First quarter of FY11 (April-June 2010) at a Glance

Posted by admin in Articles, Basics, Featured Articles on Jul 3rd, 2010 | no responses

Here is a quick synopsis of the major business news and stock market news in the quarter that’s just gone by.

Major Business Reforms

The much awaited 3G auction was completed with Indian goverment getting a bonanza of a trillion rupees (Rs 1 lakh crore), much above the expected revenues from the auction. This helped bringing down the fiscal deficit by a few points which is a positive over-all. However, the telecom companies suffered by having to pay huge sums to get the much needed spectrum to start the 3G services.
The SEBI listing guideline stated that public shareholding in all companies will have to be brought up to 25% in three years. A good news for retail investors. This opened up chances of very good investment oppurtunities in some good PSU companies as well as some good private sector companies.
Fuel price reforms saw the government free petrol prices and raise kerosene, diesel and cooking gas rates. A good fiscal reform from Indian government which will help control deficit and curb ever increasing subsidy bills. A good news especially for Oil Marketing companies such as BPCL, HPCL, IOC etc. However, the common man suffered with this move.
The ‘base rate’ system for bank lending was introduced and SBI set its base rate of 7.5%. The base rates for various banks now range from 7.5% to 8.5%.
All the above moves are generally considered to be good reforms. Some are expected to empower Indian consumers and minority shareholders. Others work in favour of the companies and economy as a while. However, all are welcome moves. However, the rising inflation becomes the biggest worry.

The state of Stock Markets

The BSE sensex now hovering around 17,700, just a little higher than it was at the end of FY 2010 (i.e March 2010), and is nearly double compared to the end of FY 2009. Most index stocks are trading near year highs, except Telecom stocks.
Indian companies did a great job during the slowdown. They came out as better companies by improving efficiencies. anufacturing companies are expanding their capacies and services companies started hiring in a big way.
The end of long fued and new found cooperation between Ambani brothers saw the Reliance and ADAG stocks go up and up. Mukesh Ambani entered into Power and Telecom sectors. And Anil is quickly restructuring his businesses with mergers and demergers.