Fiscal roadmap revives markets

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In what was an extremely volatile session, the benchmark indices in Indian stock markets managed to resurface into the positive territory during the final trading hour. This was seemingly due to the Finance Minister's announcement of a fiscal roadmap for India. While the BSE-Sensex closed higher by around 10 points, the NSE-Nifty ended flat for the day. The BSE Mid Cap and BSE Small Cap indices ended lower by around 0.5% each.

Asian indices closed a mixed bag today with Europe too trading in the negative currently. The rupee was placed at Rs 53.99 to the dollar at the time of writing.

Concerned over ballooning budget deficit overturning economic growth, Finance minister P Chidambaram unveiled a five-year fiscal road map today. The plan for fiscal consolidation is expected to promote investments, rein inflation and stimulate growth. Moreover it is expected to check the potential rating downgrade for the economy. As per the plan, the government will work towards restricting fiscal deficit to 5.3% of GDP in FYH13 (higher than the budgeted deficit of 5.1% of GDP). It will further trim it down to 3% by FY17. It may be noted that the Vijay Kelkar Committee had warned about fiscal deficit shooting up to 6.1% in FY13 in the absence of reform initiatives. As part of the roadmap, the government aims to raise Rs 300 bn from disinvestment and Rs 400 bn from sale of telecom spectrum.

NTPC declared the results for the second quarter and first half of financial year 2012-2013 (1HFY13). The company has reported 30% YoY growth in net profits for the second quarter. This was on the back of improved capacity addition leading to higher generation and decreased raw material cost. A 660 Megawatt (MW) unit at Sipat and a 550 MW unit of Simhadri unit have been commissioned in the second quarter of FY13. In the first half of current fiscal, NTPC has declared 2,820 Mw capacity under commercial operation. This is highest-ever in a period of six months. Further the profit growth wsa attributable to the 15% decline in raw material cost quarter-on-quarter. Coal India's supply to NTPC has shown improvement allowing NTPC to absorb coal cost favorably. NTPC has a current installed power generation capacity of 39,100 Mw. The company has a target of adding another 25,000 Mw capacity over the five year period ending March 2017 by spending Rs 1.5 trillion on development of coal mines.

Meanwhile, a leading business daily has reported that Tata Consultancy Services (TCS) is planning to set up operations in the state of Madhya Pradesh by building a new integrated campus in Indore for IT and BPO. The software behemoth will make an initial investment of Rs 5.5 bn in the first phase. The total development area of the campus is expected to be around 1.5 million square feet. The construction of phase-I is expected to be completed by March 2016, after receiving all the applicable permissions are received. The TCS Indore campus will be located on a 100 acre property allotted by Madhya Pradesh government. The company reported a good set of results for September 2012.