It’s been a dramatic week for Indian markets with gloomy news from around the world wreaking havoc on local bourses. Indian markets opened Monday’s trade right after the downgrading of American sovereign debt. Not surprisingly, they went into freefall, only make a partial recovery on news that the European Central Bank was buying Italian and Spanish bonds. By day’s end the Sensex was 316 points lower at 16,990. Markets extended their losses on Tuesday, with another 132 point loss on the Sensex. Then on Wednesday they staged a dramatic recovery thanks to bargain hunters and short-covering. But the battering resumed the next day with a 71point drop followed by a 220 point decline on Friday to 16840.The Sensex is currently at its lowest level since June of last year.
Tata Motors’ first quarter profit growth screech to a halt. Like other automakers, the company has suffered from rising raw material costs that have chewed into margins. Net profit inched ahead a mere 0.5% to just under Rs2,000 crore. That was on a revenue growth of 24% to Rs33,572 crore. Tata Motors has a net debt of Rs15,000 crores as of June. What’s worse, purchases have slumped in July, with sales of the Nano car alone dropping a full 64%.
Once troubled IT firm Mahindra Satyam has reported bumper results for the first quarter. The company posted a profit after tax of Rs 225 crores, which is an increase of more than a 100%. That’s on a revenue growth of just 15% to Rs 1,434 crores. Satyam chairman Vineet Nayyar said the results showed the company was now finally progressing towards growth.
Despite all the worries about the economy, India’s international trade has surged in July. And the rise has been accompanied by high growth in imports as well. Exports for July jumped some 82% to $29.3 billion. Imports meanwhile climbed a robust 52% to $40.4 billion. That in turn means a trade deficit of $11.1 billion. India’s imports have been inflated by rising oil prices. The country’s oil import bill for July alone was some $11.5 billion
The other bit of good news for the economy came from the industrial sector. On Friday the government released data showing a spike in June’s industrial output. The index of industrial production for the month stood at 8.8%. In May it was at just 5.9%.The better than estimated numbers could bolster the case for RBI to hike interest rates further despite worries about a slowdown.
India’s food inflation has hit a four month high towards the end of July. The food price index hit 9.9% in the period to the 30 July. The previous week it stood at just 8%.
The Prime Minister has extended RBI governor D Subbarao’s term by another two years. Subbarao became RBI chief back in September of 2008, just as the global financial crisis erupted.