Sensex in India Drifts; Banking Amendment Bill Clears Cabinet

Devan Biswas
04 Mar, 2011
New York City

Mumbai stocks surrendered earlier gains. Union Cabinet approved the banking reform bill that will increase shareholder voting right proportional to holding and require an approval for a stake higher than 5%. Tata Power plans to increase its generating capacity eightfold in the next seven years.

[R]4:45 PM Mumbai – Mumbai stocks surrendered earlier gains after stocks drifted lower in the afternoon. Union Cabinet approved the banking reform bill that will increase shareholder voting right proportional to holding and require central bank approval for a stake higher than 5%. Tata Power plans to increase its generating capacity eightfold in the next seven years.[/R]

Stocks in Mumbai trading opened nearly 0.5% higher but drifted lower in the afternoon. The index briefly dipped in the negative territory but managed close higher.

The Sensex in Mumbai trading closed up 43.26 to 18,489.76 and Nifty index gained 2.55 to 5,538.75.

The trading turnover on the BSE declined to Rs 3,150 crore from Rs 3,833.73 crore.

The rupee closed lower to 45.10 to a dollar and gold declined Rs 34 to Rs 21,118.00 for ten grams.

Crude oil declined as investors hoped that talks between Arab League president and Libyan leader Muammar Gaddafi will bring to an end of violence in Libya, the largest oil producer in Africa.

Banking reform bill is expected to be presented to parliament after the Cabinet approved the amendments. The revised bill will increase the shareholder voting right proportional to their stock holdings.

Currently, shareholders in state owned banks have only 1% of voting right of their holding and 10% in the private sector banks.

The bill also proposes that individual or corporate shareholder to hold more than 5% stake in the bank will need an approval from Reserve Bank of India.

Stock Movers

Reliance Industries increased 0.4% to Rs 981.70 on the optimism that the recent increase in crude prices will lift margins.

Larsen & Toubro declined 3% after rallying 10% in the last three days on the optimism that higher budgetary allocation in the Union Budget 2011 will lift margin in the industry.

Tata Power increased 2.3% after the company said it plans to invest Rs 70,000 crore or $15.5 billion to increase its power generation capacity eight times to 25,000 megawatts.

Banks gained after Union Cabinet approved the banking reform bill and will be presented to the parliament for its approval. State Bank of India increased 0.4% and HDFC Bank increased 1.4%.

Auto stocks extended gains for the fourth day on higher sales in February. Mahindra & Mahindra increased 0.5% and Hero Honda added 2.2%. Bajaj Auto increased 2.2% and Ashok Leyland increased 1.6%.

Maruti Suzuki declined 1.5% and Tata Motors fell 1.3%.