Sensex Surges, Budget Expectations

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

The statistical agency of India estimated growth in the second half in the current year in India at a slower pace and for the year estimated a growth of 7.1%. Manufacturing industry association survey indicated a decline in production among 96 industry sub groups. Stocks surged.

[R]10:00AM New York, 7:30 PM – The statistical agency of India estimated growth in the second half in the current year in India at a slower pace and for the year estimated a growth of 7.1%. Manufacturing industry association survey indicated a decline in production among 96 industry sub groups.[/R]

Stocks in Mumbai rallied on expectations that the interim budget will include tax cuts among a host of measures to stimulate economic growth.

An interim budget will be presented on Friday this week, while a mini general budget will be unveiled on February 16. India’s general elections are due in May 2009.

Investors sentiment was bolstered after Securities & Exchange Board of India that showed foreign funds bough 51.20 crore rupees on Thursday last week.

In addition, Fitch rating agency affirmed India''s foreign currency issuer default ratings at BBB-minus, or the lowest investment-grade level, with a stable outlook.

In Mumbai, the BSE 30-share Sensex increased 3% or 283.03 to 9,583.89, and the CNX Nifty edged up 2.7% or 76.80 to 2,919.90.

Of the stocks traded on BSE, 1,578 rose, 935 declined, and 61 were unchanged.

Trading Statistics

Daily turnover on the BSE edged higher 2,824 crore rupees from 2,742.59 crore rupees on Friday last week.

Economic Growth at 7.1%

Central Statistical Office reported today that the economy is estimated to grow at 7.1% compared to 9% in the previous year. The economic growth in the second half of the current fiscal year is estimated at a slower pace of 6.5%.

Government, RBI in Discussions on More Borrowing

Economic Times of India reported Reserve Bank of India Governor D Subbarao said the central bank and the government are currently in discussions on additional borrowing programs.

Subbarao said that the current uncertainty in the global financial markets is weighing on the borrowing calendar.

“We will manage the calendar of borrowing to ensure markets are not destabilized in any way; we will manage in an efficient and orderly manner,” said Subbarao.

Manufacturing Industry Needs Further Interest Rate Cuts, CII

According to Confederation of Indian Industries statement noted that a third of the 96 manufacturing industries production dropped in the three months to December from the previous quarter.

Gainers & Losers

Reliance Industries increased 3.4% to 1,389.05 rupees.

Commodity stocks increased as metal prices increased. Copper prices advanced 8%. Tata Steel rose 7.2% as domestic sales rose 26% to 511,000 tons in January 2009 from the year ago period.

Financial stocks gained on market rumors the government will unveil 2,000 crore rupee bank recapitalization scheme. State Bank of India edged up 2.6%, HDFC Bank advanced 2.3% and ICICI Bank climbed 5.2%.

HDFC rose 5.6%.

IT stocks increased on expectations that the U.S. stimulus plan will be passed this week.

The rupee rose 0.2% to 48.57 against a dollar from 48.67 on Friday last week. TCS rose 2.7%, Wipro increased 1%, Infosys Technologies advanced 1.8% and HCL Technologies dropped 4.3%.

Satyam Computer Services declined 2.7% on reports insurance Assurant and Visa Inc had ended contracts with the firm.

Bharat Heavy Electricals rose 2% after it won four contracts worth 7,000 crore rupees to supply and set up electrical equipment for thermal power projects.

BEML increased 7.8% after receiving a order worth 1672.50 crore rupees for supply of metro rail coaches.

ACC rose 0.3% on reports cement makers are expected to increase prices by 5 rupees per 50 kg bag in a couple of weeks.