Benchmarks continue its firm trade with mild gains

Indian equity indices are trading firm with positive bias as investors are having conservative approach, after the announcement of the inflation numbers. Inflation data for May was reported at 9.06% versus 8.66% (MoM) and the numbers were higher than street expectations, which strengthened expectations that RBI would further its hawkish stance against the towering inflation and raise key policy rates for the tenth time which is scheduled on June 16. Investors were seen piling up the positions in Capital Goods, FMCG and Health Care while, selling was witnessed among Consumer Durables, Oil & Gas and Auto. Majority of Asian markets were trading in green barring Hang Seng and Straits Times which were trading tad lower while, the European markets were trading firm in green providing support to the local market. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,500 and 18,300 levels, respectively. The market breadth on the BSE was in favor of advances in the ratio of 1516:1200 while 122 scrips remained unchanged.

Moreover, country's largest car maker Maruti Suzuki India's (MSI) Manesar plant workers' strike entered eleventh day today with the production at the plant stopped. Workers in up to 65 factories in the Gurgaon-Manesar industrial belt commenced a two-hour tool-down strike this morning in support of their colleagues at Maruti Suzuki India's Manesar plant. Yesterday, a tripartite meeting between the Government, MSI management and striking workers failed as the company refused to accept any new union at the plant. Around 2,000 workers at the plant have been on strike since June 4, resulting in a loss of about Rs 450 crore for 9,000 units till yesterday.

The BSE Sensex added 20.60 points or 0.11% at 18,266.03. The index touched a high and a low of 18,380.19 and 18,261.11 respectively.

The BSE midcap index advanced 0.46% and the smallcap index added 0.32% points.

On the BSE sectoral front, Capital Goods up 0.81%, FMCG up 0.69%, Healthcare up 0.68%, PSU up 0.63% and Power up 0.59%, remained the major gainers. While, Consumer Durables down 1.16%, Oil & Gas down 0.56%, Auto down 0.15% and Metal down 0.12% were the only laggards in the BSE sectoral space. 

The top gainers on the Sensex were R Infra up 2.05%, Bajaj Auto up 1.63%, Tata Power up 1.48%, TCS up 1.22% and L&T up 1.13%. On the flip side, Tata Motors down 2.45%, Hindalco down 2.08%, HDFC down 1.81%, RIL down 1.37% and Cipla down 0.94% were the major losers on the index.

Meanwhile, a government panel set up by the Ministry of Heavy Industries will soon review four sick public-sector companies - Hindustan Cable, Richardson & Cruddas, Hindustan Machine Tools and Tungabhadra Steel - to fast track the disinvestment process. The committee, set up by the ministry, will consider outright sale or revival of these units through joint ventures. There are around 27 sick units under the administrative control of the ministry.

The government plans to generate Rs 40,000 crore through divestment in public-sector companies in the current financial year to cut high fiscal deficit. However, this year, the government has managed to raise Rs 1,162 crore from the public issue of PFC (Power Finance Corp). The government has been delaying sale of shares in some profitable companies because of stock market volatility. The move to fast-track stake sale is a shift from the earlier government's agenda of disinvestment only through public offers. The cabinet has cleared another stake sale, that in Scooters India. The government will soon invite expressions of interest for Tungabhadra Steel.

'Already two public sector companies, Kudermukh Iron Ore and NDMC, have shown interest. We are hoping that private players will also be interested,' said a senior official with the ministry of heavy industries. Karnataka-based Tungabhadra Steel's hydel plant generates 5.5 million units of power every year. The company has about 88 acres of prime land. 'The company has about 100 employees on its rolls but its operating cost is very high. An outright sale is one option for this company,' the official said.

The case of Richardson & Cruddas is likely to be taken up by the month end. The company has about 73 acres of prime land, mostly in Mumbai. 'We will soon hold discussion with the Maharashtra government on the land issue, as a large part of it is under encroachment,' the official said. The company, with accumulated losses of about Rs 300 crore, was cleared for closure in 2003. The committee will also review the cases of Hindustan Cable, which has been sick since 2002, and HMT Bearings.

The S&P CNX Nifty rose 10.80 points or 0.20% at 5,493.60. The index touched high and low of 5,520.15 and 5,484.20 respectively.

The top gainers on the Nifty were R Capital up 2.02%, R Infra up 1.97%, Axis Bank up 1.61%, Ranbaxy up 1.60% and Sun Pharma up 1.51%. On the other hand, Hindalco down 2.16%, Tata Motors down 2.12%, IDFC down 1.97%, HDFC down 1.67% and Reliance down 1.36% were the major losers on the index.

On the Asian front, Shanghai Composite surged 1.10%, Jakarta Composite inched up 0.42%, KLSE Composite advanced 0.17%, Nikkei 225 soared 1.05%, Seoul Composite jumped 1.37% and Taiwan Weighted amassed 1.33% while, Hang Seng lost 0.05% and Straits Times tad lower 0.07%.

The European markets are trading in green with, the France's CAC 40 surged 1.05%, Germany's DAX jumped 1.54% and London's FTSE climbed 0.43%.

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