RBI Incentives, Sensex Surges 2.3%

123jump.com Staff
06 Feb, 2009
New York City

The stocks in Mumbai rise on the hopes that the soon to be announced interim budget will offer industry incentives and tax relief. The benchmark index Sensex gained 2.3%. The Reserve Bank of India offered easier access to loans to exporters.

[R]12:00PM New York, 10:30 PM Mumbai – The government of India may offer tax relief in interim budget to be released in less than ten days. The RBI eases rules on access of loans to exporters.[/R]

India stocks jumped on speculation that the government may introduce tax relief in the interim budget to be released on February 16.

The market expects government to lower corporate tax to 20% from the current 30% and relief in interest rates for housing loans and to exporters. Commodity, IT and financial stocks increased.

In Mumbai, the BSE 30-share Sensex index climbed 2.3% or 209.98 to 9,300.86, and the CNX Nifty advanced 2.3% or 63.05 to 2,843.10.

Of the stocks traded on BSE, 1,474 advanced, 1,024 declined, and 63 were unchanged.

Trading Statistics

Daily turnover on BSE declined to 2,732 crore rupees from 2,589.37 crore rupees yesterday.

India May Offer Tax Sops in Interim Budget

Economic Times of India reported today that the government may slash taxes to boost the slowing economy and provide relief to several industries in its interim budget to be unveiled on February 16.

Recent employment statistics showed that an estimated 500,000 people were rendered jobless between October 2008 and December 2008.

Minister of state for industry Ashwani Kumar said “a very calibrated policy prescription” will be announced in the interim budget.

Kumar said government will unveil sector-specific packages to boost areas that need immediate intervention.

RBI Eases Rules on Access of Loans by Exporters

Reserve Bank of India has increased the interest rate ceiling at which banks can raise export credit on the global market to 350 basis points above the London Interbank Offered Rate (LIBOR) from 100 basis points.

Banks have also been directed not to levy charges like the service tax on the credit. However, the new rules will be applicable to EURO-LIBOR loans only.

Gainers & Losers

Reliance Industries rose 4.4% to 1,343.50 rupees on the news the petroleum ministry is seeking re-introduction of the seven-year income-tax holiday for natural gas producers.

DLF fell 0.9% on reports it has lowered property prices by 20% to forestall slowing demand for new homes.

Financial stocks gained after Reserve Bank of India extended forex swap facility for banks from the end of 2009 to 2010. State Bank of India rose 2.2%, HDFC Bank gained 1.7% and ICICI Bank advanced 4.1%.

HDFC increased 1.7%.

IT gained on expectations the U.S. stimulus package might soon be passed in Senate. However the rupee rose to 48.69 from 48.77 yesterday. Wipro advanced 1.9%, Infosys Technologies advanced 2.2%, HCL Technologies gained 3.4% and TCS advanced 4%.

Satyam Computer Services edged up 2.5% after A S Murty was appointed the new chief executive officer. The troubled software services provider has been plagued with the accounting fraud and mismanagement of its finances.

Tata Motors rose 4.6% after reporting that three-quarters of its purchases from vendors have been paid immediately through an arrangement with banks.

Mercator Lines fell 3.9%.