Sensex Plunges 5%, Wireless Carries Drop

123jump.com Staff
05 Nov, 2008
New York City

Mumbai stocks fell sharply in the afternoon trading. Sensex index closed down nearly 5% and CNX Nifty index dropped below 3,000 mark. Wireless carriers fell after the government plan to impose higher additional taxes. Bharti Airtel dropped 4.5% and Reliance Communication declined 10%.

[R]12:00 p.m. New York, 9:30 p.m. – Stocks in Mumbai dropped sharply in the afternoon on the worries that economic growth will remain sluggish despite the recent cuts in interest rates.[/R]

Market Sentiment

Indian stocks fell today on profit taking after a rally in realty, banking and metal stocks in the previous trading sessions.

In the morning, stocks in Mumbai rose following a rally in Asian markets and on the hopes that the U.S. president-elect Barack Obama will revive the U.S. economic growth.

The CNX Nifty dropped below the psychological 3,000 mark today in volatile trading.

In Mumbai trading, the BSE 30-share Sensex fell 4.8% or 511.11 to 10,120.01and the CNX Nifty declined 4.7% or 147.15 to 2,994.95.

Of the stocks traded on BSE 1000 rose, 1,565 declined, and 73 were unchanged.

Trading Statistics

Daily turnover on the BSE rose to 4,973 crore rupees from 4,431.22 rupees yesterday.

Auction of 3G Frequency to Be Held in January

The Economic Times of India reported that at a meeting chaired by Prime Minister Manmohan Singh, finance minister P Chidambaram and communications minister A Raja agreed to increase spectrum user charges for all existing telecom operators, both using CDMA and GSM technologies. The operators may have to pay one-time fee who hold second generation radio frequencies beyond the 6.2 MHz mark.

Government said the auction of third generation frequency will be held in January next year.

Stake sales by Swan and Unitech to UAE''s Etisalat and Norway''s Telenor, respectively, will not be probed.

The government may charge a fee of 1% to 2% of mobile operator’s revenue for additional revenues and levy a time one-time charge.

Gainers & Losers

Reliance Industries dropped 12.8% to 1,269.45 rupees after brokerage ABN Amro downgraded the stock to “sell” and slashed its target price by 38% to 1,150 rupees from 1,850 rupees.

Jaiprakash Associates fell 10% to 80.50 rupees, Grasim Industries declined 7.3% to 1,049.45 rupees, Tata Motors shed 6.5% to 181.20 rupees, and ACC dropped 7% to 470.95 rupees.

Telecom stocks fell on worries government''s decision to levy more for radio spectrum will place a squeeze on profits. Bharti Airtel fell 4.5% and Reliance Communication dropped 9.5% after Morgan Stanley cut price target on the stock by 45% to 280 rupees.

IT stocks were mixed after the rupee gained to 47.39 against the dollar. Satyam Computer Services increased 0.3%, Wipro advanced 2.7%, but Infosys fell 0.9% and Tata Consultancy Services declined 0.5% to 548.90 rupees.

Financial stocks declined on reports that private sector bank will cut their lending and deposit rates in the next two weeks and support credit lines to finance companies and mutual funds.

State Bank of India fell 3.6% after its chairman O P Bhatt said yesterday it will cut interest rates by 50 basis points and Bank of India edged 0.04% higher after it slashed its prime lending rate by 75 basis points to 13.3%, effective tomorrow.

State Bank of Bikaner & Jaipur closed unchanged at 2,651.70 rupees after slashing its prime lending rate to 13.3% from 14% from today, while State Bank of Travancore rose 5% after announcing that it will conduct the stock split 10 for 1 on December 20.

ICICI Bank fell 1.62% and HDFC Bank plunged 1.5%.

Indiabulls Real Estate rose 5.15% on the hopes that the recent rate cuts will lift real estate prices.

Pharmaceutical stocks were mixed on news National Pharmaceutical Pricing Authority fined Cipla, Ranbaxy Laboratories and Piramal Healthcare 1,630 crore rupees for overcharging consumers.

Airlines stocks fell on the media speculation that Kingfisher Airlines will default on payment of lease rentals on aircrafts. Kingfisher Airlines declined 16.6%.