Top Stock Picks - Nov 6 2011
Sunday, November 06, 2011
Shares of Bharat Heavy Electricals Ltd. (BHEL), Thermax and BGR Energy rallied amid media reports that the Government was contemplating imposing 14% import duty on power equipment to curb the influx of cheaper products, primarily from China. The Union Heavy Industries Ministry has sought the Government’s approval for a proposal to impose a 14% import duty on power equipment, Minister Praful Patel said in New Delhi today. Officials from companies, including BHEL, Larsen & Toubro Ltd. met Patel in New Delhi today. There seemed to be a consensus for ensuring a level-playing field for the domestic power equipment manufacturers like BHEL and L&T vis-a-vis Chinese imports. In 2010, a panel headed by Planning Commission member Arun Maira recommended 14% import duties to bridge the disadvantage faced by local manufacturers against overseas rivals, especially from China. "We are asking for a level playing field, we are not asking for any special protection," BHEL Chairman B. Prasad Rao told reporters in New Delhi after today’s meeting. "There is agreement that the old argument about indigenous manufacturing not having enough capacity to carry India is no longer valid," Rao added. "We are not asking for protection, only level-playing field... there seems to be a consensus on this," L&T Chairman A.M. Naik told reporters after the meeting. Besides the industry players, senior officials of the Ministries of Heavy Industries, Power and Commerce attended the meeting. Currently, the projects with less than 1,000 MW generation capacity attract 5% import duty while the rest enjoy duty free import of equipment.
India's budget deficit for the first six months of the current fiscal has crossed 70% of the full year target, adding to fears that the Government won't be able to contain it within the projected levels. Fiscal deficit for the April-September 2011 period was almost double of the year-ago period, according to the data released by the Controller General of Accounts (CGA). The budget shortfall for the first six months of FY12 stood at Rs. 2.92 lakh crore versus Rs. 1.33 lakh crore in the same period of the last financial year. However, the pace of increase in the fiscal deficit slowed in September compared to August. The fiscal deficit surged from 39.4% of FY12 target in June, to 55.4% in July, and further to 66.3% in August. The Government has set a target of 4.6% of GDP, but most economists see it above 5.5% of GDP. Plan expenditure was only 40.3% of the budget estimates at the end of the first six months, as against 45.5% in the year-ago period. Gross tax revenues for April-September 2011 were up 10.2% from the same period last year. On a net basis, after setting aside the share of states, it is up only 4.1% because of heavy refunds. Non-tax revenue for the first half of FY12 is just a third of what was achieved last year. Non-tax revenue collection stood at Rs. 507.97bn this year versus Rs. 1.69 lakh crore in the year-ago period when the Centre benefited from the bumper sale of spectrum for 3G services and wireless broadband. At Rs. 2.43 lakh crore, total tax revenue collection in the April to September period of 2011 was slightly higher than last year compared to Rs. 2.33 lakh crore in the first half of last year. However, in terms of budget targets for FY12, it was just 36.6% as against 43.7% in the first six months of FY11. Plan and non-plan expenditure were higher than last year in absolute terms.
Food inflation in India accelerated further in the penultimate week of October, driven by soaring vegetable prices even as onion prices tumbled. Inflation in the fuel group declined. Data released by the government on Thursday showed that food inflation rose to 12.21% year on year for the week ended October 22, compared with 11.43% in the preceding week. Food inflation stood at 13.55% in the corresponding week last year. Inflation in the Primary Articles group increased to 12.08% in the week under review, from 11.75% in the week ended October 15, according to the Commerce Ministry statement. It was at 17.09% in the year-ago period. Inflation in the Fuel & Power group fell to 14.50% in the week ended October 22 from 14.70% in the previous week, the Government data showed. It was at 10.67% in the comparable week of the previous year. Inflation in the Non-Food Articles space declined to 6.43% in the week under review from 7.67% in the previous week, the Government data showed. It was at 25.09% in the same period a year earlier. Inflation in the Minerals group was at 21.59% in the week ended October 22, unchanged from the week ended October 15, according to the Commerce Ministry data. Inflation in this group stood at 29.09% in the year-ago period.
Global markets once again went through a tumultuous week after Greek's embattled prime minister George Papandreou stunned everyone by proposing a public vote on the EU bailout for the debt-stricken nation. He also called for a confidence vote in parliament, sending the highly indebted eurozone country into a political turmoil. The shocking development sparked off worries over the fate of Greece in the 17-member exclusive club called the eurozone. In fact, France and Germany were so upset they suspended the next tranche of emergency aid for Greece pending the referendum.
Shares of public sector oil marketing companies rose on Friday after they hiked petrol prices by Rs 1.82 per litre. Following the latest increase, petrol will cost Rs 68.64 per litre in Delhi, up from Rs 66.64 a litre. The retail selling price in different cities will vary according to local taxes. This is the second hike in petrol prices in less than two months. The OMCs had earlier increased petrol prices by Rs 3.14 a litre on September 16.
On Tuesday, HPCL Finance Director B Mukherjee said that the company was losing Rs 1.50 a litre on petrol. As on November 1, the OMCs are losing Rs. 9.27 a litre on diesel, Rs. 26.94 a litre on kerosene, and Rs. 260.50 on LPG cylinder.