Sensex Rises, Rupee Gains 4%

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

Stocks in Mumbai rose after a week of volatile trading. The IMF lowered growth projections for India, Europe, Australia and the U.S. and said that emerging markets will still lead the world economic growth but at a slower pace. Local banks lowered interest rates on loans. Rupee gains 4% in the week.

[R]10:00AM New York, 7:30 PM – Stocks in Mumbai rose despite the lowered economic growth projection from the IMF and Nomura.[/R]

Market Sentiment

In Mumbai, the 30-share BSE Sensex rose 2.4% or 230.07 to 9,964.29, and the CNX Nifty gained 2.8% or 80.35 to 2,973.

Of the stocks traded on the BSE, 1,417 rose, 1,124 declined and 75 remained unchanged.

Trading Statistics

Daily turnover on BSE fell to 3,447 crore rupees from 4,010.92 crore rupees yesterday.

IMF and Nomura Lower India’s Growth Estimates

Japanese broker Nomura and the International Monetary Fund lowered economic growth projections for India and worried that balance of payment situation will worsen before it improves.

Nomura said India''s growth rate will ease to 7.2% from 9% a year earlier on rising economic uncertainty in the financial markets and tighter credit conditions.

Technology, manufacturing, construction, business and financial services, transportation and hotel sectors are exposed to the adverse effects of turbulent financial conditions.

The current account deficit is expected to drop to 0.2% of GDP in fiscal 2010 from 2.4% in fiscal 2009, while inflation is projected to dip 3% by the third quarter of 2009.

Nomura said the balance of payments will slip into deficit in fiscal 2009, adding that government must make measures to ensure the “smooth rollover of short-term residual debt.”

Separately the International Monetary Fund forecasted that economic growth in India will drop from 7.8% this year to 6.3% in 2009.

Central Bank of India to Cut Lending Rate to 13.3%

State-run Central Bank of India said it will slash its prime lending rate by 75 basis points to 13.3% from 14% effective 10.

Floating interest rates on home loans was cut between 25 and 50 basis points.

The revised interest rate on loans up to 3 million rupees will range from 9% to 10% and loans above 3 million rupees will have an interest rate of 10.3% to 11.3%.

Gainers & Losers

India''s infrastructure sector grew 5.1% in September 2008 from a year earlier, above 2.3% annualized growth in August 2008, government data released earlier in the day showed.

Reliance Industries rose 4% to 1,217.85 rupees.

Reliance Communications increased 5.5% to 228.15 rupees, Jaiprakash Associates gained 4.7% to 87.70 rupees and ITC edged up 3.6% to 174.80 rupees.

Hindalco Industries surged 6.6% on reports that it has finalized its loan to acquire Novelis.

JSW Steel dropped 5.2% after cutting production.

Sesa Goa rose 3.1% and NMDC soared 2.4% on the reports that railroad freight rates for iron ore will be lowered by 50% from November 8.

Ashok Leyland dropped 4.6% on a decision to cut production at its plants to three days a week until the end of 2008 because of declining demand for its vehicles. Tata Motors declined 0.2% to 158.90 rupees.

Maruti Suzuki plunged 0.4%.

Hero Honda Motor increased 4.2%, TVS Motor Company slipped 2% and Bajaj Auto surged 0.9%.

IT stocks rose as rupee closed at 47.77 rupees against a dollar. Satyam Computer Services increased 3.2% to 277.75 rupees, Infosys jumped 1.2% to 1262.50 rupees, Wipro advanced 2.9% to 260.45 rupees and Tata Consultancy Services climbed 4.9% to 524.55 rupees.

Financial stocks rose on rate cuts. State Bank of India increased 2.8% after cutting its prime lending rate by 75 basis points and deposit rates by 25 to 50 basis points across all maturities from December 1.

ICICI Bank fell 0.7% and HDFC Bank soared 2.6% to 1,088.55 rupees.

ONGC fell 0.3% notwithstanding reports Russia has approved its bid for Imperial Energy.

Ranbaxy Laboratories rose 1% after Daiichi Sankyo Co. completed the purchase of its 63.9% stake in Ranbaxy Laboratories for 19980 crore rupees.

Airlines rose on the speculation that Kingfisher Airlines and Jet Airways are likely to cut ticket prices by up to 1,000 rupees on domestic routes before the end of the month.