Sensex Rebounds, Weak Footing

123jump.com Staff
26 Jun, 2008
New York City

Stocks in gained after a week of decline on rising inflation and economic slow down. Sensex in Mumbai rose 1.4% to 14,421. State Bank of India increased its lending rate following a recent increase in interest rate by the Reserve Bank of India. Rupee against dollar contiue to trade lower as crude oil price trade near record level. Stocks in India and Asia are likely to fall on a record high closing of Crude oil in New York.

[R]10:00AM New York, 7:30PM Mumbai - State Bank of India raises rates as shares surge for the second day in a row. Cairn India will invest $2 billion to increase crude oil production.[/R]

Market sentiment

Indian shares rose on Thursday ahead of expiry of June 2008 derivatives contracts led by oil and software shares.

In Mumbai trading, the 30-share BSE Sensex gained 1.4% or at 14,421.82. On the National Stock Exchange, the CNX Nifty rose 63.20 at 4,315.85.

Of the BSE traded shares, 1,468 shares advanced, 1,159 shares declined while 75 shares remained unchanged.

Among Sensex index share, 17 shares gained and 13 stocks fell.

Trading statistics

Daily turnover on the BSE amounted to 5,185 crore rupees and on the NSE was at 15,803 crore rupees.

Reliance Industries was the most active stock on the BSE with the trading turnover of 559.39 crore rupees followed by Reliance Capital, Niraj Cement & Structurals, Chambal Fertilisers and Anu''s Labs.

Chambal Fertilisers & Chemicals recorded the highest volumes followed by Nagarjuna Fertilisers & Chemicals, Reliance Natural Resources, Niraj Cement & Structurals and IFCI.

Higher Inflation to Persist

Double-digit inflation is likely to continue for a few more weeks before government efforts kick in to ease the rate of price rise, Finance Minister P Chidambaram has said.

Ahead of new inflation data to be released on Friday, Chidambaram said he cannot guess the inflation figure, but it will remain in double digit for some more weeks. Finance minister, however, disagreed with a suggestion that inflation could spoil the United Progressive Alliance''s chances in the upcoming general elections.

Inflation touched a 13-year high of 11.05% as on June 7, after a partial pass through of increase in global crude prices.

Government and RBI have taken several fiscal and monetary steps to cool inflation, but these measures may also have a slowdown effect on economic expansion.

FDI increased 127% in May

Foreign investors shrugged off concerns of high inflation rate impacting economic growth in India and poured in $3.74 billion in April showing a whopping 127% gain from $1.64 billion a year ago.

India attracted $25 billion in the fiscal year ending in March 2008 and has set a target of $35 billion for the current financial year.

Gainers and losers

Reliance Industries rose 3.9% to 2,219 rupees.

Software shares advanced after the U.S. Federal Reserve decided to keep rates steady bolstering expectations of steady technology spending in US.

The Federal Reserve on Wednesday held interest rates steady at 2%, as widely expected but sounded hawkish comments on fighting inflation. The Fed is widely believed to be pursing inflationary policy of puping liquidity in the financial system and has shown a general disregard to falling dollar in the international currency market.

Satyam Computer Services was up 2% to 453.90 rupees, Wipro gained 4.6% to 477.50 rupees and Infosys Technologies rose 1.5% to 1,774 rupees.

ITC gained 2.2% to 190.50 rupees. The shares rose on reports that ITC Infotech, a $100 million, wholly-owned subsidiary of ITC, is likely to pull out of its joint venture with the US based, Sitel Corporation.

Ambuja Cements led the gainers in the Sensex index with a rise of 5.3% to 86.90 rupees. Metal stocks, too, were in demand. Sesa Goa rose 1.9% to 3,431 rupees, JSW Steel was up 2.5% to 1,032 rupees and Steel Authority of India fell 2.1% to 154 rupees.

Tata Steel gained 1.5% to 754 rupees after the company reported 195.64% jump in consolidated net profit to 12,349.98 crore rupees on 415.04% spurt in total income to 132,110.09 crore rupees in the year ended March 2008 over the year ended March 2007.

Realty stocks declined on fresh selling. DLF lost 2.7% to 446 rupees, Indiabulls Real Estate was down 1.7% to 325 rupees and Purvankara Projects fell 7.7% to 169.70 rupees.
Reliance Communications led the decliners in the Sensex index with a fall of 2.8% to 495 rupees.

Bharti Airtel fell 2.3% to 762.20 rupees and Ranbaxy Laboratories declined 2.5% to 531.75 rupees.

SBI Increase Rates

India''s largest lender State Bank of India on Thursday announced a hike in its benchmark prime lending rate by 0.5% to 12.75% with effect from Friday, a decision that would make loans costlier.

The decision was taken by the bank''s Asset Liability Committee.3 which met here following Reserve Bank''s announcement of a 0.5% hike in its short term lending rate to banks and cash reserve requirement.

State Bank of India gained 1.4% to 1,220 rupees.

Cairn in $2 billion investment drive

Cairn India announced on Thursday it would invest nearly $2 billion over the next 18 months to develop oil fields and build a pipeline from its oilfields in Rajasthan to the refinery in Gujarat.

Cairn India is developing one of the biggest oil finds in India since the discovery of the Bombay High Oilfields in the 1970s. The peak production of the company''s three oil fields in the Rajasthan — Mangala, Bhagyam and Aishwariya — would amount to nearly 175,000 barrels of oil per day.

The company would continue with exploration activities in different parts of the country. Exploratory drilling in Bihar''s Ganga Basin will begin later this year.

The company is also working on implementing advanced techniques to increase oil output from 150,000 barrels per day to 175,000 barrels per day.