Mumbai Stocks Fall; Kingfisher Talks

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

Stocks in India fell 1% in weak trading. Reserve Bank of India lowered the risk exposure for banks to commercial sector loans. RBI also added liquidity. Exporters are worried that falling economies in the U.S., Europe and Japan will drag sales. Airline Kingfisher may sell stake.

[R]10:00AM New York, 7:30 PM Mumbai - Global economic woes drag the Sensex index.[/R]

Market Sentiment

Indian stocks fell for the fourth straight trading session as mounting global economic worries offset the liquidity boosting measures that were announced by the central bank on Saturday.

In Mumbai, the BSE 30-share Sensex dropped 1% or 94.91 to 9,291.0, and the CNX Nifty shed 0.4% or 10.80 to 2,799.55. Of the stocks traded on BSE 679 rose, 1800 declined, and 60 were unchanged.

The RBI lowered the risk allocation to commercial real estate loans for banks from 150% to 100% and added 20 billion or $4.2 billion liquidity in the financial system. However, exporters are worried that falling economies of U.S. and Europe and now Japan will force companies to miss the national target of $200 billion.

Trading Statistics

Daily turnover on the BSE declined to 3,213 crore rupees from 3,685.59 crore rupees on Friday last week.

India to Announce Package For Exporters

Trade Minister Kamal Nath stated that Prime Minister Manmohan Singh is expected to meet exporters, government and economists today to assess the global markets environment.

India has targeted $200 billion in exports in the current fiscal year ending in March 2009. However, EU, Japan and Hong Kong are already in recession and the U.S. economy is facing sharp fall in economic growth.

Exports to the US and Europe have sharply decelerated and to Asia have increased but not enough to compensate for the declines in other regions. India relies on export of software services, textiles and increasingly on the refine crude. The refined fuel exports are likely to surge in the next three years after Reliance Industries commences the largest crude oil refinery in the world.

The central bank announced on Saturday that it will inject 220 billion rupees of liquidity to help exporting companies.

Reserve Bank of India will also extend a special repurchase facility to provide liquidity for mutual funds and non-banking finance companies until March next year and increase the limit on export credit refinance available to banks.

In addition, housing finance companies will be allowed to raise funds through short-term overseas borrowings.

Proposals from local firms to buy back foreign currency convertible bonds early will also be considered.

Gainers & Losers

Reliance Industries dropped 0.5% to 1,142.65 rupees on worries that demand for crude products are on the decline.

Reliance Infrastructure fell 6.2% to 484.40 rupees, Tata Power Company declined 3% to 724.35 rupees and Hindalco Industries shed 3.4% to 54.70 rupees.

Carmakers rose on expectations that the government will craft a policy to protect the sector. Maruti Suzuki India rose 2.5% to 549.80 rupees and Tata Motors increased 2.6% to 140.45 rupees.

Realty stocks declined on the speculation that banks will not pass on the recent rare cut by the central bank.

RBI lowered its risk weight on bank exposure to the real estate sector and non-deposit taking non-banking financial institutions from 150% to 100%.

Financial stocks plunged on fears that a slowing economy will lead to rising delinquencies. ICICI Bank dropped 2.3% to 387.05 rupees, HDFC Bank fell 7.7% and State Bank of India shed 0.2% to 1168.10 rupees.

IT stocks were mixed as the rupee dropped 0.7% to 49.34 against the dollar. Satyam Computer Services plunged 3.8%, Tata Consultancy Services shed 2.5%, Infosys increased 1.2% to 1,232.80 rupees and Wipro edged up 4.6% to 251.95 rupees.

Infosys predicted higher orders from the U.S. on the hopes that companies will look to lower costs by sending more work to India.

ACC rose 4.3% to 436.55 rupees.

Steel stocks and cement stocks fell on concern over weakening demand.

Airline stocks rose as state-run oil companies cut jet fuel prices by 12%. Spicejet increased 0.7% and Kingfisher Airlines gained 12.9%.

UTV Software Communications plunged 5.4% after forecasting a loss of 25 crore rupees in the year ending March 2010.

Elecon Engineering Company advanced 2% and Godrej Consumer Products climbed 1.2%.

Ispat Industries declined 4.3% on the speculation that the company is planning production cut of 10% before the year end.

Apollo Tyres gained 1.8% after it plans to invest 3,000 crore rupees in the next five years for capacity expansion.