Sensex zooms 128 points, closes at 17,686

Indian bourses stayed volatile due to fears over a possible hike in interest rates

Indian markets remained volatile due to fears over an immediate hike in interest rates by the central bank. However, volatility declined following strong comments from government officials. During the day, the Sensex was up 128 points from the previous day’s close, ending the day at 17,686, while the Nifty closed at 5,278, up 46 points.

Yesterday, we had said that the market would open higher today and it did so. Bourses will open higher tomorrow, but may not sustain momentum through the day.

Steel Authority of India (SAIL) rose 3% after the company reported a 32% growth in sales at 1.3 million tonnes in December 2009 from a year ago.

JSW Steel jumped 11% after the company’s crude steel output soared 88% to 14.70 lakh tonnes in the December 2009 quarter over the December 2008 quarter.

Bharti Airtel rose 2% on reports that the firm had received an approval from Bangladesh’s telecom authority for its proposed $300 million investment in Abu Dhabi Group’s Warid Telecom.

Dr Reddy’s Laboratories rose 3% after the company said its Balaglitazone diabetes drug had met its primary target in the first of its Phase 3 clinical trials. As per reports, Balaglitazone reduced blood glucose levels over a period of time in the study conducted on 409 patients.

Maruti Suzuki India fell 2% on reports that Shinzo Nakanishi, managing director, had said that exports will be hit next year by removal of incentives in Europe. He also said that there would be lower off-take from Nissan for exports as a result of the removal of incentives. He further said that the company aims to keep operating margins at 10% in fiscal year 2009-10 but profitability would be impacted by a rise in raw material prices and a rise in the yen.

As per the EPFR global funds tracker, emerging market equity funds posted a record $64.50 billion in inflows in calendar year 2009, helped by record flows into the BRIC countries, comprising funds in Brazil, Russia, India and China. The Chinese economy’s return to robust growth also boosted Asia (excluding Japan) equity funds, which posted record inflows of $19.10 billion. Emerging market bond funds attracted record inflows of $8.20 billion.

According to the finance ministry, direct-tax receipts during April-December 2009 rose 8.51% from a year earlier to Rs2,50,000 crore. Corporate-tax receipts were up by 13.47% at Rs1,67,000 crore, while income-tax paid by individuals declined by 0.41% at Rs83,178 crore, it said.

On Monday, Kaushik Basu, chief economic adviser to the finance ministry had said that the government does not need to tighten monetary policy now and risk stalling a nascent economic recovery as inflation pressure was mainly caused by high food prices. He also said that Asia’s third-largest economy was likely to return to 9% growth in the fiscal year 2010/11, after topping 7.5% in the current year to end-March.

Mr Basu said that India’s high savings and investment rates would help sustain the recovery and an annual economic growth rate of 10% was possible within a “couple of years”.

As per media reports, C Rangarajan, the prime minister’s economic adviser, said that liquidity tightening may be needed. However, an adjustment in policy interest rates is not warranted at the moment, he added.

The Reserve Bank of India (RBI) is set to hold its quarterly monetary policy review on 29 January 2010. The central bank is widely expected to tighten cash reserve ratio (CRR) requirements for banks, with economists divided on when the central bank will raise policy rates.

According to latest RBI figures, total loans, including food credit loans to Food Corporation of India for food-grain procurement and non-food credit (all other loans) amounted to Rs29,41,293.07 crore as on 19 December 2009. This represents a sequential growth of Rs34,028 crore since 27 November 2009 compared to a growth of Rs7,698 crore in the whole of November 2009.

The Union government has allowed duty-free import of raw sugar to tide over the domestic production shortfall. In the 2008-2009 season ending October 2009, domestic sugar output fell 42% to 15 million tonnes, causing retail sugar prices to more than double. At present, in retail stores, sugar is being sold at Rs42-Rs43 a kg.

During the day, Asia’s key benchmark indices in China, Taiwan, Hong Kong, Indonesia, Japan, and Singapore rose by between 0.04%-2.09%.

On Monday, 4 January 2009, the Dow Jones Industrial Average gained 156 points while the S&P 500 and the Nasdaq Composite gained 18 points and 39 points respectively.

As per US media reports, the ISM’s gauge of manufacturing showed growth for a fifth straight month, rising to 55.9 in December 2009 from 53.6 in November. Participants shrugged off the bi-monthly construction spending data that showed a slightly steeper-than-expected 0.6% monthly decline for November. However, in premarket trading, the Dow was trading one point higher.

