Corporate results for the fourth quarter are stunning, yet stock prices fall as investors, like Oliver Twist, want more. The country’s largest private sector company, Reliance Industries, produced yet another good set of results, with net profits for the year ended March 31 going up by 14 per cent to Rs 10,908 crore. Its refining business did well. Thanks to the complexity of its refinery design it was able to refine different kinds of crude oil at a gross refining margin of $13/barrel for the quarter ($11.7 for the year). This becomes important as the world is fast running out of easy-to-extract light sweet crude most refineries have been built for.
Bharti Televentures’ net profit for the quarter was Rs 1,353 crore, up
a stunning 98 per cent. And if that increase left you breathless, look at the 138 per cent increase in profits at Idea Cellular.
A study of 140 companies shows a 61 per cent increase in net profit on a 30 per cent increase in turnover this quarter. India Inc is rocking.
Investors, though, pushed down the price of these stocks, and the week ended pretty flat after an initial surge. The BSE Sensex ended at 13,908, up 11 points and the Nifty ended at 4,084, unchanged. Investors are probably getting good at anticipating results and pushing up stock prices only when the anticipated performance is greatly exceeded.
The week started strong, cheered by an RBI credit policy stance that seemed to suggest it was trying to balance the imperatives of economic growth with the
compulsions of containing inflation. And also with the Indian economy hitting the $1 trillion mark. This has been achieved thanks to past economic reforms and for growth to continue, sensible reforms must, too.
One that will have to be taken up is labour reform. With organised labour forming something like 5-6 per cent of the total workforce, why this should be an unmanageable problem is not known. The danger is that the manufacturing
sector is not adding a lot of jobs, though IT/ITES is. The top five IT companies will add 100,000 jobs this year. This, though, is far less than the
number required. Jobs can come from organised retail (but this is being opposed because of the fallout on small traders) or from tourism (which requires huge investments in better roads, airports and hotels) or from infrastructure (which is proceeding far too slowly).
The market could bounce back over the next fortnight but rallies ought to be considered for exit. Inconsistency in policy, flip-flops over issues, and illogical tax rulings will surely take their toll.