Recovery in Blue chip companies pushes domestic bourses higher... - Ajcon Global

BSE Sensex rose on Monday to its highest close in nearly 2-1/2 weeks as some blue chips recovered from recent steep falls while ITC jumped after the company had raised prices for some of its cigarette brands. Tata steel went up by 6.09 percent, ITC Ltd. rose 3.79 percent while Axis Bank Ltd. ended 3.76 percent higher. The benchmark BSE Sensex rose 1.43 percent, marking its fourth consecutive day of gains, while the broader Nifty ended 1.44 percent higher.

The rupee remained frail after last week's record low, as pessimism generated by dismal economic growth data was compounded on Monday by survey showing factory activity in August shrank for the first time in over four years. Investors want bold reforms to restore confidence in India, spur growth, reduce a record current account gap, while keeping a worryingly high fiscal deficit under control. Measures taken by Prime Minister Manmohan Singh's minority government since the rupee began its slide in May have left the market unimpressed, and there are fears that the ruling coalition will put politics before the urgent needs of the economy with an election due by May next year. Quoted at 66.09 per dollar by midday, the rupee was just a touch weaker than Friday's close of 65.70/71, and still within easy striking distance of the all time low of 68.85 to the dollar struck on August 28. Aggressive intervention by the Reserve Bank of India had helped lift the rupee off its low late last week. The RBI's main defence, squeezing rupee liquidity and pushing up short term interest rates, has pushed up borrowing costs for already depressed corporates, but has barely stemmed the rupee's fall. The rupee has depreciated around 16 percent since May, and has fared worse than other emerging market currencies that have been hit since the U.S. Federal Reserve first hinted that it was considering tapering off its bond buying stimulus. Raghuram Rajan, a vaunted former chief economist at the International Monetary Fund, will step into his new role as RBI governor on Thursday, having been the prime minister's economic advisor for the past year.

On Monday, the HSBC manufacturing purchasing managers index (PMI) report, compiled by Markit, piled on the misery. The overall index sank to 48.5 in August from 50.1 in July, falling below the watershed 50-level that separates growth from contraction and marking its lowest reading since March 2009.

Looking to trim the oil import bill, Oil Minister M. Veerappa Moily has recommended to Singh that India buy more crude oil from Iran, which would accept payment in rupees, regardless of U.S. sanctions on Tehran. There are also calls for an increase in state-controlled diesel prices, in order to curb imports and reduce the subsidy burden. On Sunday, Indian Oil Corp Ltd, the country's biggest refiner, raised petrol prices by 4 percent and diesel by 1.1 percent.

Rajiv Bajaj, managing director of Bajaj Auto expects the August exports positivity to continue in coming days. Exports were overall up about 10 percent to about a 144,000 vehicles, up from 131,000 in August. That gain came primarily from our motorcycles. We exported close to 128,000 motorcycles, about 17 percent higher than August last year which was about 109,000. However, the disappointment in exports came in the three-wheeler segment due to a slowdown seen in Egypt, he explains. Despite the rupee depreciation and the forex advantage it provides to exporters, Bajaj says the company will not pass on the currency gains to its customers by adjusting prices. In the Asian and the Latin American markets in which Bajaj Auto really compete primarily with Japanese manufacturers and whatever it is they make whether it is out of Japan, Thailand, Brazil or Columbia we were always priced more or less at par. They have not lowered prices and therefore it does not make sense for us to lower prices.

Maruti Suzuki reported a 61.2 percent rise in August sales which stood at 87,323 units from 54,154 units sold in last year's corresponding month. Exports during the period under review zoomed by 180.9 percent, 11,305 units from 4,025 units shipped overseas during the corresponding month of 2012. Domestic sales were up 51.6 percent to 76,018 units during the month under review from 50,129 units sold in August 2012. Mini-car segment that includes M800, Alto, A-Star and WagonR grew 45.1 percent at 32,019 units from 22,062 units sold in the same month of 2012. Sale of compact cars Swift, Estilo and Ritz sky-rocketed by 187.3 percent at 17,409 units from 6,059 units the corresponding month of 2012. Sales of super compact segment, including Dzire, jumped 344.8 percent at 13,723 units from 3,085 units sold in August 2012. While there was no buyer for luxury sedan Kizashi during the month under review, sales of the mid-sized sedan SX4 plummeted 22.1 percent to 348 units from 447 units sold in August 2012. Sale of utility vehicles like Gypsy, Grand, Vitara and Ertiga dropped 33.7 percent to 4,563 units from 6,883 units sold in the corresponding period of last year. The van segment (Omni and Eeco) declined 31.4 percent with 7,956 units from a sale of 11,593 units in August 2012.

Source : Equity Bulls

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