Sensex Drops 1.8%; Infosys Declares Special Dividend

Chandrasekhar Atreya
15 Oct, 2010
New York City

Indian stocks pared most of the gains made the day before on profit booking. Infosys declared a special dividend but the stock fell on the worries of weakening dollar. Gold and silver reach records as festive season lifts the demand.

[R]5:00 PM Mumbai – Indian stocks pared most of the gains made the day before on profit booking. Infosys declared a special dividend but the stock fell on the worries of weakening dollar. Gold and silver reach records as festive season lifts the demand.[/R]

Indian stocks traded lower sharply near psychological resistance levels as investors booked profits. According to some analysts this was to have funds to participate in the ensuing Coal India IPO. Market breadth was negative with 2,009 declines as compared to 978 advances.

The BSE Sensex lost 1.82% or 372.59 to close at 20,125.05 with a decline of 0.62% in the week. The CNX Nifty on the National Stock Exchange lost 114.70 points to close at 6,062.65.

The rupee strengthened to a new 25-month high on Friday, buoyed by a strong foreign fund inflows.

The rupee traded at Rs 44.15 down 29 paisa at close in Mumbai.

Food inflation rose marginally to 16.37% for the week ending October 2, on the back of higher prices of cereals, fruits, select vegetables and milk. The inflation under the new series was 16.24% for the week ended September 25.

Far from the currency rows that have rattled global financial markets, a few Indian banks have sounded the regulator on the possibility of a new currency arrangement between India and China, India’s largest trading partner.

Since the rupee and Chinese yuan are largely non-convertible currencies, export and import transactions between the two countries have dollar pegs. These banks are suggesting a simpler and less expensive mechanism that would bypass the dollar and allow trade payments in local currencies.

Nearly 3,000,000 cell phone subscribers have been disconnected after home ministry can not verify the customer details or unexplained reasons.

As the Indian government prepares for quick subscriber verification exercise for security reasons, the telecom operators on Wednesday assured the government of their cooperation in getting details of customers.

The Indian government asked Cairn Energy to resolve cess, royalty and oil field management issues concerning India’s largest oil field in Rajasthan before the company pushes for approval to sell a controlling stake in Cairn India to Vedanta Resources. Cairn India holds a 70% stake in the Rajasthan block that comprises about 85% to 90% of the $9.6 billion Cairn-Vedanta deal.

Shares of SKS Microfinance, the only listed microfinance entity in India, on Friday plunged 9% on concerns that microfinance sector may come under tight government regulations.

Andhra Pradesh government on Thursday approved a Special Ordinance to rein in microfinance institutions in the state after they attracted criticism for charging high interest rates on loans.

Infosys Technologies Ltd Friday declared 200% interim dividend of Rs 10 per share and a 300% special dividend of Rs 30 per share of Rs 5 at par value for its thirtieth year in operations.

Three Indian cities, Ahmedabad, Bangalore and Chennai, have been listed among the world’s fastest growing cities by Forbes magazine. It also called Gujarat the most market-oriented and business-friendly among the Indian states.

Gold traded above Rs 20,000 per ten grams as festival season lifted the demand.

Gold jumped Rs 175 to a record Rs 20,120 per ten grams and silver reached Rs 37,000 a kg.

India offered 34 oil and gas blocks for exploration in the 9th round of New Exploration Licensing Policy, with the last date for bidding for these blocks March 18, 2011.

“Indian government is offering 34 blocks covering an area of 88,807 square kilometers,” Petroleum Minister Murli Deora said Friday in New Delhi.

The government is set to divest 10% of its stake in Indian Oil Corp and 5% in ONGC next year, a senior official said Wednesday.

“The government plans to sell 5% stake in ONGC and 10% in IOC. We are yet to appoint a banker for IOC’s public offer, but we hope to complete the process in the first quarter of fiscal year 2012,” Disinvestment Secretary Sumit Bose told reporters on the sidelines of Coal India press conference in Mumbai on Wednesday.

Finance Minister Pranab Mukherjee Wednesday laid the foundation stone of the country’s second financial hub, after the Bandra-Kurla complex in Mumbai, at Jyoti Basu Nagar in the northeastern fringes of Kolkata.

