Mumbai Stocks Drop 2.6%

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

Mumbai stocks dropped 2.6% on economic slowdown worries and terrorist attack rumors in New Delhi. Traders are expecting a large rate cut from the Reserve Bank of India after central banks in Europe cut rates. Rupee rose against the U.S. dollar. Larsen & Toubro suspended its entry in shipbuilding.

[R]10:00AM New York, 7:30 PM Mumbai - Sensex falls on security scare at New Delhi International airport. India lowers diesel and petrol fuel prices.[/R]

Market Sentiment

India stocks fell after a security scare at the New Delhi international airport. Losses were however trimmed by the speculation that the Reserve Bank of India will cut its repo and reverse repo rates by 200 basis points and 125 basis points respectively to boost economic growth.

Trading Statistics

In Mumbai, the BSE 30-share Sensex dropped 2.9% or 264.55 to 8,965.20 and the CNX Nifty shed 2.6% or 73.60 to 2,714.40.

Of the stocks traded on BSE, 985 rose, 1,104 declined and 71 were unchanged. Daily turnover on BSE stood at 3,745 crore rupees from 3,747.69 crore rupees yesterday.

Vodafone loses Indian tax case

Reuters reported today that Vodafone tax consultant Dinesh Kanabar said the Bombay High Court has dismissed a petition by Vodafone International Holdings against a tax bill relating to the acquisition of a mobile phone operation in India in 2007.

The mobile phone company last year paid $11.1 billion to a unit of Hong Kong’s Hutchison Whampoa for a controlling stake in an Indian mobile operator.

The company received a bill from the income tax department to pay capital gains tax since most of the assets it purchases were based in India.

India Cuts Petrol, Diesel Prices

The Economic Times of India reported today that the government has cut the prices of petrol and diesel by 5 rupees and 2 rupees a liter from midnight today.

Reduced prices will cut inflationary pressures and boost demand in the economy.

Fuel consumers who have seen increases in their fuel bills over the past two years, and an increase in their home budgets because of rising prices of fruits, vegetables, food articles and travel.

The report notes that a cut in diesel prices will lower prices of fruits, vegetables, food grain and industrial products.

Gainers & Losers

Financial stocks declined on fears of rising defaults as the economic conditions continue to deteriorate. State Bank of India fell 2.9%, HDFC Bank dropped 2.6% and ICICI Bank shed 1.6%.

HDFC also declined 4.8%.

IT stocks slipped as the rupee rose to 49.72 from 49.87 against the dollar. Wipro slid 2.3%, Satyam Computer Services declined 3.5%, Tata Consultancy Services dropped 5.1% and Infosys fell 4.9% on reports that it has decided to freeze its annual hiring cycle following the global economic slowdown.

Larsen & Toubro fell 2.5% on reports it has suspended its entry into the commercial shipbuilding business and has also decided to scale back its investment for a new shipyard near Chennai.

Tata Motors advanced 1.5% on reports the government may cut excise duty on commercial vehicles in order to boost the economy and Mahindra & Mahindra fell 0.8%. Ashok Leyland rose 0.1% despite a 60.2% fall in sales to 2,307 units in November 2008 from the same period a year earlier.

ACC rose 0.04% on reports it has raised 200 crore rupees via bond issue.

Binani Cement surged 4.4% after the domestic rating agency CARE upgraded its ratings on the cement manufacturer.

Reliance Communications rose 0.2% after reports the Communications and IT Ministry will refund about 112 crore rupees which the company had paid as part of the entry fee while seeking approval for offering dual technology in 2007.

Mcleod Russel India soared 6.2% after the Reserve Bank of India raised the foreign investment ceiling in the company.

Aurobindo Pharma rose 6.7% and Wockhardt gained 0.5% on receiving separate US approvals for new drugs.