Markets Negative, Tata Power Spikes 2%

As we expected, the Indian markets have remained sluggish this morning. Both the benchmark indices are down by over 0.2%, showing negativity.

The RBI Governor Duvvuri Subbarao’s fresh comments on high inflation are also being viewed keenly. Subbarao said that inflation remains too high and need to come down further. He also said that cutting interest rates in the short term may benefit the economy, but the persistent high inflation will be harmful in the long run. Subbarao also said that the RBI has lesser room for easing the monetary policy than it did in 2008, and this has impacted the markets partially, indicating that the risk is not yet priced in.

In the Asian markets, Shanghai has remained weak due the concerns that the Chinese economy is moving towards a slowdown. Nikkei and Hang Seng, however, are trading in the green.

Of the sectoral indices, Bankex, HC, Power, CG and FMCG are trading in green, while all the others are laggards. The IT index has fallen by 0.8% at this hour.

The shares of Tata Power have surged by 2.2% over the MERC’s increased fuel adjustment cost (FAC) from 10% to 20%. Tata Power has a distribution business in Mumbai and this increase will have a positive impact on its revenues. The shares of ADAG company Reliance Infra have also surged 0.42% on this news.

Among the other Sensex stocks, Cipla has also gained over 1%. Hindalco and Jindal Steel, which tanked heavily yesterday, are in the gainers list today. Other Metals stocks, though, are in losses. Maruti Suzuki and Hero MotoCorp are making gains. The shares of ONGC have declined by 1.8% over the CAG report. BHEL, Sterlite, Bajaj Auto, Tata Motors and Infosys all are down over 1%.

In other shares, United Breweries has surged further and has hit a record high on the news of amalgamation of the firm with Scottish & New Castle (India). United Spirits is also trading with 5% gains today. Jaiprakash Associates' shares have tanked 8% as the company has said that it has launched an FCCBs issue of USD 150 million to repay the existing FCCBs.

Among the other shares, Wockhardt has surged by 6%. However, one should be very cautious on the scrip as the shares will start trading in the T category by next month. Opto Circuits has tanked by 6%. Sesa Goa, Pantaloon Retail and SAIL have also declined by 2% each.

The shares of HCL Infosystems have tanked by over 10% today. Its shares were up 20% on the news that Lenovo will buy the promoter’s stake in the company.

The advance-decline ratio is currently mixed, with one share having declined for every one advanced.