Spread over 300 acres, the hub will house several banking and financial institutions, insurance companies and stock exchanges apart from hospitality and educational institutions. It will entail a total investment of Rs 16,000 crore.

The Finance Ministry said Wednesday it will provide equity support of about Rs 8,700 crore to the public sector banks, a move that will enable lenders to raise funds from the capital market without diluting the government holding below 51%.

The government will drop a key rule from the new international accounting norms Indian companies have to follow from next year to permit real estate companies to book revenue as they build a property, allowing them to maintain a healthy profit and loss account.

The current move, which was cleared by the National Advisory Committee on Accounting Standards, is expected to bring some relief to the country’s real estate sector, which is yet to recover fully from the impact of the economic downturn.

Gainers & Losers

ABG Shipyard Limited fell 0.6% to Rs 313.00 after the shipbuilder secured two export orders worth $82.50 million for construction of oil rigs and vessels.

Chambal Fertilisers and Chemicals Limited increased 3.3% to Rs 92.95 after the urea maker on the expectations that good monsoon may lead to higher sales.

E.I.D.-Parry (India) Limited gained 2.6% to Rs 461.95 after the sugar, alcohol, power, bio pesticides maker’s board will consider stock-split proposal on October 25.

Eros International Media Ltd. fell 0.9% to Rs 175.05 after the entertainment media signed a content licensing deal worth Rs 64 crore with Zee Entertainment Enterprises for exclusive broadcast of some of Eros'' films on Zee''s television network.

Heidelberg Cement India Limited, formerly Mysore Cements Limited declined 3.6% to Rs 48.45 after the cement maker said third quarter net profit plunged 89.57% to Rs 2.82 crore.

Indian Hume Pipe Co. Ltd. slipped 4.9% to Rs 177.95 on profit booking after the stock rose 14% in the preceding two trading sessions.

Infosys Technologies Limited plunged 3.3% to Rs 3,076.15 on profit taking after the outsourcing company reported higher sales and earnings but the rising rupee may crimp future sales growth.

Jay Bharat Maruti Limited spurted 7.5% to Rs 83.75 after the auto component maker said second quarter net profit gained 133.56% to Rs 10.30 crore.

Kernex Microsystems (India) Limited surged 4.9% to Rs 148.30 after the anti-collision system maker reported second quarter net profit of Rs 2.92 crore compared to net loss of Rs 3.25 crore from a year ago.

Khaitan Electricals Limited fell 0.3% to Rs 201.80 on profit booking after the stock soared 46% in the preceding four trading sessions.

Manappuram General Finance and Leasing Limited declined 1.1% to Rs 150.00 after the non-banking finance company second quarter net profit spurted 226.12% to Rs 60.17 crore.

Nu Tek India Limited fell 0.4% to Rs 41.70 after the telecom infrastructure provider reported second quarter consolidated net profit surged 70.34% to Rs 8.04 crore.

Orbit Exports Limited increased 1.6% to Rs 70.00 after the woven fabric maker said second quarter net profit soared 180% to Rs 2.10 crore.

Rallis India Limited fell 1.9% to Rs 1,416.30 after the chemicals & pesticides maker said second quarter net profit rose 28.4% to Rs 58.70 crore.

Suryaamba Spinning Mills Limited soared 4.9% to Rs 94.35 after the synthetic blended yarn maker reported second quarter net profit of Rs 1.70 crore compared to net loss of Rs 0.47 crore from a year ago.

Suzlon Energy Limited decreased 2.3% to Rs 57.50 after the wind power company won orders for 168.5 megawatt of wind turbines.

Sadbhav Engineering Limited plunged 3% to Rs 1,486.25 after the engineering construction company won a project worth Rs 1411.36 crore from National Highway Authority of India.

Su-Raj Diamonds and Jewellery Limited gained 1.9% to Rs 64.90 after the diamond and jewelry maker’s board allotted 50 lakh equity shares at Rs 70 per share to two foreign institutional investors to raise Rs 35 crore.

Tata Motors Limited fell 1.6% to Rs 1,156.55 after the automobile maker’s global vehicle sales rose 19% to 86,996 units in September from a year ago.

Twilight Litaka Pharma Limited fell 0.4% to Rs 181.20 after the drugs & formulation maker entered into an agreement with South Africa based Interpro Healthcare to provide technical know-how.