Indian markets cheer US debt deal

Mon, 1 Aug 09:30 am

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US raising its debt ceiling limit has given the Asian stock markets a cause to cheer. Nearly all major stock markets have opened the day on a firm note. Stock markets in China (up 0.2%), Hong Kong (up 1.6%), and South Korea (up 1.8%) are leading the gains. The Indian stock market have opened the day on a firm note as well. Stocks in the realty and banking space are leading the gains.

The BSE-Sensex is trading up by 155 points (0.9%) while the NSE-Nifty is up by around 60 points (1%). Midcap and small cap stocks are trading in the green too, with the BSE-Midcap and BSE-Small cap indices up by 0.8% and 0.4% respectively. The rupee is trading at 44.20 to the US dollar.

Capital good stocks have opened the day on a firm note with BGR Energy and ABB in the green while Siemens is in the red. Capital Goods major, Bharat Heavy Electricals Ltd's (BHEL) had partnered with Alstom in 2005 for manufacturing large power plant boilers for Indian projects. However, Alstom recently tied up with a Chinese equipment maker, Shanghai Electric at a global level for sourcing equipments. This has raised concerns for BHEL's JV (Joint Venture) with Alstom for boilers manufacturing in India. However, BHEL's Chairman and Managing Director clarified that his company has an assurance from Alstom that the "exclusive arrangement" between the two companies for the Indian market will not be affected in any manner till 2020 (as per the agreement). In case of any bid by the new Alstom-Shanghai Electric JV for an EPC (engineering, procurement and construction) project in India, the boilers order will only be awarded to Alstom-BHEL tie-up.

Telecom stocks have opened the day on a positive note note with Reliance Communication and Bharti Airtel leading the pack of gainers. Idea Cellular has declared its first quarter (1QFY12) results for financial year 2011-2012. The company saw its net sales increase by 24% YoY during the quarter. The growth was driven by the growth in total minutes of usage (MOU) on an absolute basis. Total minutes on the network increased by 32% YoY during the quarter. This offset the impact of lower average revenue per user (ARPU), which declined by 12.1% YoY during the quarter. The realized rate per minute stood at 41 paise per minute. This was lower than the 43.8 paise realized during the same period last year but better than the 40.6 paise realized during the previous quarter (4QFY11). Operating margins improved to 26.6% during the year as compared to 24.3% during the same period last year. This was on account of lower network operating expenses which offset the marginal increase in roaming and access charges as well as the higher selling & marketing expenses during the quarter (all as a percentage of sales). Net profits for the year declined by 12% YoY. This was on account of higher tax expenses during the quarter.