RBI Provides Liquidity, Stocks Rise

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

Stocks in Mumbai, India rose more than 8.5% in two-day gains. The European government offered $1.6 trillion to support banking system and the U.S. offered $250 billion in nine largest financial institutions. The RBI injected 20,000 crore rupees to help mutual funds to face redemptions.

[R]10:00AM New York, 7:30 PM – The Reserve Bank of India provides short term lending to mutual funds to meet redemptions. Election Commission announces schedule for state elections in five states.[/R]

Market Sentiment

Stocks in Mumbai rose after market indexes rose in New York and Europe. The global markets rebound on the hopes that the latest injection of capital from the U.S. Treasury in nine largest banks will stabilize the credit markets.

Gains were however trimmed by the announcement of the poll schedule for Elections Assembly by the Election Commission.

In Mumbai, the Sensex index rose 1.54% or 174.31 to 11,483.40, and the CNX Nifty gained 0.8% or 27.95 to 3,518.65.

Of the stocks traded on BSE 1,656 shares advanced, 972 that declined, and 55 were unchanged.

Trading Statistics

Daily turnover on BSE stood at 4,237 crore rupees from 3,966.25 crore rupees yesterday.

RBI Injects 20,000 crore rupees

The Reserve Bank of India will inject 20,000 crore rupees through short-term funding in order to relieve redemption pressure that has been stoked by the credit market turmoil.

In the statement issued by the RBI, the central bank noted, “RBI has decided to conduct a special 14-day repo at nine per cent per annum for Rs 20,000 crore today with a view to enabling banks to meet the liquidity requirement of mutual funds.”

Elections In Five States

The Election Commission announced election for five states in November and December for state elections. The elections will be held in Delhi, Madhya Pradesh, Rajasthan, Chhattisgarh and Mizoram. Vote counting will be held simultaneously on December 8.

The elections precede the Lok Sabha elections scheduled for early next year.

Gainers & Losers

IT stocks rose. Tata Consultancy Services rose 2.84% after the Ministry of External Affairs yesterday awarded the company the Passport Seva Project worth 1,000 crore rupees. The government will issue electronic chip embedded passport and expedite the data collection and verification for passport application.

Infosys gained 5.87% to 1,397.05 rupees, Wipro climbed 3%, Satyam Computer Services advanced 7.38%, and ICSA jumped 42%.

Financial stocks increased after RBI announced that it will allow commercial banks to accept certificate of deposits held by mutual funds as collateral for the coming 15 days. ICICI Bank rose 5.18% to 458.25.

Bank of India added 5.86% on news that it has raised 500 crore rupees through a private placement of bonds with state-run insurer, Life Insurance Corp of India.

South Indian Bank edged up 2.96% after reporting that second quarter profit increased 44.8% to 51.68 crore rupees.

Mahindra & Mahindra slipped 2.6% to 507.25 rupees after news that its unit Mahindra Systech is diversifying its clientele to power plants, railways, defence, aerospace and oil refineries.

Tata Motors dropped 0.12% to 298.90 rupees on reports that its UK subsidiary, Tata Motors European Technical Centre Plc., has purchased 50.3% of Norwegian electric vehicle firm Miljoe Grenland/Innovasjon for 9.40 crore rupees.

Larsen & Toubro gained 1.15% to 1,003.65 rupees. The company is due to announce its second quarter results tomorrow.

ONGC shed 3.81% to 880.70 rupees after Goldman Sachs Group slashed its rating on stock.

Reliance Communications slipped 4.83% to 268.70 rupees on yesterday’s report that it has added 1.76 million mobile subscribers in September 2008.

Airliner Kingfisher Airlines rose 0.97%, but Jet Airways fell 5.58% after the companies decided to share facilities and reduce operating costs.

Sonata Software surged 20% after net profit in the second quarter ended September rose 1.61% to 13.48 crore rupees.

Jaiprakash Associates gained 5.2% to 85 rupees, Tata Power Company rose 5.06% to 830 rupees and Reliance Infrastructure soared 5.09% to 632.25 rupees.

Hindalco Industries declined 4.11% to 85.10, HDFC Bank slipped 3.47% to 1,138.45 rupees, and NTPC declined 2.7% to 174.45 rupees