Sensex Drops 2.3%, Reliance Plunges 8%

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

Stocks in Mumbai fell on the worries that rising government spending will widen fiscal deficit and global markets weakness will slow exports growth. The economy is likely to grow at a slower pace between 6.5% and 7.5% in the current fiscal year. Reliance Industries drops 8% to 1,050 rupees.

[R]10:00AM New York, 7:30 PM Mumbai - Sensex falls 2.3% in choppy trading on the worries that hike in government spending will fuel inflation and exports may not meet the current fiscal year target. Reliance Industries and Larsen & Toubro fell sharply.[/R]

Stocks in Mumbai trading fell on the worries that increase in government spending will fuel inflation and exports may decline further on global markets weakness.

Finance Minister P Chidambaram said yesterday the government will spend additional money to boost domestic demand.

In Mumbai, the BSE 30-share Sensex declined 2.3% or 207.59 to 8,695.53, and the CNX Nifty fell 2% or 54.25 to 2,654.

Of the stocks traded on the BSE, 1,006 rose, 1,449 declined, and 85 were unchanged.

Trading Statistics

Daily turnover on the BSE declined to 3,159 crore rupees from 3,206.82 crore rupees in Monday’s trading.

China Economic Growth to Ease to 7.5% in 2009

World Bank reported in its quarterly update that China''s economic growth is projected to decline to 7.5% in 2009 from 9.4% expected this year as worldwide exports from China weaken. The bank also forecasted growth in exports to decline to 3.5% from 11% in 2008.

According to the report, domestic demand in China is projected to plummet on weaknesses in the real estate in the market, affecting cement and steel industries and private consumption is expected to soften in 2009.

Gainers & Losers

Tata Motors rose 1.2% to 135 rupees, Maruti Suzuki India gained 1.1% to 536 rupees, and Hindustan Unilever edged up 0.1% to 236.25 rupees.

Mahindra & Mahindra fell 7.5% to 277 rupees, Sterlite Industries declined 6.6% to 200.50 rupees, and Reliance Communications dropped 5.4% to 194.60 rupees.

Reliance Industries plunged 8.2% to 1,051 rupees on speculation that the global economic slowdown will affect demand for petrochemicals.

Oil & Natural Gas Corporation rose 0.2% to 680 rupees.

Oil companies were mixed after the government said that it might cut fuel prices after December 24, 2008. HPCL fell 3.5% to 235 rupees, BPCL declined 1.7% to 331.15 rupees, but IOC rose 0.6% to 409 rupees.

Financial stocks slipped on mounting worries that more global banks will seek government aid after the bailout of Citigroup by the U.S. government. ICICI Bank fell 0.8% to 320.05 rupees.

HDFC Bank rose 0.7% to 837.15 rupees.

Housing Development Finance Corporation shed 1.5% to 1,353 rupees notwithstanding reports that investors are interested in buying Citigroup''s 11.74% stake.

Ranbaxy Laboratories by sales dropped 5.8% to 201.20 rupees on news that its unit Ranbaxy Fine Chemical''s plans to buy US based specialty chemicals maker Mallinckrodt Baker is likely to be curtailed as companies fail to agree on purchase price.

Dr Reddy''s declined 2.5% to 419 rupees, Sun Pharma dropped 0.8% to 1,073 rupees and Cipla fell 0.7% to 186.40 rupees.

GlaxoSmithKline Pharma increased 1.7% to 1,170.50 rupees.

IT stocks gained after rupee edged up 0.3% to 49.92 from 50.09 yesterday. Infosys Technologies fell 1.4% to 1,180 rupees, Wipro dipped 1.1% to 231.10 rupees, and TCS declined 3.8% to 501 rupees.

Satyam Computer Services rose 1.8% to 233.75 rupees and HCL Technologies slid 8.2% to 137 rupees after reporting that its margins will be affected by the purchase of British software firm Axon.

Telecommunications dropped despite reports that government will allocate spectrum in the next 10 days. Bharti Airtel fell 2.8% to 618 rupees and Reliance Communications declined 5.4% to 194.60 rupees.

Capital goods stocks plunged on speculation that demand will decline as the economy slows. Bharat Heavy Electricals dipped 1.4% to 1283 rupees and Larsen & Toubro shed 3.5% to 732.25 rupees.

Titan rose 5% to 896 rupees and Blue Star Industries soared 2.9% to 156 rupees.