Nuclea Deal Hopes Drive Sensex Surge

123jump.com Staff
08 Sep, 2008
New York City

The Nuclear Suppliers Group has agreed to back a deal between the U.S. and India according to several media reports. The deal will help India to alleviate its chronic power supply shortage and diversify its fuel sources. The deal between the two democratic nations will also increase trade in nuclear materials and nuclear reactor building contracts. Stocks in India surged on the approval news. Financials and realty stocks rallied after the U.S. nationalized the two largest mortgage lenders.

[R]10:00AM New York, 7:30 PM- Nuclear deal prospects and regional strength in Asia on the bailout of two largest U.S. mortgage agencies lifted market benchmark indexes.[/R]

Market Sentiment

Stocks in India rose after the growing optimism that the Nuclear Suppliers Group is backing the US-India Atomic deal. Financial stocks surged after the U.S. government seized control of Fannie and Freddie Mac. The two mortgage lenders will also receive capital support or injection of as much as $200 billion. The two lending agencies will operate under a conservatorship and the Federal Housing Finance Agency (FHFA) will assume oversight of the management. The U.S. Treasury will acquire preferred share in the two lenders worth $1 billion in each lender and provided a guarantee of $200 billion but no immediate cash.

In Mumbai, the BSE 30-share Sensex rose 3.18% or 461.14 to 14,944.97, and the CNX Nifty advanced 2.99% or 130 to 4482.30.

Of the stocks traded on BSE 1,656 rose, 1,040 declined, and 63 were unchanged.

Trading Statistics

Daily turnover on BSE stood at 4,485 crore rupees from 4,815.43 crore rupees on Friday last week. Sterlite Industries led gainers in the Sensex index, rising 6.16% to 624 rupees.

NSG Gives Nod to U.S.- India Atomic Trade Deal

The Wall Street Journal reported on its Web site yesterday that the Nuclear Supplier Group has approved a U.S.-sponsored nuclear trade deal with India.

Despite India’s decision not to sign the Treaty on the Nonproliferation of Nuclear Weapons, the Nuclear Suppliers Group has permitted the sale of civilian nuclear technology and fuel to India.

The deal by NSG effectively lifts the 34-year-old embargo of nuclear technology trading with India.

The U.S. opines that the deal will help the subcontinent to satisfy its burgeoning energy demand and open a nuclear market worth billions of dollars.

Indian Prime Minister Manmohan Singh commented, “It marks the end of India''s decades-long isolation from the nuclear mainstream and of the technology denial regime.”

Gainers & Losers

Financial stocks rose as the U.S. Treasury seized control of Fannie Mae and Freddie Mac. ICICI Bank increased 4.65% to 719 rupees, HDFC Bank soared 4.43% to 1302.70 rupees, State Bank of India gained 4.84% to 1592.05 rupees, and Housing Development Finance Corporation edged up 4.12% to 2375 rupees.

Companies that stand to benefit from the deal also rose. Reliance Infrastructure, which is considering installing 2,000 megawatt of nuclear power capacity, spiked 4.17% to 1,058.20 rupees.

Larsen & Toubro increased 4.54% to 2,735.15 rupees, Bharat Heavy Electricals gained 2.90% to 1,782 rupees and National Thermal Power Corporation jumped 4.50% to 181.25 rupees.

Other non-nuclear-related stocks also gained. Areva T&D increased 3.08% to 1,675 rupees and Alstom Projects India spiked 6.47% to 422.20 rupees.

Telecommunication stocks advanced. Reliance Communications soared 1.03% to 398 rupees, Bharti Airtel rose 1.54% to 817.25 rupees.

IT stocks gained as well. Infosys Technologies edged up 2.09% to 1,748.60 rupees, Satyam Computer Services advanced 3.29% to 429.50 rupees, Wipro gained 1.11% to 431 rupees and TCS surged 1.78% to 853.10 rupees.

Auto stocks participated in the rally. Tata Motors rose 4.30% to 438 rupees after news that negotiations for the company’s plant at Singur, West Bengal have stalled. Mahindra & Mahindra increased 0.61% to 585.50 rupees and Maruti Suzuki India edged up 0.92% to 686 rupees.

Hindustan Construction Company jumped 7.58% to 104.35 rupees, as the company constructed four nuclear power projects in India.

Walchandnagar Industries surged 13.70% to 302.45 rupees.

Oil refiners fell as crude oil for October delivery rose 2.6% to $108.95 a barrel as Hurricane Ike delayed the resumption of production in the Gulf of Mexico. Hindustan Petroleum Corporation plunged 1.31% to 233.30 rupees, Bharat Petroleum Corporation slipped 3.90% to 344 rupees and Indian Oil Corporation plunged 2.92% to 433.55 rupees.

Cambridge Technology Enterprises advanced 10% to 61.05 rupees after the company agreed to acquire U.S. based Protege Software Services Inc. The company based in Woburn, Massachusetts provides supply chain management related services on Oracle software platform.

Dolphin Offshore Enterprises India climbed 20% to 281.15 rupees after the company received two orders worth 304 crore rupees from Oil & Natural Gas Corporation.

Hotel Leela Venture rose 3.26% to 34.85 rupees on news the company is considering buying seven new luxury hotels in the next three to five years.

Pratibha Industries gained 5.44% to 284.90 rupees after the company said today it has secured a contract worth 44.75 crore rupees from Delhi Jal Board for a water transportation program.