Business This Week: Trade Deficit Drops; Equity Markets Rally

Business This Week: Trade Deficit Drops

Business This Week: Trade Deficit DropsMarkets This Week

Another very positive week at the equity markets. After an apprehensive fortnight in the green, the equity markets seem to reassure investors of the positive signs. The 30 share S&P BSE Sensex closed the week at 29094.93 points – a gain of about 377.02 points or 1.31 per cent over last week’s closing. Similarly, the 50 share CNX Nifty, ended the week at 8805.50 point – a gain of some 144.45 points or 1.66 per cent over the previous week. FIIs are reported to have sold equity worth INR 2699.04 this week.

Most of the sectors, except perhaps realty and oil & gas, made progress this week. Banks and pharma led the rally with Lupin, SBI, and IDFC going on to become the top gainers from among the Nifty fifty. GAIL, BHEL, DLF, ONGC, and HDFC Bank were among the top Nifty losers this week. ONGC and HDFC Bank may be worth looking out for in the next two trading sessions with their Q3 results set to be announced.

Both gold and silver gained this week. while gold gained slightly ahead of the next wedding season, silver closed over the INR 39,000 level following much speculation in the market.

Coal Auction Ruling Brings Relief to JSPL, Sterlite, Sarda, and Others

Financial bidding for two coal blocks – Talabira-I and Sail Goghri – opened on 14 February. A number of blocks are to be subsequently put up for auction. On 13 February, a Delhi High Court verdict brought relief to a number of companies including Jindal Steel and Power Ltd (JSPL) and Jindal Power Ltd (JPL), Monet Ispat, Sesa Sterlite, Sarda Energy and Minerals Ltd, Usha-Martin Ltd, and Utkal Coal Ltd, which had earlier been disqualified from bidding due to technical reasons. The court has asked the government to include their bids in the consideration process. Some of these companies such as Sesa Sterlite had bid for all nine coal blocks but were disqualified due to technical reasons and had subsequently filed a petition seeking inclusion in the list of bidders. The Coal Secretary of India, Mr. Anil Swarup, said that the High Court order would be complied with and this would not have any impact on the auction process itself.

SBI Q3 Results Brings Cheer

The State Bank of India (SBI) closed the week by declaring its much-awaited quarterly results for the period ending December 2014. The country’s largest state-run bank posted a net profit of about INR 2,910 crore, an increase of 30.2 per cent in the profit over that of the same quarter last year. The bank has been making a concentrated effort, over the past few quarters, to recover bad loans. India’s biggest lender reported a rise in gross bad loans by 4.9 per cent of total loans – a slight increase from 4.89 per cent reported in the previous quarter. This comes as a relief at a time when PSU banks have been increasingly reporting bad loans.

The profits declared by SBI was lower than the market estimate of INR 3,326.3 crore and yet investors at the equity market found reasons to cheer with the share price rising about 8 per cent to INR 307.05 at the BSE. SBI declared a net interest income of INR 13,776.64 crore and a non-interest income of INR 5,237.80 crore. The SBI also announced that it would conduct a ‘mega auction’ next month in which assets worth INR 1,200 crore would be put up for online auction.

Snapdeal Set to Raise USD 400 Million

Snapdeal announced its intentions of raising about USD 400 million (approximately INR 2,500 crore) taking its valuation up to about USD 5 billion. This comes very close on the heels of the last round of fundraising by SnapDeal in October 2014 when the company received USD 627 million investment from SoftBank. According to reports, international hedge funds may be major investors this time. Snapdeal is also set to acquire about five tech companies in 2015. Kunal Bahl, the founder and chief executive of Snapdeal announced that the e-commerce giant is likely to announce an acquisition anytime soon. This technology will become an enabler for the site’s platform.

Drop in Trade Deficit Due to Falling Oil Price

Trade deficit in the country has fallen to a 11-month low as of January 2015. A sharp drop in oil prices has helped. The country’s current account deficit also registered a southward trend. In January 2015, the trade deficit came down to about USD 8.32 billion from the estimated USD 9.43 billion in December 2014. According to an official statement released by the Commerce Ministry, Indian exports contracted by about 11.19 per cent in January and imports went down by about 11.39 per cent.

January CPI inflation at 5.11 per cent; December IIP at 1.7 per cent

According to the latest reports released this year, CPI inflation rose from 4.28 per cent in December to 5.11 per cent in January. The CPI data base year was revised by the government a fortnight ago and this estimate shall be crucial to those wanting to understand India’s economic progress. The RBI has been targeting a CPI inflation of less than 8 per cent for January 2015 and less than 6 per cent in the longer run. The index of industrial production (IIP) for the month of December rose by a mere 1.17 per cent against 3.9 per cent growth registered in the month of November.