Sensex Drops, Mutual Funds Withdrawals

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

Stocks in Mumbai fell on the weakness in global markets. Mutual funds in India suffered 77 billion rupees withdrawals in the month. The sharp decline in Sensex and weakness in global markets also forced companies to tap 300 billion rupees. Foreign investor outflow stands at $11 billion in the year.

[R]10:00AM New York, 7:30 PM Mumbai - Sensex falls on weakening global sentiment.[/R]

Market Sentiment

Stocks in India fell 2% as investor sentiment declined on deepening global economic worries and weak global markets. Software exporters declined after a sharp sell-off in the U.S. financial markets on the worries that the economic slowdown will soon turn to a recession.

The lower-than-forecasted fall in inflation for the week ended October 4 however pared losses on expectation that the Reserve Bank of India will slash its key rate.

In Mumbai, the BSE 30-share Sensex declined 2.11% or 227.63 to 10,581.49, and the CNX Nifty fell 2.07% or 69.10 to 3,269.30.

Of the BSE stocks, 833 shares rose, 1,733 declined, and 57 were unchanged.

Trading Statistics

Daily turnover on BSE stood at 4,540 crore rupees from 3,581.21 crore rupees yesterday.

Infosys fell 4.85% to 1,266.70 rupees after the rupee declined against the dollar.

India’s Inflation Eases to 11.44%

India’s Ministry of Commerce reported today that wholesale price inflation eased to 11.44% in the week ended October 4 from 11.8% the previous week.

The inflation rise declined as fuel and petroleum products prices dropped. The index of manufactured products that includes cooking oil, food products and steel declined to 9.69% from 10.33% a week earlier.

Analysts had forecasted an increase to 11.86% in the period.

Sebi Revises Margin

The Securities & Exchange Board of India revised the exposure margin for exchange traded equity derivatives to 10% or 1.5 times the standard deviation from October 21.

SEBI said the move is to “ensure market safety and safeguard the interests of investors.”

Gainers & Losers

Telecommunication stocks gained. Bharti Airtel gained 1.79% to 731.45 rupees and Reliance Communications climbed 9.8% to 258.90 rupees.

Jaiprakash Associates edged up 2.82% to 77 rupees, Reliance Infrastructure advanced 0.31% to 557.40 rupees and Tata Power Company increased 0.7% to 800 rupees.

Hindalco Industries fell 12.15% to 69.75 rupees, Tata Motors plunged 11.17% to 250.55 rupees, Grasim Industries declined 8.05% to 1,375.50 rupees and Larsen & Toubro fell 7.55% to 825.75 rupees.

Financial stocks gained on expectations that the central bank will cut interest rates on lower-than-forecasted inflation. ICICI Bank rose 0.19% to 415 rupees, ICICI Bank ADR dropped 14.19%, HDFC Bank declined 4.15% to 1,087.35 rupees, and State Bank of India edged up 3.13% to 1,543.90 rupees.

Punjab National Bank, Indian Bank, Corporation Bank, Dena Bank IDBI Bank, Canara Bank, Bank of India, Syndicate Bank, Bank of Baroda, Union Bank of India, Allahabad Bank and Indian Overseas Bank gained between 2.03% to 8.07%.

Realty stocks also rose on rate cut expectations. HDFC increased 6.27% to 1,820 rupees.

Housing Development & Infrastructure, Indiabulls Real Estate and Unitech rose between 1.1% and 7.2%.

IT stocks gained as rupee declined. Satyam Computer Services down 0.26% to 273.05 rupees, Infosys fell 4.85% to 1,266.70 rupees, and Tata Consultancy Services dropped 8.86% to 495.20 rupees.

Tata Steel fell 1.28%, and Allcargo Global Logistics declined 4.91%.

Cairn India dropped as oil prices declined to $72 per barrel.

Refex Refrigerants shed 5% as net profit in the second quarter ending September fell 23.3% to 2.76 crore rupees.

Orchid Chemicals & Pharmaceuticals rose 0.96% after the company received US Food & Drug Administration approval for a new drug.

Reliance Industries fell 8.03% to 1,397.25 rupees. Sterlite Industries rose 2.21% to 298.80 rupees.