Interim Budget in India; Stocks Fall 3.4%

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

Stocks in India dropped sharply after the interim budeget focus on rural development and failed to offer any subsidy to businesses. Exports in the current fiscal year are expected to rise 26.4% and total international traded is expected to surge 35.5%.

[R]10:00AM New York, 7:30 PM Mumbai - India seeks $4.2 billion from World Bank for bank recapitalizations.[/R]

Indian stocks lost 329 points today after investors were disappointed that the interim budget unveiled today didn’t have tax breaks and other subsidies for businesses.

However, the government said it will extend interest rate subsidies on exports on some sectors until September 30, 2009 and will increase its spending by 6% to 9.53 trillion rupees in the year beginning April 1, 2009.

Current revenues will be reviewed once a new government is in office in May 2009.

Investors were also unnerved by weak trading in markets in Japan, Hong Kong, South Korea, Taiwan and Singapore.

In Mumbai, the BSE 30-share Sensex index fell 3.4% or 329.29 to 9,305.45, and the CNX Nifty declined 3.4% or 99.85 to 2,848.50.

Of the stocks traded on the BSE, 781 rose, 1,606 dropped, and 103 remained unchanged.

Trading Statistics

Daily turnover on the BSE dropped to 2,894 crore rupees from 2,908.21 crore rupees on Friday last week.

India Exports Rise 26.4%

India’s finance secretary Arun Ramanathan said today the country’s exports rose at an annual average growth rate of 26.4% U.S. dollar terms, while foreign trade increased 35.5% in the same period.

India Seeks $4.2 billion from World Bank for Bank Recapitalisation

Separately finance minister Pranab Murkherjee reported today in his interim budget presentation the government is seeking an additional $4.2 billion for bank recapitalization.

Economists say the country’s federal debt and deteriorating fiscal deficit are negatively impacting.

Gainers

ONGC fell 2.8%, HDFC shed 2.8%, and ACC dropped 2.7%.

Jaiprakash Associates declined 8%, Bhel plunged 4.6%, Larsen & Toubro dipped 5.4% and Lanco Infratech plummeted 8.4%.

Reliance Infrastructure dropped 6.3% to 533.50 rupees after the company said AAA Project Ventures, a promoter of the company, has pledged more than 3.72 crore shares or 16.35% stake.

Reliance Industries lost 5.4% to 1,315.90 rupees on profit taking after the government failed to announce stimulus measures in today’s interim budget.

Reliance Communication dipped 5.9% to 170.95 rupees after the company said AAA Communication, a promoter, has pledged more than 27.23 crore shares or 13.19% stake.

Auto makers also shed. Tata Motors dropped 2% to 135.10 rupees, Mahindra & Mahindra lost 2.5% to 313 rupees after the company said its promoters have pledged more than 2.09 crore or 8.09% stake in the company, Maruti Suzuki declined 2.2%, Hindustan Motors dipped 3.9% and Bajaj Auto plunged 2.2%.

Financial stocks dropped. HDFC Bank lost 3.3%, ICICI Bank declined 5.1% and State Bank of India fell 5.1%.

Commodity stocks fell. Tata Steel declined 5.5%, Sterlite Industries dipped 4.5%, National Aluminium Company plunged 7.2%, SAIL tumbled 4.8%, Hindalco declined 3.3%, and Sesa Goa tumbled 4.9%.

Realty stocks declined. DLF lost 2.6% to 156.50 rupees, Parsvnath Developers fell 2.6%, Omaxe slipped 3.5%, Indiabulls Real Estate plummeted 10.3%, and HDIL declined 6.5%.

NTPC fell 2.8% to 177.80 rupees after forming a joint venture with Nuclear Power Corporation of India for setting up Nuclear Power Projects.

IT stocks dropped despite the weakness in rupee. The currency dropped to 48.74 against the dollar from 48.67 on Friday last week. Wipro fell 4.2% and Infosys Technologies shed 2.4%.

Sun Pharmaceutical dipped 1.5% to 1,052 rupees on the reports that it is looking for acquisitions.