India Markets Thursday Wrap-Up: India Leads Asian Gainers

by: Equitymaster

For the second day in succession, the benchmark indices remained remarkably stable since the start of the session and helped the Indian stock market to lead the pack of gainers in Asia today. The BSE Sensex closed with gains of around 155 points (up 0.8%) whereas NSE Nifty gained around 46 points (up 0.8%). The BSE midcap and small cap indices trailed behind, gaining around 0.2% each. The realty, auto and infrastructure stocks garnered the maximum investor favour.

Most Asian indices closed the day in the positive whereas Europe too is trading in the positive currently. The rupee was poised at Rs 44.56 to the dollar at the time of writing.

The State Bank of India (SBI), which acts as the de facto banker to the government, will continue to manage the Rs 3.5 trillion retirement fund for EPFO. Amongst the erstwhile fund managers, SBI is the only one to continue to manage the fund. The others including ICICI Pru, HSBC and Reliance Capital have been declined the offer. This gives SBI the opportunity to earn fee income on the corpus for the first quarter of FY12. As many as 11 Asset Management Companies (AMCs) have evinced interest to manage EPFO's huge corpus which receives incremental deposits of about Rs 300 bn every year.

In what may come as interesting data to companies looking at capitalizing on India’s consumption story, the initial reports from India’s census statistics puts India's population at 17.5% of world population in 2011. The population rose by 181 m to 1.2 bn people over the last 10 years. China currently is the most populous nation in the world, accounting for 19.4% of the global population. However, with India's population equaling the combined headcount of the US, Indonesia, Brazil, Pakistan, Bangladesh and Japan put together, there is little to take away from the consumption potential here. Another encouraging piece of data is the rise in literacy rates. Literates constituted 74% of the total population in 2011 up from 64.83% in 2001. FMCG and consumer durable companies in particular will have a lot of takeaways from the results of the consensus.

As per a business daily, engineering heavyweight Larsen & Toubro (L&T), (OTC:LTOUF), has exited its joint venture L&T-Case Equipment by selling its stake to the partner. This JV produces loader backhoes, vibratory compactors and other earth moving equipment. L&T had earlier cited the intent to sell its stake in joint ventures in which it is not holding a majority stake. Another JV under review is the one with Japanese company Komatsu for hydraulic excavators and components.

L&T has realigned its JVs in the past. These included the JVs with Germany's Demag Plastics Group and Messer Electric and Castolin Group. The company had also exited the Bangalore airport project. It may be recalled that in January, L&T had announced a restructuring plan for its businesses. It had split its portfolio comprised of 64 businesses into 9 independent entities with a separate head of business and board of directors for each of these.