Rupee Falls, Musharraf Forced Out

123jump.com Staff
18 Aug, 2008
New York City

Stocks in Mumbai fell as investors face tighter monetary policy in the country on the prospect of elevated inflation for the rest of the year. Rupee declined against dollar as the U.S. currency climbed from its low on the expectations of interest cuts in the euro zone. Mahindra & Mahindra acquired a majority stake in the third largest tractor company in China. Former dictator of Pakistan, President Musharraf was forced to resign to avoid impeachment charges.

[R]10:00AM New York, 7:30 PM Mumbai - Mahindra acquires majority stake in China’s third biggest tractor company. Rupee falls further. Musharraf, after nine years in power is forced out in Pakistan.[/R]

Market Sentiment

Weaknesses in India’s stocks continued today on lingering worries that the Reserve Bank of India will be forced to tighten its monetary policy, especially in the wake of rising inflation.

In Mumbai, the 30-share BSE Sensex fell 0.53% or 78.52 to 14,645.66, and the CNX Nifty slid 0.85% or 37.65 to 4,393.05.

Of the stocks traded on the BSE, 930 rose, 1,668 declined, and 78 were unchanged.

Trading Statistics

Daily turnover on BSE stood at 3,832 crore rupees from 4,882.32 crore rupees on Thursday last week. The markets were closed on Friday for the Independence Day celebration.

Ambuja Cements fell 5%, Hindalco Industries and Grasim Industries plunged 4.5% each.

State Bank of India Workers on Strike

Bloomberg News reported on its Web site that G.D. Nadaf, the general secretary at All India State Bank of India Officers'' Federation said today staff at the State Bank of India and its seven subsidiary went on strike to protest the merger of subsidiary State Bank of Saurashtra with the bank.

The strike will affect more than 130 million customers of the bank as 60,000 officers of State Bank and another 20,000 at seven subsidiary banks will stay away from almost 15,000 branches.

“We are demanding that officers at the subsidiaries be given the same superannuation benefits as those at the State Bank of India,” said Nadaf as reported by Bloomberg News service.

Indian Private Funds to Invest 15% of Assets in Stock Markets

The Indian government announced on Thursday last week that private pension funds will be allowed to invest up to 15% of their assets in stock markets from April 1, 2009 from the current limit of 5%, while non-government pension funds will invest a maximum of 55% of the assets in federal, state and debt mutual funds.

Rupee Falls Most in 17 Months

Reuters News reported today on its Web site that the rupee fell the most in 17 months to 43.51/52 against the U.S. dollar on a rebound in dollar as oil and metals prices declined. The figure also represents a 1.2% drop from 43.01/02 at the close of trading on Thursday last week.

Gainers & Losers

Oil marketers fell on resurgent crude oil prices. Reliance Industries slipped 2.21% to 2,224.95 rupees. BPCL climbed down 2.25% to 309.05 rupees, Indian Oil Corporation plunged 0.64% to 437.75 rupees, and HPCL declined 3.63% to 215 rupees.

Financial stocks were mixed on concern that the Reserve Bank of India will tighten its monetary policy as the inflation outlook further deteriorates. HDFC Bank rose 2.14% to 1,200.40 rupees, but ICICI Bank plummeted 1.23% to 665 rupees, while the State Bank of India fell 0.03% to 1,457.75 rupees as the financial institution’s staff embarked on an industrial action.

IT stocks increased as the rupee fell the most in 17 months against the United States dollar. Satyam Computer Services advanced 1.75% to 419.10 rupees, Infosys edged up 0.77% to 1,702.40 rupees, Wipro gained 0.64% to 431.90 rupees and Tata Consultancy Services increased 1.24% to 841.80 rupees.

Commodity stock also tumbled as Hindalco Industries fixed the price of its right issue at 96 rupees per share, which is at a premium of 95 rupees per share. The stock lost 4.53% to 129.65 rupees. Steel Authority of India tumbled 2.47% to 139.95 rupees, Tata Steel climbed down 2.14% to 603 rupees, Sterlite Industries plunged 1.43% to 611.35 rupees and National Aluminum Company slipped 0.1% to 392.20 rupees.

Reliance Communications fell 2.71% to 412.40 rupees. The company reported on Thursday last week that it added net users of 1.75 million in July and increased its total subscriber base to 52.5 million.

Mahindra & Mahindra closed down 2.56% to 568.10 rupees after reporting on its Web site that it will acquire a 51% stake in a joint venture with a Chinese firm and purchase the latter''s tractor operations for $50 million.

Mahindra & Mahindra Invests in Chinese Tractor Company

Mahindra & Mahindra reported on its Web site that Mahindra Farm Equipment Sector signed an agreement today to form a joint venture with Jiangsu Yueda Yancheng Tractor Manufacturing Co. Yancheng’s assets and liabilities will be transferred to the JV.

Mahindra will hold 51% in the JV through its unit, Mahindra Overseas Investment Co.

Musharraf Forced to Resign

Former dictator of Pakistan, Pervez Musharraf who installed himself as President and generally acted as a puppet of the United States was forced to resign from his position to avoid impeachment. The recently elected coalition government was preparing charges against Musharraf for firing judges. Musharraf, 65 years old came to power by overthrowing democratically elected Nawaz Sharif in 1999 and installed military in command.

Musharraf is widely reviled in Pakistan for siding with the U.S. and carrying out attacks in the North West Frontier of Pakistan and is seen as acting in the foreign interest and not in the interest of people of Pakistan. The nine-year reign of the dictator produced economic progress in the first five years as the U.S. pumped $10 billion in ‘aid’ to the country that is seen as the payment for Musharraf’s readiness to use Pakistan military to fight Afghan terrorist that benefits the U.S. interests.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 146.04 or 1.12% to 13,165.45, Hang Seng index in Hong Kong decreased 229.91 or 1.09% closed to 20,930.67. ASX 200 index in Australia increased 3.30 or 0.07% to close 4,985.00. The KL Composite index in Malaysia decreased 10.69 or 0.98% closed to 1,084.36.

The Kospi Index in South Korea decreased 4.48 or 0.28% to close at 1,567.71, SET index in Thailand closed lower 10.25 or 1.45% to 697.23 The Sensex index in India decreased 78.52 or 0.53% closed to 14,645.66. Markets of Indonesia were closed today.