Market Updates

Sensex in India Drops 1.4%, Banks Decline

Devan Biswas
08 Feb, 2011
New York City

    The benchmark index in India dropped 1.4% as investors worry another round of rate hike. Mixed earnings and selling from foreign investors also weighed on investor sentiment. Adani Power and Mundra SEZ earnings rose but Punj Lloyd reported net loss.

[R]5:00 PM Mumbai – The benchmark index in India dropped 1.4% as investors worry another round of rate hike. Mixed earnings and selling from foreign investors also weighed on investor sentiment. Adani Power and Mundra SEZ earnings rose but Punj Lloyd reported net loss.[/R]

The benchmark index in Mumbai declined sharply on the worries that interest rates will be on the rise as inflation stay near elevated levels.

The BSE Sensex declined 1.4% or 261.49 to close at 17,775.70 The CNX Nifty on the National Stock Exchange decreased 83.45 to close at 5,312.55.

Rupee traded between 45.30 and 45.50 a dollar as foreign investors remain on the sideline in the week.

Foreign investors have pulled out $1.3 billion in the year to Feb 4. However in the last two sessions foreign buyers have returned and added more than $49 million on Friday, second day of net purchase in a row.

Stocks of banks face another round of selling after Deputy Governor of Reserve Bank of India Subir Gokarn said monetary policy stance is “anti-inflationary” and headline inflation at 8.43% “continues to be high.”

The central bank in a statement at the late rate decision said that supply constraints are driving food inflation and monetary policy is largely ineffective in controlling food prices.

The statement was interpreted by investors as high inflation is likely to persist.

Hiring activities tracked by several job portals indicate a pickup in new recruiting. Retailers, IT sector and industrial companies are leading the new jobs creations according to two jobs sites Monster and Naukri January data.

Stock Movers

Adani Power Limited declined 1.3% to Rs 122.45 after the power generator company reported third quarter net profit surged 50.5% to Rs 109.11 crore and net sales soared 115% to Rs 502.60 crore.

Fortis Healthcare Limited surged 5.3% to Rs 147.40 after the healthcare company reported third quarter consolidated net profit rose 58.69% to Rs 34.50 crore and total income increased 69.32% to Rs 408.36 crore.

Mundra Port and Special Economic Zone Limited decreased 2% to Rs 131.65 after the infrastructure developer reported third quarter net profit rose 39.94% to Rs 228.47 crore.

The Shipping Corporation of India Limited fell 0.6% to Rs 113.50 after the shipping company said third quarter net profit increased 40.7% to Rs 123.06 crore and net sales rose 5% to Rs 888.93 crore.

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