More Rate Hikes Likely in India

123jump.com Staff
22 Mar, 2010
New York City

Mumbai stocks closed lower after Reserve Bank of India in a surprise move lifted reverse repurchase rate to 3.5% and the repurchase rate to 5% from 4.75%. The small increase in rate may be followed by additional increases if inflation fails to decline from the near record rate of 17%.

[R]6:00 PM Mumbai, 8:30 AM New York – Mumbai stocks closed lower after Reserve Bank of India in a surprise move lifted key interest rate. The small increase in interest rate may be followed by additional increases if inflation fails to decline from the 16-month record and industrial production increase hovers near 17%.[/R]

Reserve Bank of India lifted its key lending rate by 25 basis points in a surprise move to stem the surging inflation. The rate hike though expected and widely talked about, its timing before the next scheduled meeting surprised the market.

The Sensex index in India decreased 167.66 or 0.95% to 17,410.57 and CNX Nifty index fell 57.60 or 1.09% to 5,205.20. Among the Sensex 30 stocks, 8 rose and 22 fell.

On BSE trading, 988 stocks advanced, 1,853 declined and 78 were unchanged. Reliance Industries closed down 1.4% on profit taking.

The government hopes to raise the share of manufacturing to 22% of gross domestic product, Trade Minister Anand Sharma said on today.

The Finance Minister Pranab Mukherjee said the economy is expected to expand 7.2% the current fiscal year ending in March, and by 8.5% in the next fiscal year.

The wholesale price index-based inflation may fall as food and oil prices begin to decline according to deputy governor of Reserve Bank of India K.C. Chakrabarty.

The headline inflation is expected to come down in two months and the winter crop is likely to be good, the plan panel deputy Montek Singh Ahluwalia said on Monday.

Rupee edged lower 4 paisa to 45.53 against one dollar.

Gainers & Losers

Aurobindo Pharma Limited rose 1.0% to Rs 948.00 after the drug firm today said it has received approval from the Canadian health regulator for Topiramate tablets used in the treatment of epilepsy and migraine.

Bharti Airtel Limited added 1.4% to Rs 316.30 after the telecom firm finalized $8.5 billion of funding for its acquisition of the African assets of Kuwait’s Zain. Standard Chartered Bank, Royal Bank of Scotland and HSBC led the loan consortium.

Biocon Limited rose 0.9% to Rs 284.55 after the company entered into a discovery and development coloration with Endo Pharmaceutical USA to develop biological therapeutic molecules against cancer.

Fedders Lloyd Corporation Ltd rose 0.2% to Rs 83.10.

Jubilant Foodworks rose 1.5% to Rs 350.20 after HDFC Mutual Fund acquired 3.29% stake in the fast-food chain operator.

Kemrock Industries and Exports Limited gained 3.9% to Rs 465.55 after the company promoters added stake.

ICICI Bank Limited dropped 1.7% to Rs 938.40.

Lupin Limited rose 2.1% to Rs 1,644.45 after the drug maker said its U.S. subsidiary received a tentative approval from regulator for Eszopiclone tablets used in the treatment of sleep disorder.

National Aluminium Company Limited slipped 0.7% to Rs 400.40 after the Union Minister for Mines ruled out any possibility of disinvestment in the state run company.

Punj Lloyd Limited rose 1.7% to Rs 176.95 after the company said it has secured a project worth $40 million from Abu Dhabi Gas Industries for infrastructure related works.

SE Investments advanced 1.6% to Rs 621 after the company''s board approved a 5-for-1 stock split.

TTK Prestige Limited rose 2.7% to Rs 558.70 after the company spurts 14% in two trading days on new product launch.

Simmonds Marshall Limited increased 4.9% to Rs 141.90 after the company set the date for stock split.