Record Weakness in Rupee, Nano in Gujarat

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

Early rally in Mumbai trading faltered despite Sebi lifting the ban on P-note transactions and the RBI lowering cash reserves ratios by 0.5%. Tata Motors agreed to relocate its Nano manufacturing plant to Gujarat. Rupee dropped to another low. Infosys drops to a 2-year and TCS falls to 3-year lows.

[R]10:00AM New York, 7:30 Mumbai – Gujarat approves sale of land to Tata Motors for Nano manufacturing plant. Reliance and NTPC discuss settlement. Financials fall.[/R]

Stocks in Mumbai were mixed today as lingering worries over the health of the U.S. economy trimmed gains. The RBI decision to lower cash reserve ratio for banks and SEBI ruling to lift one year old restriction on participatory notes lifted financial stocks in the morning, but rally faltered in the afternoon trading.

Market Sentiment

In Mumbai, the BSE 30-share Sensex declined 0.9% or 106.46 to 11,695.24, and the CNX Nifty rose 0.12% or 4.25 to 3,606.60.

Of the stocks traded on BSE 787 advanced, 1,822 that declined, and 74 shares remained unchanged.

Trading Statistics

Daily turnover on BSE stood at 4,728 crore rupees from 3,992.08 crore rupees yesterday. Reliance Industries rose 2.04% to 1,675.40 rupees as a result.

Reliance offered to settle its ongoing court battle with state controlled NTPC according to the statement by its lawyer in Mumbai High Court.

Tata Motors to Make Nano in Gujarat

The Gujarat government moved swiftly to attract Tata Motors to relocate small car manufacturing plant in the state. Chief Minister Narendra Modi acted with a speed that stunned Tata executives and delivered an economic package in less than ten days of discussion.

The state government agreed to sell at market price 1,100 acre land to Tata at Sanand near Amdavad. The government will sell unencumbered land with a clear title. Tata promised to expand production capacity to 500,000 cars from 300,000 and also plans to set up a training facility and marine biology research institute.

In addition, the automaker said it is considering options of making the Nano at its facilities in Pune and Pantnagar in the interim. Tata Motors is likely to take 1,100 crore rupee loss for the plant in Singur, West Bengal and hopes to sell the first car by March 2009.

The company pulled out of West Bengal last week after Mamta Banerjee, the leader of Trinamool Congress Party organized protests against the plant and demanded return of some of the farmers land and higher compensation to farmers.

Chairman of Tata Group, Ratan Tata at a press gathering after the agreement with Narendra Modi retorted, “There is good a M and a bad M” and “We have made the transition.”

Rupee Pares Losses

The rupee pared losses today after plummeting the lowest since December 2002 and closed at 47.915 against the dollar from 47.80/81 yesterday. The rising import bill and pull out of foreign investors from the stock market have contributed the recent decline in rupee.

Gainers & Losers

Capital goods declined. Larsen & Toubro lost 6.94% to 1,008.10 rupees, and Suzlon Energy declined 1.97% to 124.60 rupees.

However Bharat Heavy Electricals soared 3.26% to 1,496.70 rupees.

Financial stocks dropped in the afternoon session after a rally in the morning session induced by the RBI decision to cut by 50 basis points the cash reserve ratio to 8.5% failed to take hold.

ICICI Bank fell 1.07% to 485.20 rupees, HDFC Bank shed 6.17% to 1,127.70 rupees and State Bank of India dropped 1.81% to 1,408 rupees.

Tata Consultancy Services tumbled 7.02% to 575.08 rupees, Sterlite Industries shed 6.35% to 314.05 rupees, Satyam Computer Services plummeted 5.18% to 279.09 rupees.

NTPC soared 4.83% to 176.85 rupees, Ranbaxy Laboratories gained 5.54% to 260.10 rupees, and Bharti Airtel edged up 3.6% to 755 rupees.

Oil and Natural Gas Corporation rose 1.25% to 992.35 rupees on news that the company will enter in a tie up with Uranium Corporation of India for exploring and mining the fissile material.