Buying momentum fuels Indian indices

Fri, 30 Mar Closing

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Indian stock markets traded into the positive throughout today's session. The indices began on a firm note and buying activity intensified in the subsequent hours propelling the indices higher. This momentum was sustained in the final trading hour as well and the indices closed well above the dotted line. While the BSE-Sensex closed higher by around 346 points (up 2%), the NSE-Nifty closed higher by around 117 points (up 2%). The BSE Mid cap and the BSE Small cap also did well to notch gains of 2% each. Gains were largely seen in banking and oil & gas stocks.

As regards global markets, Asian indices closed mixed today while European indices have opened in the green. The rupee was trading at Rs 50.86 to the dollar at the time of writing.

Power stocks closed firm today with the key gainers being Neyveli Lignite, Tata Power and Power Grid Corporation. As per a leading business daily, National Thermal Power Corporation (NTPC) is looking to invest over Rs 170 bn in two power projects. These projects are to be set up in Maharashtra and would have a total generation capacity of 2,640 MW. Investment approval has been given for the Mouda Super Thermal Power Project having two units of 660 MW each. The project has an estimated cost of around Rs 79 bn. The other project - Solapur Super Thermal Power Project - also has two units of 660 MW each with an estimated cost of around Rs 94 bn. It must be noted that NTPC had capacity of 36,014 MW at the end of December 2011 and is targeting capacity addition of 4,320 MW in FY12. While the company has coal linkages for 9 new projects with a total capacity of 10,920 MW and a gas supply agreement for 14.5 MMSCMD of gas, fuel supplies remain a hindrance to growth. In order to meet some of its future fuel requirements, the company is looking to produce 45 m tonne of coal from its own mines by 2017. The Ministry of Coal will reallocate the five cancelled coal blocks to the company on which it has incurred Rs 5.6 bn as development costs. The stock closed marginally into the positive.

As per a leading business daily, the fiscal deficit during April 2011 to February 2012 was Rs 4.94 trillion. This is 94.6% of the revised target for FY12. During the same period in the last fiscal year, the deficit was 68.6% of the budgeted target. Net tax receipts were Rs 4.94 trillion and total expenditure was Rs 11.07 trillion during the April-February period. The government in recent times has been under pressure to lower its fiscal deficit as various forms of subsidy has wreaked havoc on its finances. The Reserve Bank of India (RBI) is also of the view that while it has resorted to monetary tools to lower inflation, the government will have to take efforts to bolster the supply side by removing various infrastructural bottlenecks. It must be noted that in the recent Budget, the government revised up the fiscal deficit target for FY12 to 5.9% of GDP from 4.6% projected earlier.