Markets trade higher ahead of budget

Fri, 25 Feb 01:30 pm

   Previous Close   

   Pre-Open   

   09:30 am   

   11:30 am   

   Closing   

The Indian indices traded in the positive during the previous two hours of trade on account of buying interest in the index heavy weights. Stocks from the banking and FMCG space are trading firm, while stocks from the metal and IT space are trading weak.

The BSE-Sensex is up by 105 points while NSE-Nifty is trading 46 points above the dotted line. BSE Midcap index and BSE Small cap index are trading higher by 0.2% each. The rupee is trading at 45.38 to the US dollar.

Software majors are trading weak with Mphasis, Oracle and TCS leading the pack of losers. Mphasis plunged 23% on account of its disappointing numbers for the quarter ended January 31, 2011. On a consolidated basis, the Mphasis Group reported a 3% YoY increase in sales and a 16% YoY decline in net profits for the quarter. The sales for the BFSI vertical grew the fastest at around 10% YoY. On account of a sharp rise in the selling and distribution expenses and cost of sales, the group reported a 16% YoY decline in net profits. Except for the IT communication and entertainment vertical, all other verticals reported a decline in profitability. Mphasis added 18 new clients during the quarter ended January 31, 2011. The net addition to employees during the quarter was 1,097 and the total number of employees as on January 31, 2011 was 41,059.

The Economic Survey 2010-11 was released a while ago. The Survey talks about how the Indian economy braved the global slowdown and emerged stronger in FY11. It puts out an estimated figure of 8.6% for GDP growth during the year, and also forecasts an 8.75-9.25% growth in the next fiscal (FY12). The Survey has also taken note of the deceleration in industrial growth in recent times. However, it counters it by adding that this is a short term phenomenon and that the long-term growth story remains intact. The FY12 growth estimates are backed by rising savings and investments in the country. That said, the Survey also mentioned high inflation in India as one of the key policy challenges for the government over the next few quarters. It has blamed the rise in food and global commodity prices as the key reasons for the surge in inflation since the end of 2009. The blame has also been put on the easy money policy of the western nations that are trying to jump-start their economies. Overall, notwithstanding the challenges on the inflation part, the Survey has painted a rosy picture of high growth for the Indian economy going forward.