India Stocks Volatile, Military Option Open

123jump.com Staff
03 Dec, 2008
New York City

Stocks in Mumbai closed up in a volatile session. India is exploring cross border military or commando raid to eliminate terrorist camps if Pakistan fails to reign in on outlawed groups. Terrorists are using Karachi to finance their operations. SEBI extended margin facility to all investors.

[R]2:00PM New York, 1:00 AM Mumbai – Stocks in volatile trading in Mumbai closed higher. Tata Steel earnings surged. SEBI extends cross margining across all participants.[/R]

Market Sentiment

India stocks rose marginally in choppy trading on expectations that the government will take measures to boost the economy. Securities & Exchanges Board of India extended the facility of cross margining across cash and derivates segments to all categories of market participants.

Congress party President Sonia Gandhi at an election rally today said that India wants peaceful relations with all its neighbors helped buoy market sentiment. However, other Indian authorities have not ruled out military strike in Karachi and other cities where terrorist training camps are located.

Market gains were trimmed by the simmering tensions between Pakistan and India after last week’s Mumbai terror attacks. If Pakistan fails to deal with terrorists, India may be forced to attack camps in cities in Karachi, Lahore and Peshawar where terrorists are based.

In Mumbai, the BSE 30-share Sensex index rose 0.1% or 8.19 to 8,747.43, and the CNX Nifty declined 0.1% or 1.35 to 2,656.45.

Of the BSE stocks 1,180 rose, 930 declined and 78 were unchanged.

Trading Statistics

Daily turnover on BSE increased to 2,948 crore rupees from 2,603.16 crore rupees yesterday.

SEBI Extends Cross Margining Facilities

Securities & Exchanges Board of India yesterday revised the existing facility of cross margining and to extend it across cash and derivatives segments to all categories of market participants. Currently only institutional investors have access to these facilities.

Cross margining enables traders offset positions having excess margin from one account to another where it is under the required maintenance margin.

Positions of clients in both cash and derivatives segments to the extent they offset each other and a basket of positions in index stock or stock futures will be eligible for cross margining.

The report notes that a spread margin of 25% of the total applicable margin on the eligible off-setting positions will be levied in the cash and derivative segments.

Government to Introduce New Measures to Boost Economy

Capitalmarkets.com reported today that the government will introduce a raft of economic measures that are meant to stimulate the economy. An estimated 50,000 crore rupees may be released for infrastructure building.

Gainers & Losers

Reliance Industries fell 0.5% to 1,069.50 rupees on worries that weak global economy will lower refining margins.

ONGC fell 1.8% as crude oil continues to trade below $50 per barrel. BPCL fell 1.13% after the sale of industrial fuel and diesel declined 1.7% to 10.1 million tons in October 2008 from the same period a year ago.

Steel makers gained after Tata Steel reported that second quarter profit soared 215.8% to 4703.64 crore rupees. Total income increased 36.1% to 44283.34 crore rupees in the period. The stock rose 10.8% as a result.

Steelmakers are expected to lower hot rolled coils steel prices between 1,000 rupees and 1,500 rupees per ton.

Realty stocks rose. Parsvnath Developers edged up 4.9% on news that it has cut salaries of its employees by up to 20%.

Financial stocks increased. ICICI Bank rose 3.4%, State Bank of India climbed 5.5% and HDFC Bank dropped 0.4%.

IT stocks fell as the rupee gained to 49.95 from 50.15 against the dollar yesterday. Infosys dropped 4.3%, Wipro fell 4.2%, Satyam Computer Services declined 1.3% and Tata Consultancy Services rose 0.1%.

Autostocks fell. Mahindra & Mahindra shed 2.8% after total vehicle sales plunged 41% to 10,430 units in November 2008 from the comparable year ago period.

Hero Honda Motors slipped 2.1% but Tata Motors rose 3.7% on news the company aims to raise up to 2,700 crore rupees through term deposits to increase liquidity.

ACC fell 0.8% despite cement shipments rising 9.5% to 1.73 million tons in November 2008 and Ambuja Cements declined 0.6% after shipments increased 8.8% to 1.48 million tons.