India Awaits Second Stimulus Plan

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

Industrial production in India drops 0.4% in October as domestic economy slows. Foreign investors were net buyers of stocks in the last four weeks. World Bank is expected to lend $14 billion over the next three years to step up infrastructure development in poor states.

[R]10:00AM New York, 7:30 PM Mumbai - Industrial production falls 0.4% in October. World Bank to spend $14 billion on infrastructure programs in India.[/R]

Market Sentiment

Indian stocks rose after buying by foreign funds and expectations of a second stimulus plan helped to offset weak industrial production data.

Foreign investors purchased shares of 2,048.70 crore rupees by December 11, 2008 and for the year 52,688.50 crore rupees.

Commerce Minister Kamal Nath yesterday said government is working on a second stimulus package to boost employment and meet the credit needs of companies.

In Mumbai, Sensex index rose 0.5% or 44.61 to 9,690.07, and CNX Nifty gained 0.04% or 1.2 to 2,921.35.

Of the stocks traded on the BSE, 889 rose, 1,391 declined, and 89 were unchanged.

Trading Statistics

Daily turnover on the BSE rose to 4,471 crore rupees from 4,638.42 crore rupees yesterday.

India''s Industrial Production Drops 0.4% in October

Central Statistical Organization of the Ministry of Statistics and Program Implementation said Industrial production fell 0.4% to 261.5 in October from the comparable period a year ago.

Industrial production between April and October rose 4.1% from a year ago.

Indices of industrial production for the mining and electricity rose 2.2% to 174.4 and 4.4% to 231.2 correspondingly. However, manufacturing production fell 1.2% to 276.9.

Production of beverages, tobacco and related products jumped 7.5%, paper, paper products and printing rose 5.4%.

Leather and leather & fur products fell 18.1%, wood and wood products slid 14.4% and cotton products fell 9.6%.

In addition, basic goods production rose 2.7%, capital goods manufacturing rose and intermediate goods dropped 3.7%.

Consumer durables and consumer non-durables fell 3% and 2% respectively.

Seven out of seventeen industries grew in the period. Other manufacturing industries gained 11%.

World Bank plans $14 billion Lending Program

Bloomberg News reported that World Bank announced that it is planning a $14 billion lending program for India over three years to step up infrastructure programs and propping the nation''s seven poorest states.

The bank will focus on Millennium Development Goals and poverty reduction in seven low-income states of Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan, and Uttar Pradesh.

Middle- income states like Andhra Pradesh, Karnataka, Punjab, Tamil Nadu, Haryana, Gujarat and Maharashtra will also receive investment assistance.

Prime Minister Manmohan Singh said $500 billion is needed to support infrastructure programs needed to sustain economic growth between 9 % and 10%.

Gainers & Losers

Reliance Industries soared 4% to 1,313.20 rupees after the government withdrew an affidavit filed in the Bombay High Court opposing the sale of RIL''s Krishna-Godavari basin gas to anyone without its approval to the pricing formula.

Reliance Infrastructure rose 6.5% to 644 rupees and Reliance Communications edged up 4.1% to 248.90 rupees.

Financial stocks also rose. ICICI Bank gained 1.2% to 411.10 rupees, State Bank of India increased 0.7% to 1207 rupees and HDFC Bank rose 0.3% to 920 rupees.

Realty stocks gained. DLF jumped 7.2% to 275 rupees, Unitech declined 0.7% to 34.40 rupees, Indiabulls Real Estate fell 2.3% to 125.70 rupees, and Akruti City shed 1.7% to 642 rupees.

Tata Power rose 3.3% to 755 rupees.

Auto stocks recovered from losses in the morning session on the worries that U.S. may not pass emergency loan bill for automakers. Mahindra & Mahindra increased 1.3% to 290 rupees and Maruti Suzuki India advanced 0.4% to 465.60 rupees.

Bosch fell 2.7% to 3,052.05 rupees after a strike at the company forced it to declare a lockout.

IT stocks fell despite a weak rupee on speculation that U.S. companies will reduce the amount they spend on technology as conditions on the global financial markets deteriorated.

Tata Consultancy Services fell 4.7% to 483.80 rupees, Infosys dropped 2.6% to 1106 rupees, Satyam Computer Services shed 1% to 222.25 rupees and Wipro plunged 3.5% to 241.30 rupees.

Sterlite Industries declined 2.5% to 287.80 rupees, Tata Steel dipped 0.1% to 217.70 rupees, Sesa Goa shed 2.2% to 78.75 rupees, Nalco declined 8.3% to 179.75 rupees and JSW Steel fell 6.5% to 223.75 rupees.

Oil and Natural Gas Corporation tumbled 3% to 644.70 rupees after crude oil prices dropped $2 to $46.11per barrel.

State-run oil marketing firms gained on speculation government might de-regulate petrol and diesel prices.

HPCL edged up 6.7% to 239 rupees, BPCL increased 8.8% to 352.55 rupees and IOC gained 2.4% to 386.20 rupees.