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The S&P CNX Nifty advanced 30.10 points or 0.57% to 5,312.10. The index touched a high and a low of 5,329.55 and 5,242.15, respectively.
The major gainers on the Nifty were Hindalco up 3.61%, Reliance Power up 3.29%, Ambuja Cement up 2.60%, Sterlite Industries up 2.32% and HDFC up 2.10%. The major losers on the index were Infosys down 1.97%, TCS down 1.40%, Tata Motors down 0.97%, ABB down 0.85% and Cipla down 0.81%.
Planning commission cut India’s XI plan (FY08-12) core Infra capex (ex-Telecom) by 5% led by slippages at Railways, port and roads, while maintaining overall doubling of capex to Rs20.5tr, in a mid-term review. This reinforced our view of a 10 year extended cycle for E&C companies apart from allaying the fear of slowdown in their earnings on a higher base (8th year of this cycle). Govt. reiterated XII plan (FY13-17E) Infra capex of Rs40tr / US$880bn, taking total (FY08-17E) to Rs60tr / US$1.3tr. This creates a macro framework for robust sustainable growth & has potential to drive E&C cos into a higher orbit of size & value.
We have seen lot of talk on the Chinese Bubble. But it is for real since Citi’s Chief Economists Willem Buiter [UK] and Minggao Shen [HK] just a while ago published a joint Report in the same. The main highlights of the report are,
Key takeaways from management meeting,
Bharti Airtel has finalized $8.3 billion of funding for its acquisition of the African assets of Kuwait-based telecom major Zain. A consortium of banks led by Standard Chartered and Barclays would lend it $7.5 billion and State Bank of India (SBI) another $1 billion, a so-called rupee loan.
The financing was oversubscribed, with major international banks committing to underwrite the total amount. The company has opted for offshore loans over onshore loans owing to the good response from overseas banks. The dollar loan is expected to reduce risks involved in execution process.
Reserve Bank of India’s surprise Rate hike (25bps each for repo and reverse repo) caught the market off-guard, even as the past week’s buying in government bonds indicated a distinct comfort on the part of market participants most of whom anticipated the action at the time of the April policy – scheduled on April 20, 2010. We would expect the impact on the respective fixed income segments as below.
Sovereign bonds – with most of the action concentrated in the 2016 and the benchmark 2020 bonds, we would expect the belly of the curve to steepen and the 2s10s spread to harden as market prices in the distinctly emerging hawkishness on interest rates from the central bank.