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Inflation spoils the show
Mon, 15 Oct Closing

The Indian stock markets started the day on a negative note. The indices remained below par for a bulk of today's trading session. Despite selective buying interest in FMCG, commodity, telecom and energy stocks, the gains were capped due to inflation and interest rate concerns. The BSE-Sensex closed in the positive, higher by around 38 points (up 0.2%). The NSE-Nifty also closed higher by around 11 points (up 0.2%). The smaller indices had a better day on the bourses. The BSE Mid Cap index and the BSE Small Cap closed higher by 0.1% and 0.4% respectively today. FMCG and oil and gas stocks saw a bulk of the gains today. IT and consumer durables were on the losing end in today's trade.

As regards global markets, Asian indices had a mixed outing today. European indices opened the day on a positive note. The rupee was trading at Rs 53.06 to the dollar at the time of writing.

Inflation numbers (WPI) reported today came in at a ten month high and rose to 7.8%. This will make it more difficult for the central bank (Reserve Bank of India) to orchestrate any rate cuts in order to boost India's flagging economy. Inflation is currently well above the central bank's comfort level of 4-5%.

Bharti Airtel is planning to merge its Indian and African operations into a single business entity under a global CEO, according to latest newspaper reports. The new organizational structure is likely to be in place by the first half of 2013 and is aimed at deriving synergies and cutting costs. Reshuffling the Indian and African operations will lead to rationalization of top-level employees. Plus marketing, branding and sourcing of services and capital goods can be merged. The African operations had reported revenue growth of 32% YoY, ARPU growth of 9% YoY and operating profit growth of 12% YoY in 1QFY13.

Regulatory clouds in the form of spectrum charges as well as spectrum auction continue to haunt Indian telcos and Bharti is no exception to this. At the same time, it also has to deal with the cancellation of its 3G roaming pacts with telecom operators in circles where it does not have a 3G license.

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