Sensex Plunges 4%, Nuclear Deal Advances

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

Benchmark index in Mumbai, India dropped sharply after U.S. credit markets jitters dragged markets in Asia lower. Rupee dropped to a 12-year low as state controlled oil companies lock payment for imports. Suzlon Energy dropped 12%. The U.S. House approves nuclear deal with India.

[R]10:00AM New York, 7:30 PM Mumbai – Stocks in Mumbai fell 4% after the U.S. credit market jitters persist. Nuclear deal with the U.S. was approved by the U.S. House. Suzlon Energy taps rights market.[/R]

Market Sentiment

In Mumbai, the BSE 30-share Sensex fell 3.87% or 506.43 to 12,595.75, and the CNX Nifty was lost 3.39% or 135.20 to 3,850.05.

Of the stocks traded on BSE 357 rose, 2,287 declined, and 41 were unchanged.

Trading Statistics

Daily turnover on BSE stood at 4,579 crore rupees from 4,850.22 crore rupees on Friday last week.

ICICI Bank dipped 12.11% to 493.30 rupees after the lender said 98% of ICICI Bank UK PLC''s non-India investment book is rated investment grade and above, adding that it has zero exposure to US subprime-credit.

U.S. Approves Indo-U.S. Nuclear Deal

The U.S. House of Representatives approved the Indo-U.S. nuclear deal. The deal was approved in the House with 298 to 117 votes in its favors on Saturday. The deal will face a vote in Senate this week before Congress recesses ahead of the November election.

Prime Minister Singh met President Bush ahead of the vote on Thursday.

India hopes with the access to nuclear fuel and technology the country can produce more electric power. India generates 2.6% of its electricity using nuclear technology and hopes to build more than 35 power plants in the next 10 years. The nuclear deal has set a flurry of activities among nations competing for power projects including France and Russia.

The 45-nations member club that regulates the nuclear fuel supplies and International Atomic Energy Agency already agreed on August 1 to inspection regime for non-military nuclear facilities. The key approval from the fuel suppliers has increased prospects of nuclear deal passage in the U.S. Senate.

Rupee Weakness

Rupee continues to weaken against the U.S. dollar and dropped 0.9% today. Rupee fell to a five year intra-day low of 47.11 in Monday trading after most exporters locked rates for dollar. Rupee closed at 46.98499 a dollar at close in inter dealer currency trading in Mumbai, a 12-year low according to data available on the Reserve Bank of India.

Rising current account deficit, elevated energy prices and continued jitters in the financial markets have dragged rupee to a new low.

Rising import bill is forcing higher demand for dollar. India imports approximately $8 billion a month of crude oil compared to $5.6 billion a month in 2007. The rise in crude oil prices have contributed to a significant rise in trade and current account deficits. Trade deficit for the fiscal 2009 is expected to be near $105 billion despite a surge in exports.

Gainers & Losers

ICICI Bank declined 12.11% to 493.30 rupees despite reporting in a statement today that ICICI Bank U.K. PLC has no exposure to U.S. sub-prime mortgage securities and added that 98% of the subsidiaries non-India investment portfolio is rated investment grade or higher.

Suzlon Energy dropped 12.4% or 21.75 rupees to 153.50 rupees after its board approved rights offering plan to raise 1,800 crore rupees or $390 million. The company has tapped rights market after cost of borrowing has risen in the last few months and use the proceeds to increase its stake in Germany based Repower Systems and pay for 22% stake it purchased and held by Portugal based Martifer SGPS SA.

Suzlon owns 66% of the company and 89% voting rights in the largest turbine manufacturing company in Germany.

Realty stock DLF fell 5.12% to 350.60 rupees, while HDFC slipped 2.68% to 2,032.75 rupees.

Reliance Industries fell 1.53% to 1,930.95 rupees and Hindustan Unilever gained 0.79% to 254.50 rupees. ONGC slipped 1.14% to 1,023.30 rupees. Wipro shed 0.19% to 343.10 rupees.

Bharat Heavy Electricals declined 2.65% to 1,509.50 rupees.

Jaiprakash Associates tumbled 11.85% to 106.70 rupees, Satyam Computer Services slid 9.13% to 292.55 rupees and Tata Consultancy Services plunged 8.4% to 619.65 rupees.