Poltical Worries Drag Indian Market

123jump.com Staff
21 Aug, 2007
New York City

Stock market fell sharply after the ruling coalition disagreement surfaced over nuclear pact with the U.S. Key coalition member, communist party showed its unwillingness to lend its support for the nuclear deal. Investors worried that the disagreement may lead to a call for general election, ahead of schedule. Sensex plunged 3% in Mumbai trading as every member of the index dropped. Banks and real estate companies suffered heavy losses. Blackstone is in a deal to acquire Gokaldas Exports.

[R]7:00PM Mumbai, 9:30AM New York – A lack of transparency in nuclear pact with the U.S. left the ruling Congress party coalition in chaos. Sensex fell 3% on the worries that general election may be called ahead of schedule.[/R]

Sensex in Mumbai trading dropped 438.44 points or 3.04% to close at 13,989.11 after rebounding from the low of the day with a loss of 485 points. CNX Nifty lost 134 points or 3.2% to close at 4,074.90. The fragile coalition between Congress party and Communists parties appear to be divided on nuclear pact with the U.S. Rupee in international trading recovered against the U.S. dollar to 41.10 from 41.33.

Communists controlled parties provide a support with 60 members in the parliament to Congress party with only 226 seats, 47 seats short of majority in 545 -member Lok Sabha.

The daily turnover on BSE increased to 4,201 crore rupees from 3,877.61 crore rupees and on NSE turnover gained to 10,779 crore rupees from 8,959 crore rupees. All 30 stocks in the Sensex fell.

Gokaldas Exports soared 10.2% to 252 rupees after the U.S. private equity firm Blackstone agreed to acquire 50% from the controlling Hinduja family and 20% from the public investors. After the deal Blackstone will control 70% in the company and Hinduja family will lower its stake from 69% to 19%.

Banks declined for the second day in a row led by 5.5% fall to 1,465.30 rupees in State Bank of India followed by 4.2% decline to 835.45 rupees in ICICI Bank, and 2% decrease to 1,105 rupees in HDFC Bank.
Reliance Industries is reported to have discovered oil reserve, one of the largest discoveries on the east coast so far, in the drilling of third well in Krishna Godavari basin. The stock in the general market decline fell 2.8% to 1,742 rupees.

Reliance Communications fell 4.2% to 486 rupees after jumping a day ago on market speculation that it is negotiating with Aircel. Reliance denied the rumors today. Reliance has a total of 37 million or 3.7 crore subscribers. Bharti Airtel plans to double its network towers to 80,000 in the next the six months. The stock dropped 0.7% to 821 rupees.

Software exporters fell as market worried that the current credit market volatility in the U.S. may affect earnings in the sector. Tata Consultancy Service fell 4% to 1,012 rupees, Satyam Computer declined 4.1% to 415 rupees, and Wipro lost 5% to 446.30 rupees.

Central Bank of India priced its IPO at 102 rupees and raised 820 crore rupees. The stock closed up 13% to close at 115.40 rupees on heavy volume of 2.4 crore shares. The issue was oversubscribed 62 times at the close on July 27th.

Real estate developers suffered in the market decline. Sobha Developers fell 4.7% to 750 rupees, Unitech declined 3.3% to 477 rupees, DLF lost 3.6% to 558 rupees, and Ansal API decreased 3% to 257 rupees. TCI Industries, the owner of Mukesh Mill properties in Colaba area of Mumbai jumped upper end of the daily limit 5% to 4,318 crore rupees. The stock has surged 5% every day for the last 28 trading sessions on the expectations that the mill will be acquired at a premium price by one of realtor companies. DLF recently agreed to pay 1,600 crore rupees for 38 acre land comlex of DCM Shriram in New Delhi. Gayatri Projects fell 7.7% to 255 rupees after the company plans to raise foreign investor limit to 49%.