Mumbai Stocks Edge Higher; Shippers Rise

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

Stocks in Mumbai rose on the expectations of another round of economic stimulus. Weak financial markets dragged merchant banking fees by 36% in the first eleven months of the year. Shipping industry stocks rose on the expectations of interest rate subsidy from the government.

[R]10:00AM New York, 7:30 PM Mumbai - Indian investment banks fee based income fall 36.3% to $758 million in 11 months of 2008. Shipping stocks surged after government hinted interest rate subsidy for the industry.[/R]

Market Sentiment

Indian stocks rose in choppy trading on expectations that falling industrial production in October may lead the government to offer broader economic stimulus.

In Mumbai, the BSE 30-share Sensex index rose 1.5% or 142.32 to 9,832.39, and the CNX Nifty gained 2.1% or 59.85 to 2,981.20.

Of the stocks traded on the BSE, 1,937 rose, 555 declined, and 80 were unchanged.

Trading Statistics

Daily turnover on the BSE declined to 4,360 crore rupees from 4,486.93 crore rupees on Friday last week.

Merchant Banking Fees Decline

Economic Times of India reported today that Thomson Reuters said India''s investment banks fee-based income declined 36.3% to $758 million in the first eleven months of 2008.

Fee earned through public equity offering dropped 82% on falling prices and rising risk aversion.

Fees of managing debt-related activities slid 19.7%.

Goldman Sachs, Citi, Nomura, Deutsche Bank, ICICI Bank and Kotak Mahindra’s fees decline.

However, in the eleven months of 2007, Indian investment banks realized $1.1 billion in fee by managing mergers & acquisition deals, IPOs, FPOs, bond issues and syndicated loans for their clients.

Citi Group saw 80% fall in fee volume to $25 million through managing 47 deals compared to 5 deals worth $120 million.

State Bank of India earned $44.6 million from 5 deals compared with $44.4 million last year.

In addition, fee contributions from mergers and acquisitions were 41% and equity capital market contribution was 45%.

Separately, State Bank of India chairman O.P. Bhatt said it will offer lower rates for home loans.

Shipping Industry Subsidy

The online report said the government will provide a 2% to 3% interest subsidy in shipping sector from 11% interest for dollar loans and 14% for rupee loans.

The shipping sector may need as much as 100,000 crore rupees by 2012 to expand capacity and replace ageing fleet.

Gainers & Losers

Reliance Industries rose 2.4% to 1,338.05 rupees on the news government will soon permit oil exploration company to sell natural gas from Krishna-Godavari basin to companies other than Reliance Natural and state controlled National Thermal Power Corporation.

Tata Steel gained 4.2%.

Realty stocks increased on hopes housing demand will improve following a concessional home loan package unveiled by the state-run banks today.

Unitech soared 10.5% on reports it plans to finalize a buyer for its hotel property in Gurgaon in the next two weeks.

Financial stocks increased on further interest rate cuts from the central banks. HDFC Bank gained 2.7%, ICICI Bank jumped 1.7%.

State Bank of India has paid 56% higher advance tax at 1,700 crore rupee in the three months to December from the comparable year ago period, while HDFC paid about 30% higher advance tax at 279 crore rupees.

Also, ICICI Bank paid 6% lower advance tax at 470 crore rupees.

IT stocks rose after the rupee weakened to 48 against the dollar from 48.43 on Friday last week. Tata Consultancy Services fell 2.6%, Infosys declined 0.6% to 1,101.10 rupees, Wipro fell 1.6% and Satyam Computer Services rose 2.1%.

Apollo Tyres surged 4% after 0.4% of the company''s equity changed hands in a block deal at 19.60 rupees on BSE.

Reliance Communications fell 4.1% on reports department of telecom will ask the Comptroller and Auditor General of India to appoint a special auditor to examine the books of Reliance Communications.

Gitanjali Gems soared 7.1% after the company said its board will meet on Friday this week to consider share buyback. Indian Oil Corporation fell 0.3%.

Kirloskar Electric Company climbed 10% and McNally Bharat Engineering Company jumped 13.3% after receiving an order worth 86.66 crore rupees.