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    Godrej Properties to raise up to Rs3,000 crore for expansion

    Godrej Properties plans to raise around Rs3,000 crore through debt or equity to fund its expansion plans over the next two-three years

    After its Rs462-crore initial share sale, real-estate developer Godrej Properties Ltd on Tuesday said it plans to raise around Rs3,000 crore through debt or equity to fund its expansion plans over the next two-three years, reports PTI.

    "We plan to raise Rs2,000-Rs3,000 crore over the next two-three years to fund expansion plans," Godrej Group chairman Adi Godrej told reporters on the sidelines of the company's listing ceremony in Mumbai today.

    The company was looking at various options to raise money, including the qualified institutional placement route, Mr Godrej said, adding that the promoters will dilute stake from the current 86% in the event of a qualified institutional placement (QIP).

    Godrej Properties is currently undertaking several projects across 10 cities, which are at various stages of development, Mr Godrej said.

    Moving ahead, the company expects to become a major player in the affordable housing segment, by offering housing units in the range of Rs25-Rs30 lakh.

    "In the period ahead, we will see affordable housing picking up strongly in the country. We are very committed to play a significant role in this segment," he said.

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    Sugar prices surge to all-time high at Rs4,250/quintal

    Demand for the ongoing marriage season and approaching festival of 'Makar Sakranti' might further boost buying activity in the face of tight supply

    Sugar prices on Tuesday rose to Rs4,250 per quintal at the wholesale market on increased buying for the current festival and marriage season amid widening demand-supply gap, reports PTI.

    The sweetener, which is already trading double at Rs41 per kg in the retail market over the last one year, is likely to scale more heights as demand for the commodity rose sharply during the last fortnight among bakers and hoteliers for major events like Christmas and New Year, market analysts said.

    They said that the demand for the ongoing marriage season and approaching festival of 'Makar Sakranti' might further boost the buying activity in the face of tight supply.

    As per the consumer affairs ministry, sugar prices have gone up to Rs 41 per kg in the local market due to a demand-supply gap.

    Traders at the Delhi wholesale market said the sweetener might become more costlier as it has risen to Rs4,150-Rs4,250 per quintal in bulk trading against Rs3,590-Rs3,700 per quintal on 19th December.

    They said there is restricted supply from mills on account of a fall in production, while bulk users like soft drink manufacturers and retailers have placed more orders.

    Sugar medium and small grade prices jumped further by Rs100 each to Rs4,150-Rs4,250 and Rs4,140-Rs4,240 a quintal respectively. It had gained Rs200 in the previous session.

    Similarly, the sugar mill-gate prices, at which the companies sell from factories without duty, also rose in the range of Rs100 to Rs70 per quintal.

    The sugar from Kinoni and Mawana mills rose by Rs80 and Rs70 to Rs4,000 and Rs3,970 per quintal respectively. Dorala mills rate rose by Rs100 to Rs3,980 per quintal.

    A senior official with a leading sugar firm said that the rise in domestic price is in sync with global prices, which touched $718 (Rs33,229) a tonne in London.

    The continued restriction imposed by the Uttar Pradesh government on the movement of imported raw sugar also has a bearing on the recent spurt in sugar prices, he added.

    Domestic sugar companies, which had contracted to import over five million tonnes of raw sugar till 15th December have gone slow on further contracts, even though the country needs another two million tonne to meet the demand-supply gap.

    Sugar production from domestically-grown sugarcane is pegged at 16 million tonnes, while annual demand is 23 million tonnes. The gap is being met through imports.

    Mill delivery medium and second grade followed suit and edged up by the same margin at Rs4,050-Rs4,150 and Rs4,040-Rs4,140 per quintal.

    Following are today's rates in Rs per quintal: Sugar ready M-30 Rs4,150-Rs4,250 and S-30 Rs4,140-Rs4,240; Mill delivery M-30 Rs4,050-Rs4,150 and S-30 Rs4,040-Rs4,140.

    Sugar mill gate prices (excluding duty): Kinonni Rs4,000, Asmoli Rs3,910, Mawana Rs3,970, Titabi Rs3,900,Thanabhavan Rs3,890, Budhana Rs3,890, Dorala Rs3,980.

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