India Corrects with Asia

Elena
22 Mar, 2006
New York City

Indian market managed to gain another 1,000 points in less than 30 days of trading on strong fund flows from domestic investors. International investors have been cautious as index scaled new high for the last six days in a row.

9:00AM Sensex index in Mumbai lost 0.5% on general weakness in Asia.
India’s Sensex index dropped more than one point at mid-day but recovered to close at 63 points lower. Asian markets sharp sell-off cautioned foreign investors from more adding capital to the market. Sensex rose from 10,000 to 11,000 in 29 days and rose from 9,000 to 10,000 in 48 days of trading. The market’s rapid ascent has cautioned many domestic and international investors. However, domestic mutual funds industry has raised additional $4 billion in the last one month that has still not been put to the market. Reliance mutual funds raised more than $1.3 billion for a new group of funds.

Late surge in select stocks such as Tata Motors, Dr. Reddy’s, Hindustan Lever and Satyam Computer supported market recovery. Dr. Reddy’s jumped 10% on news that the company is in talks with Sanofi-Aventis and Bristol Meyers to settle drug patent disputes. Tata Motors gained 1.6% on recent restriction on maximum tonnage imposed by Supreme Court. Higher freight rates for road transportation and strong demand for trucks have raised hopes for better earnings. Hindustan Lever and Satyam Computers rose 1.7% and 1.4%.


8:30 AM European averages lost ground at mid-day.
European markets traded mostly in the negative at mid-day dealings with market sentiment hurt by further worries that interest rate will be soon increased. However, strong pharmaceutical, media and auto stocks limited the downward trend. Automakers Volkswagen and BMW gained on lower euro and retreating oil. Sanofi-Aventis, Astra Zaneca and GlaxoSmithKline were among advancers. The German DAX 30 fell 0.2%, the French CAC 40 dropped 0.4%, while London FTSE 100 edged up 0.02%


8:00AM Interest-rate concerns dragged Asian markets down.
Asian-Pacific benchmarks finished Wednesday session with heavy losses, reflecting interest-rate concerns and weakness in the tech sector, following news that Microsoft will postpone the release of its Windows operating system until next year. The biggest loser was South Korea’s Kospi which plunged 2% on heavy sell-off among tech stocks, including Samsung Electronics and Hynix Semiconductor. The Nikkei dropped 0.8% to 16,495.48 with Nippon Steel limiting losses with an advance of 1.3% on expectations of higher steel demand. Hong Kong also posted a sharp decline, falling 1.8%, followed by Taiwan Weighted index, down 1%, while Australia’s All Ordinaries gained 0.4%.