 "9 things that could sway the market today")
• Asian markets open positive. The Nikkei, the Japan exchange, is up 0.9%, while the Hang Seng (Honkong) is up 0.76%.
• Overnight, US equities rallied despite Eurozone worries. All three major indices finished up. Commodities too shrugged off last week’s collapse: oil, gold and silver made gains.
[caption id=“attachment_7716” align=“alignleft” width=“380” caption=“Mamta Banerjee, Trinamool Congress chief is likely to win the elections in West Bengal. AFP”]
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• Back home, electoral change is in the air. Exit polls and post-poll surveys point to a historic change in West Bengal, with the Left Front about to lose its grip after 30-plus years. Elsewhere, the picture is more mixed.
• More rate hikes, this time from India’s largest bank, SBI. It increased its short-term deposit rate by 75 basis points to 225 basis points (0.75% to 2.25%) - and the benchmark rates to which all lending rates are linked by 75 basis points (0.75%). The base rate and the BPLR will be 9.25% (currently 8.50%) and 14% (13.25%) respectively. Even now, SBI’s benchmark lending rates are among the lowest in the industry.
• Yesterday, the Sensex fell nearly 200 points after an anticipated fuel price hike was deferred. However, the oil minister subsequently announced a meeting next week on this issue. Petrol prices, which haven’t been raised since January, are expected to go up by Rs 3 a litre, perhaps even this week.
• Microfinance company SKS Microfinance is changing its business model. The company, which has lost almost 40% of its value, says it plans to focus on gold loans and other non-core stream areas, and will raise about Rs 4,000-5,000 crore this year. Although it had been downgraded by a number of brokerages due to losses and low recovery in Andhra Pradesh, the company had still been valued at a premium for being the sole microfinance lender in the market. But it will now be classified as a non-banking finance company, which typically enjoys much lower valuation.
• Amidst more symptoms of a growth-sapping energy crisis, Prime Minister Manmohan Singh has convened a high-powered meeting for May 16 to iron out issues relating to availability of coal. Poor logistics is slowing down the availability of coal to consumers, and an estimated 40,000 MW of new thermal power capacities could be stranded for want of coal.
• Pharma giant Ranbaxy’s profits slumped, but beat analyst expectations. Net profits for the first quarter were down 68% from Rs 961 crore to Rs 304 crore, against analyst expectations of of Rs 151 crore. Net sales fell to Rs 2,140 crore, down 13.6%. The company has not made any provisions for an US FDA claim that Ranbaxy had falsified data and test results in drug application. Media reports have said US prosecutors are negotiating a criminal and civil settlement with Ranbaxy, which could lead to fines and payments of over $1 billion.
• King of Bad Times. Kingfisher Airlines’s cash flow problems worsened, with the Mumbai International Airport Limited warning it would place the airline on a ‘cash-and-carry’ basis if it does not clear its Rs 105.71 crore dues by May 25. That would mean the airline won’t be allowed to operate flights out of Mumbai unless it pays for landing and parking for each movement on an immediate basis. This compounds the payments crisis the company has with oil companies and the Airports Authority of India - all pointers to the airline’s worrisome financial position. Recently, banks that had lent money to the airline converted Rs 750 crore debt into equity as part of a restructuring plan.