RBI Cuts Rate; Weak Rupee, Sensex Drops

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

Reserve Bank of India lowered its key lending rate to 5% to stimulate demand and maintain liquidity in the financial system. The latest measure of wholesale inflation declined. Stocks fell as foreign investors sell stocks and drive rupee to near record low. Tata Motors credit rating downgraded.

[R]10:00AM New York, 7:30 PM Mumbai - India’s inflation eases to 3.03% in 12 months to February 21. Reserve Bank of India cuts repo rate to 5%.[/R]

Indian stocks fell 2.9% on sustained selling by foreign funds dragging the rupee lower. Foreign investors increased their sale of stocks to 2,707 crore rupees in February.

The rupee fell to 51.77 against the dollar from 51.53 yesterday.

In Mumbai, the BSE 30-share Sensex index fell 2.9% or 248.57 to 8,197.92, and CNX Nifty declined 2.6% or 68.50 to 2,576.70.

Of the stocks traded on the BSE, 715 increased, 1,703 declined, and 69 remained unchanged.

Trading Statistics

Daily turnover on the BSE increased to 3,416 crore rupees from 2,868.60 crore rupees yesterday.

Inflation Eases to 3.03%

India’s wholesale price index dropped to 3.03% in the 12 months to February 21 from 3.36% a week ago.

Annual inflation rate was 5.69% during the corresponding week of the previous year.

Reserve Bank of India Cuts Repo Rate

The Reserve Bank of India today cut its repo rate, which is the rate at which the central bank lends to banks, to 5% and also slashed the reverse repo rate at which the RBI borrows from banks to 3.5%.

Direct Tax Collection Rise 11.3%

Economic Times of India reported today that direct tax collections rose 11.3% to 2,58,902 crore rupees in the eleven months ending in February of this fiscal year.

The tax collection is only 76.4% of the revised targeted of 3,45,000 crore rupees set in the interim budget.

Corporate tax collections advanced 16.8% to 1,62,617 crore rupees from 1,39,241 crore rupees in the April-February 2007 to 2008, while FBT collections increased to 6267 crore rupees from 5233 crore rupees.

Banking Cash Transaction Tax collections also increased 14.5 % to 588 crore rupees in April-February 2008-09 compared with 513 crore rupees in the same period a year ago.

In addition, Securities Transaction Tax collections fell 35.5% to 5,079 crore rupees from 7,879 crore rupees a year ago.

Gainers & Losers

Reliance Industries dropped 5% to 1,149.10 rupees after crude processing at its two export-focused plants at Jamnagar in Gujarat fell 12.1% to 6,68,450 barrels per day in January 2009 from a year earlier.

Oil & Natural Gas Corporation declined 1.9% after Goldman Sachs said the government took $20 billion cash from the company without consulting minority shareholders.

Financial stocks fell. ICICI Bank tumbled 5.2%, HDFC Bank slipped 4.5%, and State Bank of India shed 2.4%.

Hindustan Unilever plunged 4.5% after foreign brokerage JPMorgan Chase & Company cut its rating on the stock to ''underweight'' from ''neutral'', on weakening growth and increasing competition.

Marico rose 1.3% after its promoters increased his stake in the company.

IT stocks gained after the rupee fell to 51.77 from 51.53 yesterday. Wipro rose 0.2%, TCS increased 0.4%, and Infosys Technologies tumbled 1.3%.

Ranbaxy Laboratories dipped 9.3% on reports the Australian drug regulator is investigating earlier allegations Ranbaxy''s plants falsified data for drug approvals.

Auto stocks declined. TVS Motor Company plunged 1.7%, Tata Motors tumbled 2.7%, Maruti Suzuki India fell 2% and Mahindra & Mahindra dropped 1%.

Hero Honda Motors rose 1%.

Tata Power Company fell 5.1% after saying there might be difficulties in repaying $850 million debt used to buy stakes in two Indonesian mines as coal prices decline.