Inflation in India Falls, Stocks Rise

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

Stocks in Mumbai trading sharply after the hopes that Reserve Bank of India will lower rates significantly to sustain economic expansion. Key benchmark index closed above 9,000. Realty, financials and metals stocks gained. Wholesale inflation fell to 8.4% stoking rate cut expectations.

[R]10:00AM New York, 7:30PM Mumbai - Realty, metals and financial stocks lead Sensex rally.[/R]

Market Sentiment

Indian stocks rose markedly after falling interest rates boosted expectations that the government will soon unveil new measures that are meant to boost economy.

Analysts project that the Reserve Bank of India will slash the repo and reverse repo rates to 200 basis points and 125 basis points respectively at the weekend.

The index closed above 9,000.

In Mumbai, the BSE 30-share Sensex index rose 5.5% or 482.32 to 9,229.75, and the CNX Nifty gained 5% or 131.55 to 2,788.

Of the stocks traded on BSE 1,503 rose, 668 declined, and 60 were unchanged.

Trading Statistics

Daily turnover on BSE stood rose to 3,727 crore rupees from 2,955.08 crore rupees yesterday.

India’s Wholesale Prices Fall to 8.40%

The government reported today that wholesale prices eased to 8.40% in the week to November from a year ago after rising 8.84% in the previous week. Economists expected the wholesale inflation to rise to 8.95%.

Inflation had earlier peaked to 12.91% on August 2, 2008.

Gainers & Losers

Reliance Industries rose 8.4% to 1,159.30 rupees on expectations that it will start retailing petrol and diesel.

Realty stocks gained on news that the government will take measures to stabilize the sector. Mortgage lender Housing Development Finance soared 6.8% and LIC Housing Finance rose 10.4%. Infrastructure Development Finance Company increased 14.3%.

Financial stocks increased. ICICI Bank rose 8.8%, Bank of India climbed 6.6% and HDFC Bank gained 3.5%.

IT stocks gained despite the rupee gaining 49.78 against the dollar from 50.01 yesterday. Infosys soared 3.1%, Wipro gained 4.7%, Satyam Computer Services advanced 1% and Tata Consultancy Services edged up 2.8%.

Auto makers increased on expectations that lower interest rates will boost demand. Tata Motors rose 13.3% on reports of possible excise duty cut on commercial vehicles as a part of the government''s package to boost the economy.

Ranbaxy Laboratories gained 3.6% after signing a pact with a U.S. drug company.

Marg increased 5% to 34.45 rupees after receiving a contract for developing an airport at Bijapur in Karnataka.

Hindustan Oil Exploration Company rose 6.1% after it received two oil and gas blocks.

Nava Bharat Ventures jumped 20.3% on share buyback plan and PVR advanced 4.9% on reports it plans to set up entertainment centers across the country.