This Article is From May 14, 2012

Profit Top 10: As inflation soars, markets, rupee tumble

Profit Top 10: As inflation soars, markets, rupee tumble

Honda India president Keita Muramatsu (left) and actor Akshay Kumar at the Dream Yuga launch in Gurgaon on Tuesday.

Highlights

  • If you missed our coverage, here are the top 10 stories of the day.
New Delhi:

 

  • Rising Inflation adds to RBI’s headache
  • Sensex, Nifty fall on inflation shocker; RIL near 52-week low
  • Rupee at all-time closing low, slumps to 53.97 against dollar
  • Moody's downgrades ICICI, HDFC, Axis banks, LIC
  • Earnings Central: L&T, JSW Steel beat Street
  • JPMorgan executives expected to leave over $2 billion loss
  • Yamaha to set up Rs 1,500 crore plant in Tamil Nadu
  • Yahoo CEO steps down amid controversy
  • TRAI gets new chief; sticks to controversial auction plans
  • Facebook CEO Mark Zuckerberg turns 28, IPO could be $100 billion gift


 

1) Rising Inflation adds to RBI’s headache

 

India’s headline inflation, measured by the wholesale price index (WPI), rose to 7.23 per cent from 6.9 per cent in March 2012. Experts had projected WPI to drop to 6.7 per cent. Food inflation was at 10.5 per cent. The higher-than-expected inflation has reduced the prospects of further interest rate cuts. (Read: What experts say)

 

The surge in inflation is now adding to the RBI's struggle to control inflation when economic growth has slumped to a near three-year low. “Today's number underscores the point that the Reserve Bank of India has limited room to cut monetary policy rates because it highlights the risks that inflation poses,” said Leif Eskesen, chief economist for India and Asean, HSBC, Singapore. “The inflation is more structural in nature, and if the RBI eases rates too much, inflation could flare up.” (Read More)

 

Also Read: India’s stubbornly high inflation - What it means

 

 

2) Sensex, Nifty fall on inflation shocker; RIL near 52-week low

 

The BSE Sensex and NSE Nifty, which traded up 0.5 per cent in the early morning trade, slumped as soon as the inflation data was released. The street was betting on a low inflation for April 2012. A spike in global risk aversion too dented sentiment.

 

The BSE Sensex closed down 0.47 per cent or 77 points to 16,215.84. The NSE Nifty slipped below 4900-level shedding 21 points or 0.43 per cent. It ended the day at 4,907.80. Market heavyweight Reliance Industries also traded close to its 52-week low at Rs 681 (-2.32 per cent) as investors are concerned about declining profit growth in core businesses of refining and petrochemicals. (Read More)

 

Also read: Why is the Street bullish on Bajaj Auto

 

 

3) Rupee at all-time closing low, slumps to 53.97 against dollar

 

The rupee on Monday closed at a new provisional record closing low of 53.9750 to the dollar as global risk aversion spiked and as higher-than-expected domestic inflation data hit stocks by lowering expectations for future rate cuts. (Also read: Why the rupee is among the weakest currencies)

 

The rupee came very close to falling below the psychologically key 54-level and ended not far from the record low of 54.30 hit in mid-December. (Read More)

 

Also Read: Rupee could lose 2-3%, says Standard Chartered

 

 

4) Moody's downgrades ICICI, HDFC, Axis banks, LIC

 

Shares of India's three largest private sector banks -- ICICI Bank (-1.70 per cent), HDFC Bank (-2.02 per cent) and Axis Bank (-0.69 per cent) fell after ratings agency Moody’s downgraded their credit ratings. Moody’s also downgraded the foreign currency insurance financial strength of Life Insurance Corporation to Baa3.

 

The reason for the downgrade was similar to LIC's -- the significant direct exposure each of the banks has to Indian government securities. (Read More)

 

 

5) Earnings Central: L&T, JSW Steel beat Street

 

Larsen & Toubro, the biggest Indian engineering and construction company, reported a net profit of Rs 1,920 crore over net sales of Rs 18,481 crore for the quarter ended March 2012. While the net profit was higher than the Street estimates, net sales were lower. (Read More)

 

JSW Steel, meanwhile, reported standalone profit of Rs 752 crore for the quarter ended March 2012, beating Street expectations of Rs 675 crore. Sales were at Rs 10,150 crore, against estimates or Rs 8716 crore. (Read More)

 

 

6) JPMorgan executives expected to leave over $2 billion loss

 

Three top executives involved with a failed hedging strategy that cost JPMorgan Chase & Co at least $2 billion and tarnished its reputation are expected to leave the bank this week, sources close to the matter said on Sunday. (Read More)

 

JPMorgan Chase & Co lost at least $2 billion in its failed hedging strategy not only because it was sloppy, but because it grew too big in a small market of complex financial instruments and couldn’t offload its holdings. (Read: The core problems with JPMorgan’s failed trades)

 

Also Read: JPMorgan sparks question: How much is $2 billion?

 

 

7) Yamaha to set up Rs 1,500 crore plant in Tamil Nadu

 

Japanese two-wheeler giant Yamaha on Monday said it will set up a third facility in India, entailing an investment of Rs 1,500 crore over the next five years.

 

The company's wholly owned subsidiary—India Yamaha Motor—will start the production of this new plant near Chennai by 2014 with an initial annual capacity of 4 lakh units, which will be expanded to 18 lakh units by 2018. (Read More)

 

Also Read: Tamil Nadu signs MoU with 5 auto majors for investment worth Rs 5,700 cr

 

 

8) Yahoo CEO steps down amid controversy

 

Yahoo Inc is replacing its CEO for the third time in as many years, and giving three board seats to a hedge fund led by Daniel Loeb, putting him in a strong position to influence strategy at the struggling Internet company.

 

Chief Executive Scott Thompson stepped down on Sunday, 10 days after Loeb accused him of padding his biography by faking a computer science degree. Loeb's Third Point LLC is one of Yahoo's largest shareholders with a 5.8 per cent stake. (Read More)

 

Also read: Timeline of controversy over Yahoo CEO's resume

 

 

9) TRAI gets new chief; sticks to controversial auction plans

 

The government has approved the appointment of commerce secretary Rahul Khullar as the chairman of the Telecom Regulatory Authority of India (Trai). Khullar will succeed J.S. Sarma, whose tenure ended on Sunday. (Read More)

 

Meanwhile, the telecom regulator has reaffirmed most of its proposed rules for an auction of mobile airwaves, including a steep base price for bids, despite howls of protests by carriers in the world's second-biggest mobile phone market. (Read More)

 

 

10) Facebook CEO Mark Zuckerberg turns 28, IPO could be $100 billion gift

 

Facebook's chief executive turns 28 on Monday, setting in motion the social network's biggest week ever. The company is expected to start selling stock to the public for the first time and begin trading on the Nasdaq Stock Market on Friday. The IPO could value Facebook at nearly $100 billion, making it worth more than such iconic companies as Disney, Ford and Kraft Foods.

 

At 28, Zuckerberg is exactly half the age of the average S&P 500 CEO, according to executive search firm Spencer Stuart. (Read More)