Earnings blues grip markets

Thu, 13 Jan Closing

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Indian markets seem to have taken on to a rollercoaster ride as for the third consecutive day the indices showed wide fluctuation in investor sentiments. Triggered by lower than expected profit performance by IT heavyweight Infosys in 3QFY11 results, the index heavyweights shed considerable gains today. The BSE-Sensex edged lower by around 351 (down 1.8%) points today whereas NSE-Nifty closed with losses of around 111 points. The BSE Midcap and BSE Small cap indices also lost 0.9% and 0.7% respectively.

Amongst global markets, most other Asian indices closed strong today whereas Europe has opened on a cautious note. The rupee was trading at Rs 45 to the dollar at the time of writing.

Hospitality major Indian Hotels, which owns the Taj chain, plans to execute a pipeline of 43 projects over the next 36-48 months. As per the management this will result in addition of 10,000-12,000 rooms. While the expansion will be across all its properties, the emphasis would be on expanding its budget category under the Ginger brand. The company is planning to increase the number of Ginger hotels to 150-200 this decade. The management has also added that the average room rentals (ARR) had been restored to pre-2008 levels, showing the return of pricing power.

India's food inflation woes showed some signs of easing this week, albeit not enough to bring down the overall inflation numbers. India has the highest food inflation of any major Asian economy. This is while other emerging markets such as China and Brazil are also battling double-digit food price rises. India's food price index rose 16.9% this week, driven mainly by high vegetable prices. The fuel price index climbed 11.5% this week. In the previous week, annual food and fuel inflation stood at 18.3% and 11.6% respectively. Food makes up about 14% of the wholesale price index, while fuel contributes about 15%. Given the firmness in prices another round of interest rate hikes are expected to be around the corner.

As per a business daily, India will likely allow domestic refiners to utilize the government's emergency crude oil reserve facilities. This would be a change from the government's earlier position that the strategic reserves would only be used by the government to meet any supply disruptions. State-run Indian Strategic Petroleum Reserves is building 5.33 m metric tons of strategic crude oil storages at three locations in south India - 1.3 m tons at Visakhapatnam, 1.5 m tons in Mangalore and 2.5 m tons at Padur. The reserves will account for about 3% of India's annual crude import, which stood at 159.3 m tons in the year through March 2010. India currently imports around 80% of its crude oil requirement, and the emergency reserves can also serve as a buffer against fluctuations in crude oil prices.