Mumbai Stocks Surge 5.2%

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

Stocks in India rose on the hopes that global and local stimulus package will sustain economic expansion and corporate earnings growth. Recent rate cuts are likely to increase lending for home buyers and small businesses. Rupee strengthned against dollar. Real estate, banks and IT stocks advanced.

[R]10:00AM New York, 7:30 PM Mumbai – Stocks in India rose on the hopes that global and local stimulus package will sustain economic expansion and corporate earnings growth. Recent rate cuts are likely to increase lending for home buyers and small businesses.[/R]

Market Sentiment

In Mumbai, the BSE 30-share Sensex rose 5.3% or 492.28 to 9,654.90, and the CNX Nifty increased 5.2% or 144.25 to 2928.25.

Of the stocks traded on BSE, 1,539 rose, 888 declined and 113 remained unchanged.

Trading Statistics

Daily turnover on the BSE rose to 4,169 crore rupees from 3,243.32 crore rupees on Monday.

India Economic Growth Forecast Cut to 5.3%

Economic Times of India reported that Morgan Stanley today slashed its economic growth forecast for fiscal 2010 to 5.3% from 5.7%. The economy is projected to slow to 7% this year from 9% in 2007.

The research report says recent rate cuts by the Reserve Bank of India are unlikely to significantly lower the cost of capital.

Morgan Stanley forecasts that the central bank will cut its key rate by 125 basis points to 5.25% by the end of 2009 and announce additional measures to boost liquidity.

“Dislocation in global capital markets has resulted in a sharp reversal in capital inflows, pushing up cost of capital,” Morgan Stanley said in a research note.

The U.S. House Passes Auto Bailout

U.S. White House and the Democrats yesterday struck a deal on the proposed $15 billion bailout for Chrysler and General Motors.

The House of Representatives could vote on the bill on Tuesday and forward it to the Senate for its approval. The bailout will allow GM and Chrysler to avoid bankruptcy through March with short-term loans.

However, Ford Motor Co did not opt for immediate funds, but will like a line of credit if its position deteriorates.

Under the tentative agreement the carmakers will have to lower its debt, union workers, shrink dealer network and trim management bonus and staff by the end of March of 2009.

The “car czar” will have the mandate to recommend a bankruptcy like restructuring if companies borrowing money fail to obtain the necessary concessions from various constituents.

Gainers & Losers

Jaiprakash Associates rose 9.4% to 75.10 rupees, HDFC advanced 8.9% to 1645 rupees and Hindustan Unilever soared 1.2% to 244.70 rupees.

Reliance Industries gained 9.3% to 1,224 rupees on expectations that global stimulus packages will help boost demand for raw materials.

Oil & Natural Gas Corporation climbed 1.6% to 670 rupees after the government allowed its overseas unit ONGC Videsh to make a formal offer for acquiring a 100% stake in UK-listed Imperial Energy for £1.4 billion.

Ranbaxy Laboratories fell 1% to 210.90 rupees after Reliance Money maintained the company rating on ""sell"".

Wockhardt gained 4.4% to 100.80 rupees on reports it is in talks with private equity funds to divest a 15% stake at a huge premium.

Realty stocks gained. DLF soared 21.9% to 269.10 rupees, Unitech edged up 6.4% to 34.70 rupees, Sobha Developers advanced 3% to 97 rupees and Housing Development Infrastructure jumped 10.6% to 98.85 rupees.

Cement shares also gained. Grasim rose 14.4% to 1105 rupees, ACC increased 10.8% to 480 rupees, Ambuja Cements climbed 11.2% to 64.50 rupees, and Shree Cement jumped 8.3% to 390.25 rupees.

Capital goods stocks rose. Bharat Heavy Electricals gained 3.7% to 1412 rupees and Larsen & Toubro rose 5.4% to 780 rupees.

IT stocks advanced on rupee increasing to 48.98 against the dollar from 49.58 yesterday. Infosys rose 1.2% to 1,171.10 rupees, Satyam Computer Services climbed 5.3% to 235.60 rupees, Wipro gained 10.5% to 263.20 rupees and Tata Consultancy Services increased 2.9% to 537.45 rupees.

Commodity stocks gained on expectations of rising demand. Sterlite Industries rose 9.4% to 273.50 rupees, Hindalco Industries increased 6% to 53.75 rupees, Tata Steel jumped 13.3% to 222 rupees, Nalco soared 6.3% to 195.10 rupees and Steel Authority of India rose 16.2% to 79.95 rupees.

Telecom stocks gained on news that the country''s ministry of finance has permitted state-owned India Infrastructure Finance Company to lend money to telecom firms to bid for licenses for the third generation spectrum auction early next year.

Reliance Communications increased 11.5% to 230.90 rupees, Bharti Airtel gained 5% to 735.50 rupees and Idea Cellular jumped 3.8% to 52.80 rupees.

Banks stocks gained after the interest rate cut at the weekend. ICICI Bank gained 8.4% to 400.95 rupees, HDFC Bank increased 3% to 924.85 rupees, State Bank of India rose 1.9% to 1190.