Sensex Down 2%, SBI Net Up 31%

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

Sensex dropped 2% to a 3-year low on the worries that global economic slowdown will lower exports and foreign fund flows. Sensex declined fell as much as 6% in the early trading. Jet Airways swung to a loss after fuel prices surged. ICICI profit rises 1.1% and State Bank of India net up 31%.

[R]10:00AM New York, 7:30 PM London – Sensex fell more than 2% on weak trading in Asia. Jet Airways reports a quarterly loss. ICICI Bank reported 1.1% rise in earnings.[/R]

Market Sentiment

Indian market indices recovered from a 6% drop in the morning session on aggressive short covering of derivates, which expire on Wednesday this week.

The Sensex fell to 5.6% and the CNX Nifty Index dipped 5.4% by mid-day on weak trading across the region.

In Mumbai, the BSE 30-share Sensex declined 2.2% or 191.51 to 8,509.56, and the CNX Nifty shed 2.31% or 59.80 to 2,524.20.

Of the stocks traded on the BSE, 515 rose, 2,019 declined, and 43 remained unchanged.

Trading Statistics

Daily turnover on BSE stood at 3,374 crore rupees from 4,284.64 crore rupees on Friday last week.

SEBI Allows Creeping Acquisition Up to 75%

The Securities and Exchange Board of India today announced that it will allow investors to increase their holding in the companies through creeping acquisition from 55% to 75% through open market purchases.

Creeping acquisition entails increasing a stake in a company by purchasing up to 5% of a company''s equity in a year until the holding reaches 55%.

Consolidation through bulk, block or negotiated deals or through preferential allotment still remain unlawful.

The Sebi added that investors will not require prior authorization to increase their holdings in a company by 5% in the wake of a share buyback.

Investors Lose $11 billion from U.S. listed Indian Co.s

The Economic Times of India reported today that 16 Indian companies listed on the Nasdaq and the New York Stock Exchange lost $11.33 billion in their market capitalization in the week ending October 24.

ICICI Bank and Wipro stocks incurred losses of nearly $6 billion.

Gainers & Losers

Mahindra & Mahindra fell 13.71% to 248 rupees, Tata Motors declined 14% to 140.05 rupees, Jaiprakash Associates fell 10.3% to 53.40 rupees, and Grasim Industries declined 9.6% to 952.65 rupees.

Reliance Industries surged 5.8% to 1,074.70 rupees.

Telecommunications stocks gained. Reliance Communications rose 3.62% to 200.62 rupees and Bharti Airtel rose 6% to 566.45 rupees.

Realty stocks increased. Indiabulls Real Estate and Unitech rose 15.1% and 41.9% respectively but DLF plunged 2.9% to 198.10 rupees. Reliance Infrastructure edged up 4% to 396.60 rupees.

Tata Power Company dropped 8.75% to 570.25 rupees.

Financial stocks declined. HDFC Bank lost 4.1% to 932.35 rupees, State Bank of India fell 8.63% to 1056.60 rupees. However, ICICI Bank rose 2% to 316.30 rupees after reporting second quarter profit increased 1.15%.

IT stocks gained after the rupee fell 0.28% to 50.09 against the dollar. Satyam Computer Services rose 0.35% to 287.85 rupees and Infosys jumped 0.25% to 1,251.85 rupees.

Wipro however plummeted 6.3% to 220.45 rupees.

Metals were mixed as prices declined to a 3-year low. Nalco and Hindalco Industries fell 6.8% and 13.2% respectively.

Hindustan Zinc, Steel Authority of India rose 3.6% and 6% respectively.

Oil marketing companies dropped as oil prices fell to a 17- month low to $62 per barrel on falling global demand. HPCL, BPCL and IOC fell between 2.7% to 8%.

Earnings Review

Jet Airways fell 15.7% after reporting the biggest quarterly loss on rising oil prices.

Jet Airways reported for the second quarter ending in September a loss of 3.85 billion rupees ($78 million or 380 crore rupees) compared with a profit of 283.6 million rupees of ($5.7 million or 28.4 crore rupees).

The fuel cost in the quarter surged more than 100% to 16.9 billion rupees or $320 million as the prices charged for the fuel surged to 67.20 rupees a liter.

ICICI Bank Ltd rose 2.4% or 7.60 to 316 after it reported second quarter earnings rise of 1.1% to 1,001 crore rupees or $202 million.

Net interest income increased 20% to 21.5 billion rupees and fee income collected from trading accounts and mutual funds management surged 26% to 18.8 billion rupees.

The bank in its UK branch network has $4.9 billion in deposits and negligible non-performing loans. The UK subsidiary also reported a loss of $35 million linked to the U.S. mortgage securities. Nearly 24% of total assets at the bank are held in accounts outside India including UK, UAE, Canada and the U.S.

State Bank of India, the largest bank said second quarter total income grew 31.1% to 17,909.64 crore rupees from 13,658.22 crore rupees a year ago. Net profit in the quarter jumped 40% to 2,259.72 crore rupees or 35.61 rupees per diluted share compared to net profit of 1,611.42 crore rupees or 30.55 rupees per share a year ago.

State Bank of India, in the last one year traded as high as 2,396.55 in January 2008 and as low as 1,007.00 in July 2008. Based on the Friday’s trading closing price the company has a market cap of 734.14 billion or $14.4 billion.