Indian shares ended flat on Monday as Reliance Industries gained on hopes the appointment of a new oil minister would improve relations with the government, but Bharat Heavy Electrical dropped after quarterly earnings missed estimates. The finance minister on Monday pledged to nearly halve the country's fiscal deficit by March 2017 but the impact was limited as P. Chidambaram offered few concrete steps to meet the ambitious target.
The comments were seen as an attempt to persuade Reserve Bank of India to cut interest rates when it reviews monetary policy on Tuesday, but analysts say the central bank is unlikely to do so given its concerns about inflation. Instead, analysts expect the RBI to cut the cash reserve ratio, or the amount of deposits lenders must keep with the central bank.
"As of now there is no fiscal consolidation. Only the intent is there," said Aneesh Srivastava, chief investment officer of IDBI Federal Life Insurance. "Overall result earnings and policy would set the tone of the market in the near term," he said. India's BSE index rose 0.06 percent, or 10.48 points, to 18,635.82 points.
The 50-share NSE index rose 0.02 percent, or 1.30 points, to 5,665.60 points. Among decliners, Bharat Heavy Electricals Ltd, fell 6.4 percent after reporting a bigger-than-expected 10 percent drop in its quarterly net profit due to falling orders in a slowing economy. Shares of Hindustan Unilever dropped 1.1 percent on continued worries about whether the consumer goods maker can sustain pricing-led sales growth in the soaps and detergent segment, and concerns about slower growth in personal products and food.
Analysts also cited concerns about higher taxes: Jefferies said Hindustan Unilever has raised its tax rate assumptions for fiscal 2013/14 and 2014/15, citing guidance from the management. Hindustan Unilever shares had dropped 4.3 percent over the previous two sessions. It posted earnings that disappointed investors on Friday. Shares in United Spirits dropped 9 percent, after Vijay Mallya, who controls the liquor company, told Reuters on Sunday he had not reached a deal to sell a stake to Diageo.
Shares in Havells India dropped 5.6 percent after reporting a smaller-than-expected 23.8 percent rise in July-September quarterly earnings. Bank of India fell 2.7 percent after reporting a 38.5 percent drop in quarterly earnings and warning 12-15 percent of its restructured loan book could turn bad, while saying it expected a slight increase in non-performing assets.
However, Reliance Industries rose 1.5 percent after India's new oil minister Veerappa Moily promised to speed decision making, raising hopes for a more conciliatory approach over the energy conglomerate's investments in the KG-D6 block in India's east coast. Shares in Wipro gained 2.6 percent after Credit Suisse upgraded the stock to 'outperform' from 'neutral', saying shares have "significantly underperformed peers and the Indian market over the past 12 months.
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