Cautious undertone ahead of RBI meet

Wed, 15 Jun Closing

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Indian stock market started off today's session close to the breakeven mark. But soon the profit booking in index heavyweights forced the indices deeper into the negative territory. The BSE-Sensex closed lower by 1% (down 176 points), with the NSE-Nifty closed lower by 53 points. The BSE Midcap and BSE Small cap indices fared slightly better, but they were also not immune from selling pressure. They closed lower by 0.6% each. This sell off comes ahead of the RBI decision on the monetary policy, scheduled tomorrow.

Asian indices closed the mixed whereas Europe is currently trading in the negative zone. The rupee was trading at near about Rs 44.72 per dollar at the time of writing.

Reliance Industries has received approval from the home ministry for the sale of a 30% stake in 23 oil and gas properties to British Petroleum (BP) for US$ 7.2 bn. BP was brought in as an equity partner by Reliance in order to leverage on its expertise in producing oil & gas from deep-sea areas. Reliance has been facing some technical problems at its KG-D6 fields. Production has fallen from 61.5 million standard cubic metres (mmscmd) per day to about 48 mmscmd. This was much lower than the expected output of 69 mmscmd. The Indian oil and gas major, hopes that BP will help fix its reservoir issues and raise output to a peak of 80 mmscmd. Since India faces an energy deficit, the Production Sharing Contract (PSC) bars the export of oil outside India. Thus, the production of oil cannot be exported from these blocks to the UK.

Shoppers Stop plans to open 24 stores by the financial year 2013-14 (FY14). And to start off this expansion, the company plans to open 8-9 stores in the current fiscal (FY12). The company has already raised funds for growth from a recent qualified institutional placement (QIP). According to the company's management, the retail industry is growing by around 30-35% every year. The company estimates that it will have 62 stores operational with a total retail space of 3.6 m square feet by FY14. It also plans to enter Tier-II cities.

Idea Cellular recently declared its results for the full financial year and the quarter ended March 31st 2011. The company saw its net sales increase by 27% YoY during the quarter. For the full year, net sales increased by 25% YoY. The growth was driven by the growth in total minutes of usage (MOU). However, the realized rate per minute (RPM) continued to decline to 40.6 paise per minute. This was lower than the 46.6 paise realized during the same period last year and 41.8 paise realized during the previous quarter (3QFY11). Operating margins declined to 24.5% during the year as compared to 27.4% during the same period last year. This was on account of higher license charges as well as higher roaming and access charges during the year (as a percentage of sales). Net profits for the year declined by 5.8% YoY. This was on account of lower operating margins as well as higher depreciation charges. For the quarter, net profits increased by 3% YoY due to the lower interest expenses which offset the increase in depreciation charges.