Post Market Update

Although the Indian markets ended the day on a weak note, they curbed a part of their losses during the second half of today’s trading session. The BSE-Sensex ended the day with losses of around 150 points, while the NSE-Nifty closed lower by about 40 points. On the other hand, stocks from the mid-cap and small-cap space ended the day on a firm note, higher by 0.4% and 0.7% respectively. While profit booking was witnessed in stocks from the energy and capital goods space, buying activity was witnessed in stocks from the realty and auto sectors.
All the other Asian markets ended the day on a weak note. The European indices are currently trading in the red as well. Rupee was trading at 49.82 against the US dollar at the time of writing.
Inflation (as measured by the WPI) has decreased to 0.48% for the week ended May 2. This is lower than the previous week figure of 0.7%. It may be noted that the decline in the inflation figure is in spite of the rise in prices of foods such as pulses, cereals and vegetables. The number for the same week last year stood at 8.7%.
As per a leading business daily, Maharashtra Seamless (MSL) has delayed its plan to set up two steel plants by almost two years on account of the dull economic conditions. It may be noted that the company had planned to set up two steel plants of 500,000 tonne capacity each in Maharashtra and Jharkhand with an investment of around Rs 30 bn. However, with the current economic scenario wherein the prices of key raw material like steel have fallen significantly, the company has deferred its plans of backward integration. However, the management has stated that it is open to acquiring smaller steel plants and is looking for a right offer. Further, it stated that the expansion plans of company’s seamless pipe making capacity are going as per schedule. The company is increasing its capacity from 350,000 tonnes to 500,000 tonnes over next three years. The stock of MSL ended the day on a firm note along with its peer, Welspun Gujarat Stahl.
Power stocks ended the day on a weak note led by Neyveli Lignite, Reliance Power and Tata Power. In a move to attain the set target of the eleventh five-year plan, the Central Electricity Authority (CEA) has rescheduled a bulk of its targets to the last two years of the plan (FY11 and FY12). It may be noted that as per the original targets of adding nearly 16,335 MW and 6,782 MW in FY08 and FY09 respectively, India added only 9,263 MW and 3,454 MW respectively. This translates to an underperformance of 43% and 50% respectively. As per the revised targets set by the CEA, about 84% of the power generation capacity that is to be added during the 11th Plan will be commissioned during the last three years of the plan - FY10, FY11, and FY12. As per the original target, the same figure stood at 70%. In addition, the capacity addition target for the 11th plan has been revised to 80,010 MW from 78,577 MW earlier (an increase of 2%). It may be noted that in the last three five-year plans, the actual additions in the country have been only half of what was envisaged. In addition, a handful of experts, including members of the Planning Commission team have mentioned that the country will not be able to manage a capacity addition of more than 65,000 MW during the period. The reason behind this is lack of resources.