Second Day 2% Drop in Stocks in India

123jump.com Staff
03 Mar, 2009
New York City

Stock prices declined after foreign investors sold stocks and repatriated capital to home market. The benchmark index declined more than 2% for the second day in a row. The foreign fund outflow is expected to rise as emerging markets remain depressed.

[R]10:00AM New York, 7:30 PM Mumbai – Stock prices declined after foreign investors sold stocks and repatriated capital to home market. The benchmark index declined more than 2% for the second day in a row.[/R]

Indian stocks fell 2.1%, dropping the most in three years on a massive sell off as investors were unnerved by heavy selling by foreign funds.

Foreign institutional investors outflow soared to 2,707 crore rupees in February 2009 and domestic funds purchased shares valued at 52,357 crore rupees.

In Mumbai, the BSE-share Sensex Index fell 2.1% or 179.79 to 8,411.30, and CNX Nifty declined 2% or 52.20 to 2,622.40.

Of the BSE stocks, 825 increased, 1,617 declined, and 67 remained unchanged.

Trading Statistics

Turnover on the BSE declined to 2,542 crore rupees from 2,587.98 crore rupees yesterday.

Exports to be Subdued in Next 6 Months

Morgan Stanley estimated that exports will remain subdued in the next six months on weak demand in the global financial markets.

Commerce ministry revealed that exports tumbled 15.9% to $12.38 billion in January from $14.71 billion in the comparable year ago period, falling for the fourth month in a row.

The current account deficit is projected to narrow sharply in the quarter beginning April and turn into surplus from the quarter beginning July.

“Imports will continue to weaken due to the slowing domestic demand and lower oil import bill, helping trade deficit to narrow further,"""" said Morgan Stanley.

Economic Growth Forecasts Cut

Economic Times of India reported that Kotak Mahindra Bank today cut India economic growth forecast for the fiscal year ending March from 6.8% projected earlier to 6.5%, while the growth estimate for the next financial year was slashed to 5.5% from 5.8%.

The decline in economic growth is expected to be pared by increased consumption occasioned by the farm loan waiver, dearness allowance for federal employees and pay hikes for civil servants.

Gainers & Losers

Reliance Industries dropped 2.1% to 1,199.05 rupees and Reliance Petroleum fell 2.4%.

Cairn India dipped 3.9% as crude oil prices declined 10% to $40.20 per barrel. ONGC also declined 2.4%.

Financial stocks declined on worries over the health of the global economy. ICICI Bank tumbled 2.6% to 296.40 rupees, HDFC Bank fell 1.7% to 831 rupees and State Bank of India shed 2% to 975.85 rupees.

IT stocks fell after worries the weakening global financial environment offset the effect of a falling rupee, which declined 0.3% to 51.93 against the dollar from 51.90 yesterday. Wipro tumbled 1.2% to 200.50 rupees and TCS dropped 3.1% to 445.15 rupees.

Infosys Technologies plunged 1.7% after brokerage Wachovia Capital Markets downgraded the stock to ''underperform'' from ''market perform.''

Sesa Goa fell 3.6% on reports iron ore export prices are falling on weak demand from China.

Cement stocks rose. Grasim Industries edged up 2.9% and Ultratech Cement advanced 1.4%.

ACC jumped 1.3% after cement dispatches increased 4% at 1.75 million tones in February 2009 from the same period a year earlier.

Ambuja Cement rose 4.7% after 11.3 % increase in volume shipment at 1.65 million ton in February 2009 from a year ago.