Indian markets sole loser in Asia

Fri, 4 Mar Closing

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After opening on a positive note, the Indian indices swiftly moved closer to the dotted line and ended the day with a status quo. While the BSE-Sensex closed barely in negative (down 3 points), the NSE-Nifty just about managed to stay in the green (up 3 points). The BSE Midcap and the BSE Small cap indices too failed to show significant changes. Gains were largely seen in the auto and banking space. FMCG and metal stocks remained out of investor favour.

As regards major global markets, most Asian indices closed in the positive on the back of oil prices easing. European indices also opened in the green. The rupee was trading at Rs 44.97 to the dollar at the time of writing.

Deregulation of petrol prices was supposed ease the burden of subsidies on Indian oil marketing companies. However, the reality seems to be otherwise. As per a business daily, state-run OMCs Indian Oil Corp, BPCL and HPCL have together lost about Rs 20 bn because of not raising petrol prices in sync with international rates in the past six months. As per the report, the three firms are losing Rs 4 per litre on petrol. It may be recalled that the government had in June last year deregulated petrol pricing, giving the three state-run retailers the freedom to fix rates in sync with the cost of crude oil. But following an informal dictat from the government, they have not raised prices to keep inflation under check.

The three firms had last hiked petrol price by Rs 2.5 per litre on January 15, 2011. However, since deregulation of rates in June, the rates have gone up about Rs 7 per litre in five installments. Besides petrol, the three retailers are losing a record Rs 12.6 a litre on diesel, Rs 24.7 per litre on kerosene and Rs 297.8 per LPG cylinder. Hence compensating the oil companies in cash for at least half of their under-recoveries will be a tall order.

Meanwhile, the country's largest power producer NTPC plans to hire 10,000 engineers in the next ten years as part of massive expansion plans. This is to meet manpower requirements of the company’s plans to expand generation capacity. At present, the power giant has about 25,000 employees, out of which half of the workforce are engineers. The company also aims to improve its Man-to-MW ratio, which is an indicator of the work force's efficiency, to as much as 0.50 by the end of the 12th Five-Year Plan (2012-17). Currently the ratio is around 0.80. This would make NTPC the most efficient power producer globally.

NTPC plans to scale up its power generation capacity to 50,000 MW by the end of the 11th Plan (2007-12) from its present production capability of over 33,000 MW. At present, projects totaling 16,340 MW are under various stages of implementation.

The textile manufacturers in India have not seen any significant change in their net profit margins despite reasonable recovery in the export markets. The higher taxes levied on the industry is only expected to make matters worse. Garment manufacturers are upset with the government for imposing 10% excise duty on branded garments and made-ups like bed sheets and towels. They have asked the government to roll back the duty for the benefit of the sector and to protect jobs. Manufacturers said the sector is already reeling under the pressure of input costs and high leverage costs. The incremental capacities coming on stream in the sector is expected to remain under utilized with the levy of additional taxes. The Indian textile made-ups industry has become the leader in the exports markets with annual exports to the tune of US$ 2.5 bn.