FDI Surges in India, Rupee Nears Low

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

Stocks in India closed above 9,000 after foreign direct investment in the first six months of the fiscal year surged to $17 billion. The surprise rate cut in China also lifted stocks in the Asian markets. Rupee edged higher and software services export stocks followed. Reliance Industries gained 6%.

[R]10:00AM New York, 7:30 PM Mumbai - India’s foreign direct investment surged to $17.21 billion in the six months to September.[/R]

Stocks in Mumbai rose after a surprise rate cut by China. The Sensex rose above the key 9,000 mark in volatile trading after the foreign direct investment in the country soared in the first six months of the fiscal year.

In Mumbai, the BSE 30-share Sensex rose 3.8% or 331.19 to 9,026.72 and the CNX Nifty gained 3.7% or 98.25 to 2752.25.

Of the stocks traded on BSE 1,065 rose, 1,390 declined, and 84 were unchanged.

Trading Statistics

Daily turnover on the BSE declined to 3,223 crore rupees from 3,196 crore rupees yesterday.

China Cuts Lending Rate to 5.58%

The People’s Bank of China in a surprise move slashed its key one-year rate by 5.58% and lowered its deposit rate to 2.52% to stimulate economic growth.

Also the central bank cut the cash reserve requirement of biggest banks to 16% from 17% and lowered the requirement for smaller banks from 16% to 14% with effect from December 5.

World Bank reported yesterday in a quarterly update of China that the country’s economy is forecasted to drop to 7.5% in 2009 from 9.4% expected this year. Exports are also expected to soar 11% in 2008 but fall sharply in 2009.

India’s FDI Rises to $17.21 billion

Economic Times of India reported today that foreign direct investment in the country increased 137% to $17.21 billion from $7.25 billion in the same period a year ago.

Department of Industrial Policy and Promotion (DIPP) Secretary Ajay Shankar said the issue of liberation and rationalization of FDI is still under review.

The DIPP is currently mulling excluding foreign institutional investor’s stake in companies from the overall FDI ceiling.

Gainers & Losers

NTPC rose 7.6% to 165.30 rupees, Reliance Infrastructure increased 4.9% to 522 rupees, and Jaiprakash Associates soared 3.2% to 56.75 rupees.

Sterlite Industries soared 12.1% to 229.50 rupees after it estimated that the company is still interested in U.S. based mining company Asarco, which operates three copper mines in the state of Arizona.

Commodity stocks also increased. Hindalco Industries edged up 2% to 52.35 rupees, Sesa Goa jumped 2.6% to 70.50 rupees, and Tata Steel gained 1.6% to 153.15 rupees.

Financial stocks increased on news that banks operating in India might soon be allowed to open new branches and set up automated teller machines without a licence from the Reserve Bank of India. ICICI Bank gained 9.1% to 348.95 rupees, HDFC Bank soared 8.9% to 909 rupees, and State Bank of India edged up 1.8% to 1,091.40 rupees.

Housing Development Finance Corporation gained 5.6% to 1,424 rupees after Citigroup reportedly said it is not looking to liquidate its 11.74% stake.

Reliance Industries soared 5.9% to 1,134.80 rupees. Oil & Natural Gas Corporation gained 2.1% to 700 rupees.

IT stocks rose after rupee rose to 49.51 against the dollar from 49.95 yesterday. Infosys Technologies increased 0.7% to 1,188.95 rupees, Satyam Computer Services edged up 1.1% to 236.40 rupees, Wipro edged up 5.1% to 240.50 rupees, and TCS gained 4.2% to 524.50 rupees.

Telecom stocks also increased on hopes that government will allocate spectrums for 3G mobile phone services. Bharti Airtel rose 4.6% to 655.20 rupees and Reliance Communications gained 1.3% to 198.10 rupees.

Consumer goods companies also advanced. Bharat Heavy Electricals soared 1.6% to 1303.90 rupees and Larsen & Toubro gained 1.4% to 746.10 rupees.

Sun Pharmaceuticals Industries rose 3.1% to 1,109 rupees.