BackThe Mint Report for 27 July 2010
The Mint Report for 27 July 2010
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Worried about inflation, the RBI took stronger-than-expected action on monetary policy on Tuesday. The repo rate, at which the RBI lends to banks is up 25 basis points to 5.75%. While that hike was expected, the reverse repo, which is the rate at which banks park their excess cash with the RBI was increased by 50 basis points to 4.50%. On the other hand, the cash reserve ratio remained unchanged at 6%. RBI governor D. Subbarao said inflation remained the central bank’s main concern and that with economic growth on firmer ground, it was time to rein it in. And analysts have told Mint the 50 basis point increase in the reverse repo will stabilize overnight rates and hike short end rates.
India’s biggest company Reliance Industries reported bumper earnings on Tuesday. Net profit rose 32% to Rs4,851 crore. Revenues did even better, shooting up 85% to nearly Rs60,000 crore.
RIL’s profits were boosted by its oil and gas business. The company’s gross refining margins recovered to $7.30 a barrel in the first quarter. In the same period in 2009, those margins were at $6.80.
Larsen and Toubro met street expectations with its quarterly numbers. Its net profit fell to Rs666 crore compared to nearly Rs1,600 crore in the same period last year. The high 2009 figure came after L & T sold its investment in UltraTech Cement for more than Rs1,000 crore. Not counting that sale, the company’s profits actually grew about 15% in this year’s first quarter.
Laresen and Toubro stocks turned bearish on Tuesday, closing 2.94% down on the BSE at 1,863.25.
In other corporate numbers on Tuesday, Hindustan Unilever’s profits were flat, falling 1.8% to Rs533 crore. Revenue, on the other hand, went up 7%. HUL says volume growth so far has been slower than in 2009. The company’s numbers were also hit by advertising and promotional expenses of about Rs750 crore.
Markets made modest gains on Tuesday, helped along by positive global sentiments. The Sensex ended the day at 18,078, a gain of 58 points. And the Nifty nudged up 12 to finish at 5,431.
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