Rupee 5-year Low, Sensex Falls 6%

123jump.com Staff
06 Oct, 2008
New York City

The Reserve Bank of India relaxed cash reserve ratio to pump liquidity in the financial system. Stocks fell to two-year low as the benchmark index declines 42% for the year. Rupee dropped to a 5-year low after international investors withdraw money from the market. Reliance drops 6%.

[R]10:00AM New York, 7:30 PM Mumbai - Reserve Bank of India to slash cash reserve ratio to 8.5%[/R]

Market Sentiment

In Mumbai, the BSE 30-share Sensex declined 5.8% or 724.62 to 11,801.70, and the CNX Nifty slid 5.7% or 215.95 to 3,602.35.

Of the stocks traded on the BSE, 281 rose, 2,369 declined, and 27 shares remained unchanged.

Trading Statistics

Daily turnover on BSE stood at 3,921 crore rupees compared to 4,801.25 crore rupees on Friday last week.

Sterlite Industries plunged 15% to 335.50 rupees after copper and zinc prices declined in international trading and Infosys fell more than 5.3% to 1,318.65 rupees. Reliance Industries dropped 6.8% to 1,641 rupees.

RBI Slashes Cash Reserve Ratio to 8.5%

The Reserve Bank of India today said it will cut the cash reserve ratio for banks by half a percentage point to 8.5% from October 11 to ease financial markets liquidity. The action by the RBI will release 200 billion rupees into the financial system.

Sebi Removes Restriction on P-Notes

The Securities & Exchange Board of India reported on its Web site today that it has removed the restriction on issue of participatory notes by foreign institutional investors against securities, including derivatives, as underlying.

The Sebi move lifts a ban as investors withdraw funds from the investment. According to the latest data published by the regulators, international investors have taken out $9.2 billion for the year so far. On October 1, in a single day investors repatriated $60 million or 285 crore rupees.

Gainers & Losers

Reliance Industries fell 6.76% to 1,641.90 rupees after managing director Mukesh Ambani, of Reliance Industries converted their 12 crore warrants into an equal number of shares and now own 49% stake with 52% voting rights.

The warrant conversion injected 15,142 crore rupees into the company.

Infosys declined 5.26% to 1,317.80 rupees.

Sterlite Industries fell 15.26% to 335.35 rupees, Reliance Infrastructure slid 13.93% to 638 rupees, Jaiprakash Associates shed 13.57% to 100.35 rupees, Tata Steel dipped 11.06% to 350.25 rupees, Tata Power Company shed 10.15% to 798.35 rupees, and Grasim Industries dropped 9.54% to 1,590.80 rupees.

Realty stocks declined. Indiabulls Real Estate lost 9.89% to 144.85 rupees, Unitech slumped 9.85% to 101.10 rupees and DLF dropped 10.33% to 301.65 rupees.

Consumer durables stocks also fell. Gitanjali Gems plunged 16.75% to 155.85 rupees, Blue Star tumbled 12.3% to 245.70 rupees, Titan Industries shed 11.45% to 953.85 rupees and Videocon Industries declined 9.99% to 185.60 rupees.

Bharat Heavy Electricals fell 7.48% to 1,449.40 rupees after reports that the company and Nuclear Power Corporation of India are in talks with foreign firms Siemens, Alstom and GE for a third partner in their planned joint venture to set up nuclear power projects in India.