Sensex in India in Record Close; Coal India Surges 40%

Devan Biswas
04 Nov, 2010
New York City

Stocks in Mumbai closed record high as foreign investors pour money on the successful public offering of Coal India. Rupee strengthened as the dollar declined on the back of higher than expected pump priming by the U.S. Fed.

[R]5:00PM Mumbai – Stocks in Mumbai closed record high as foreign investors pour money on the successful public offering of Coal India. Rupee strengthened as the dollar declined on the back of higher than expected pump priming by the U.S. Fed.[/R]

Mumbai stocks soared after Coal India surged nearly 40% and foreign investors sustain the market climb. A rally in international markets also contributed to the positive sentiment. Food price inflation index declined as well.

The Sensex index closed at a record high but failed to cross the intra-day high 21,206.77 on Jan 10, 2008. The benchmark index plunged since then to the low of 8,160.40 in March of 2009 in the wake of global financial markets crisis.

The BSE Sensex soared 2.09% or 427.83 to close at 20,893.57. The CNX Nifty on the National Stock Exchange gained 121.30 to close at 6,281.80.

The Sensex index is now up 20% for the year, leading top ten largest markets in the world, however stocks in India are not cheap when measured on price to earnings basis. Stocks in India are trading at a multiple of 20 where stocks in China are trading at 17.5% and in Brazil at 13.5% and less than 8 times in Russia.

Stocks in Asia surged after the U.S. Federal Reserve expanded the purchase of U.S. Treasuries by $600 billion.

The move was widely expected by investors in China and exceeded to top end of the forecast of $500 billion. Stocks in Hong had surged in advance of the move and closed higher again today.

The Fed’s move is tantamount to printing money to revive economic activities is expected to the U.S. economic recovery but is widely feared to fuel inflationary pressures.

Fed Chairman Ben Bernanke is experimenting with the crisis as he runs of traditional tools and opts for unconventional measures as interest rates hover near zero for two years and consumers and businesses withdraw spending and increase savings.

The dollar edged today in trading but is hovering near lows against the yen and the euro. Rupee rose 0.3% to 44.21 against a dollar and is up 5% in the year. The rupee is widely expected to strengthen to 43 in the next three months.

Coal India Limited surged to Rs 342.35 after the miner emerge as the fifth largest firm on the first day of trading and priced its offering at Rs 245

Food price index declined in the week ending October 23 to 12.85% from a year ago. The index rose 13.75% in the previous week. The index tracks prices agriculture products and vegetables and lentils.

Stock Movers

Surya Pharmaceutical Limited gained 3.3% to Rs 341.60 after the pharmaceutical company board approved a 10-for-1 stock split.

Tata Sponge Iron Limited decreased 2.2% to Rs 370.00 after the sponge iron maker reported second quarter net profit declined 28.65% to Rs 10.41 crore.

Venus Remedies Limited declined 1.1% to Rs 293.20 after the pharmaceutical formulation company on the back of certification of operation in Saudi Arabia.