Indices stay on a steady course

Tue, 3 Apr Closing

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The Indian stock markets had a decent outing on the bourses today. After opening in the green, markets remained in positive territory throughout today's session, trading well above the dotted line. While the BSE-Sensex closed higher by around 119 points (up 0.7%), the NSE-Nifty closed higher by around 41 points (up 0.8 %). The BSE Mid cap and BSE Small cap, also closed higher. These smaller indices closed higher by 1% and 1.1% respectively. Consumer durables and capital goods stocks led the gains. Healthcare and auto stocks indices were however trading weaker.

As regards global markets, major Asian indices had a mixed outing today. European indices opened the day on a negative note. The rupee was trading at Rs 50.74 to the dollar at the time of writing.

Bajaj Auto reported a 9% increase in its monthly sales for March at 335,515 units, up from 307,741 units sold earlier. These sales figures were the highest figures ever recorded for any month of March. The company's exports during the period under review grew by 54% to stand at 107,691 units in March, 2011. The company's motorcycles sales in the period under review grew 10% from 274,392 sold in the corresponding period of last year. Commercial vehicle (CV) sales grew by 4% in March. For the entire FY12 fiscal, the company sold a total of 4.3 m units, up 14% per cent from 3.8 m units sold in FY11. The exports during the fiscal grew by a robust 31% per cent. The company thus achieved its highest ever annual exports at 1.6 m units from 1.2 m units earlier. The popular Bajaj Pulsar's cumulative sales have now exceeded 5 m units since its launch. Commercial vehicle sales grew by 18% in FY12.

Coal India (CIL) produced about 436 million tonnes (MT) of coal in 2011-12, missing even a scaled down production target of 447 MT for FY12. Coal India's production has stagnated over the past three years, and the company has been facing a number of regulatory and infrastructure hurdles. Even nature seems to be taking its course, CIL reported negative production growth of 19% and 16.9% in the months of August and September, 2011, due to unprecedented rains.

The government is desperately trying to boost the output of coal to meet power sector demands. However, its biggest player in the field is not doing enough to raise supplies. The company has raised its 2012-13 production target to 470 MT from 464 MT previously, but is this enough? The state run company may now have to pay up if it doesn't meet its targets. It may have to pay power companies between 10% and 40% of the average cost of 20% and more shortfall in supplies under new guaranteed fuel pacts the government is forcing the company to sign. However, it stands to gain even if it meets only 90% of its commitments under these pacts with power plants that are due to be commissioned by 2015 and generate 50,000 megawatts of power. We hope that this new carrot and stick approach helps ensure timely fuel supply to power producers.