Thanks again. I figured out (through google) that i had to do "setenforce 0" to see output on hwclock. So, i enabled Network Time Protocol (NTP) and did hwclock --systohc. Anyways my BIOS clock was already right and local, I also did hwclock --localtime, to associate hwclock time to localtime.
Rebooted and am back to square one. I checked rc.sysinit and it seems to be calling /etc/sysconfig/clock, which looks right as i had pasted before.
Since i am connected all the time, I am just leaving it at NTP for now.
But i would be really glad to know, how to make linux think that hwclock is only localtime.