PSU stocks buck the trend

Thu, 4 Aug 01:30 pm

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Indian stock market indices have been trading flat over the last two hours of trade. PSU and IT stocks are leading the gains while Auto and Power stocks are on the losing end.

The BSE-Sensex and NSE-Nifty are trading absolutely flat. BSE Midcap and BSE Small cap indices are up by 0.5% and 0.7% respectively. The rupee is trading at 44.43 to the US dollar.

As per a leading financial daily, NTPC Ltd's plans to acquire coal mines abroad have been hit by high valuations and proposed rule changes in Indonesia and Australia. The same could make the fossil fuel there more expensive. High coal prices have driven up valuations of mines. Also, the cost of coal produced will go up as Australia plans to levy a tax of A$23 (US$24.79) for each metric ton of carbon emitted from 2012 and Indonesia is set to link the price of coal exported to international coal indexes this year. The management has said that all this will dampen its overseas buy-out plans. The company requires 164 million tons of coal this fiscal year through March to run its plants. It meets part of its fossil fuel requirement through imports and has been scouting for overseas assets to secure raw material. However, last week it decided not to bid for Australian coal miner Bandanna Energy Ltd. The reason cited by the management was high cost to produce coal from Bandanna's mines making it financially unviable. The stock was trading in the red.

As per the official data released today, the food inflation has risen up to 8.04% for the week ended July 23 on expensive onion, fruits and milk. The recent rise follows a 20 month low in mid July. The food inflation, as measured by the Wholesale Price Index (WPI), was 7.33% in the previous week, the lowest since November 2009. The rate of price rise of food items was 16.27% in the corresponding week of July 2010. On the other hand, inflation of non-food articles (fibres, oil seeds and minerals) fell to 15.60% from 16.05% in the previous week. The fuel and power inflation stood at 12.12%, unchanged from the level in the previous week.

The headline inflation for June stood at 9.44%. The RBI has already hiked interest rates 11 times since March, 2010 to control demand and curb inflation. In its Economic Outlook for 2011-12 released earlier this week, the Prime Minister's Economic Advisory Council projected headline inflation to remain high at around 9% till October. It suggests easing of the rate of price rise from November, declining to around 6.5% by March 2012.