ‘Avatar’.

Zee Entertainment Enterprises (ZEEL) will consider a proposal for restructuring of the businesses of ETC Networks Ltd, a subsidiary of the company. At the end of the day, ETC Networks was up 5% while ZEEL rose 4%.

MRF declined 7%. The company reported 68% growth in operating profits for the financial year 2008-2009 over the corresponding period last year. However, sales rose only 12% during the same period.

As per reports, Indian firms paid 24% more in advance tax for the October-December 2009 period year-on-year, suggesting higher profit growth as economic recovery picked up pace. The advance tax paid by the top 100 firms was up more than 30% in the December 2009 quarter. The country’s corporate advance tax had fallen by 3.7% in the June 2009 quarter, but grew by 14.7% in the September 2009 quarter due to a strong recovery in banking, auto, and consumer durables sectors.

According to the latest data release from fund-tracker EPFR Global, emerging-market equity funds took in $571.40 million in the week ended 16 December 2009, a slower pace of inflows than that seen earlier in the year.

Still, inflows into developing world stock funds have now surpassed $75 billion for calendar year 2009, well beyond the previous record of $54 billion set in 2007. Meanwhile, diversified global emerging market funds soaked up $404 million and Asia funds, excluding Japan, posted net inflows of $301 million. India equity funds took in $64 million over the week, putting their intake for the year ahead of the previous record of $3.40 billion in 2005.

During the day, finance secretary Ashok Chawla said that there are no plans for any additional borrowing this year and added that not much can be done about food price inflation with steps including monetary policy.

Kaushik Basu, chief economic adviser to the finance ministry said that inflationary expectations in India will die out soon. He also added that inflation in India was sector-specific, present in food prices, and would therefore need sectoral intervention.

Meanwhile, companies planning to list may reportedly have to ensure that at least a quarter of their total equity lies with the public, as the government sets about its stated mission to ensure that investors get a wider selection of stocks to choose from. Under the proposed plan, already listed companies will be required to divest at least 5% stake every year from 2010 to reach the prescribed threshold. Under the current rules, companies have the option to go public with 10% or 25% equity dilution. The government is scrapping the rules allowing companies to go for an initial public offering with 10% dilution.

During the day, Asia’s key benchmark indices in South Korea, Hong Kong, Indonesia and Singapore were down by between 0.17%-3.12%, while indices in China, Japan, and Taiwan rose by between 0.29%-0.43%.

Japan’s exports fell at the slowest pace in 14 months in November 2009 as demand from Asia supported the nation’s recovery from its worst post-war recession. Shipments abroad slid 6.2% from a year earlier, the smallest drop since September 2008, the finance ministry said.

Meanwhile, China’s industry minister said that the government will aim for economic growth of about 8% in 2010, even as it faces a tougher time boosting domestic consumption as a driver of growth.

The economy minister of the United Arab Emirates (UAE) said that Dubai, which faces more debt maturities in 2010, may receive more aid from either the UAE federal government or wealthy fellow emirate, Abu Dhabi.

On Friday, 18 December 2009, the Dow Jones Industrial Average rose 21 points while the S&P 500 and Nasdaq Composite rose 6 points and 32 points respectively.

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