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Positive comments from the finance minister helped the Indian bourses to gain momentum
Indian markets bounced back to positive trends on the back of positive comments from the finance minister on economic growth, along with strong global markets and high advance tax payment by India Inc. The Sensex shot up 539 points from the previous day’s close, ending the day at 17,231, while the Nifty closed at 5,145, up 159 points.
Adhunik Metaliks has signed definitive agreements with India Infrastructure Fund (IIF), managed by IDFC Project Equity Company Ltd, for an investment of Rs2,500 million in its power subsidiary Adhunik Power & Natural Resources Ltd towards part-financing the equity of its ongoing 540MW
coal-based merchant power project at Jamshedpur, Jharkhand. The project cost of Rs26,500 million is being funded through a debt-equity mix of 3:1. The stock zoomed 11%.
During the day, the government has asked market regulator SEBI for more details of a probe into a case of alleged routing of funds by Reliance Industries to dummy companies for buying its own shares in 2000. However, the stock was up 5%.
Adani Power rose 2% on reports that the company’s subsidiary Adani Power Maharashtra had secured a contract for supply of 1,200MW of power from the Maharashtra State Electricity Distribution Company.
Hotel Leela Venture rose 3% on reports that the promoters were increasing their stake through creeping acquisition and plan to take their stake to 55% from the current 52.5%. Shriram EPC won orders worth Rs156 crore. The stock remained flat.
Finance minister Pranab Mukherjee said that the government will wait until the February 2010 budget to consider withdrawing some of the fiscal stimulus measures. He said that inflation and fiscal consolidation are major challenges in the short- to medium-term. Growth outlook for the second half of FY 2010 looks better, he added. The finance minister also said that farm output must grow 4% for the economy to expand 9%-10% annually. He said that industrial production has started picking up.
Mr Mukherjee said that sustaining higher growth remains a priority for the government and the Centre is open to making changes in the draft direct tax code. The draft code has proposed various reform measures, including cutting corporate tax rate to 25% and streamlining tax laws.
During the day, Asia’s key benchmark indices in Indonesia, South Korea, Singapore, Taiwan, China and Hong Kong rose by between 0.35%-1.12%. Japanese markets were closed on account of the emperor’s birthday.
The People’s Bank of China said that the economy’s recovery is still insufficient and that correcting structural problems for the nation’s growth is urgent. The bank also added that it will seek to keep policy flexible and will focus on decreasing economic volatility and manage the pace of loan growth.
On Tuesday, 22 December 2009, the Dow Jones Industrial Average was up 51 points while the S&P 500 and the Nasdaq Composite were up 4 points and 15 points respectively.
As per reports, USA’s third quarter GDP increased at a slower-than-expected annualised rate of 2.2%, lower than consensus prediction. The housing data provided some relief. It showed that existing home sales climbed at a stronger-than-expected jump of 7.4% to 6.54 million units in November 2009. US treasury secretary Timothy Geithner expressed confidence by saying that the US economy was on a solid recovery path, but said that tight lending practices by banks still poses a risk.
In premarket trading, the Dow was trading 30 points higher.