Indian Stocks Climb, Economy Expected to Slow

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

Indian stocks ended the trading session higher boosted by expectations of rate cuts by the Reserve Bank of India. In the meantime, local brokers announced that the country''s economic growth was likely to ease between 6% and 7%.

[R]10:00AM New York, 7:30 PM Mumbai- India’s economic growth to ease between 6% and 7% in 2009.[/R]

Indian stocks rose on expectations that the Reserve Bank of India will cut its interest rates and the government will unveil a second stimulus package to spur economic growth.

Prime Minister Manmohan Singh has reportedly directed the Reserve Bank of India to cut the mandatory cash reserve ratio for banks and short-term interest rates.

Volatility in Reliance Industries stock however pared gains.

In Mumbai, the BSE 30-share Sensex Index rose 1.9% or 182.64 to 9716.16, and the CNX Nifty advanced 2% or 57.30 to 2979.50.

Of the stocks traded on BSE, 1633 rose, 821 declined, and 80 remained unchanged.

India’s Economic Growth to Ease 6%-7% in 2009

Brokerage Kotak Securities reported that India’s economic growth is projected to ease between 6% and 7% in 2009 on the flight of liquidity from equity markets and freeze in the credit markets that has crimped economic growth.

Th Sensex is expected to move between 9000-12000, while pharmaceuticals, PSU banks, power, construction and capital goods sectors are expected to perform well.

Kotak Securities’ managing director S A Narayan said, “The global turmoil has had an impact on the Indian economy due to the resultant liquidity crunch and fall in demand. This will have an impact on the growth of the corporate sector and this impact may continue in the foreseeable future.”

Fuel Prices to Be Slashed in January

Union Minister for Petroleum and Natural Gas Murli Deora said on Tuesday the Centre will effect a reduction in petroleum prices next month.

Deora added that the proposal on supply of cooking gas through pipelines is also being considered in the wake of shortages of LPG cylinders.

Gainers & Losers

Jaiprakash Associates rose 6%, Ranbaxy soared 4.1% and Reliance Infrastructure gained 4.1%.

Satyam Computer Services jumped 8.7% to 161.10 rupees on news that private equity players are eyeing a stake in the company.

IT stocks increased as the rupee fell to 48.55 against the dollar from 48.41 yesterday. Infosys rose 1.4% to 1126 rupees, Wipro soared 3% to 234 rupees and Tata Consultancy Services advanced 0.3% to 478.15 rupees.

Rolta India increased 4.3% to 115.75 rupees after acquiring a US firm that provides IT solutions to oil and gas refineries.

Reliance Communication rose 7.2% to 228.10 rupees after the company reported that it has spent 10000 crore rupees on expanding GSM services across India, and expects to spend a further 2000-4000 crore rupees on building 3G networks.

In addition, RCom said it has repurchased zero coupon foreign currency convertible bonds worth 121 crore rupees at a discount of 52.5%.

Idea Cellular climbed 8% to 53.85 rupees on plans to invest 300 crore rupees in the next 15 months to grow its business in Karnataka.

Reliance Industries increased 0.1% to 1248.95 rupees amid highly volatile trade.

Financial stocks increased on expectation of lower interest rates. ICICI Bank rose 3.1% to 458.05 rupees, HDFC Bank gained 1.5% to 1018.15 rupees and State Bank of India jumped 1.4% to 1288.85 rupees.

Carmaker increased on news that the government is likely to remove an additional excise duty of 10,000-20,000 rupees on large cars and sports-utility vehicles as part of the package for the automobile industry. Tata Motors increased 5% to 156.10 rupees, Maruti Suzuki India gained 3.7% to 517.60 rupees and Mahindra & Mahindra advanced 5.8% to 270.45 rupees.

Realty stocks rose. DLF soared 3.2%, Unitech jumped 4.4% and Indiabulls Real Estate increased 4.6%.

NTPC gained 2.5% to 181.60 rupees on reports it has submitted bids for the 4,000-megawatt Tilaiya Ultra Mega Power Project in Jharkhand.

Sterlite Industries edged up 4.8% to 265.05 rupees.

Larsen & Toubro climbed 3.9% to 770 rupees on hopes that lower interest rates will keep order flows strong and aid project funding.

Sun TV Network increased 8.6% to 183.45 rupees and Electrotherm India jumped 20% to 128.40 rupees after the board approved spinning off its engineering business into a new entity - Electrotherm Engineering & Projects.