Market remains choppy

Volatility ruled the roost on the bourses in afternoon trade. The
BSE Sensex was up 34.82 points. The market had made a sharp
recovery from its intra-day lows in early afternoon trade. Earlier,
the market had slipped deep into the red with Sensex losing close
to 200 points at intra-day lows soon after trading resumed after
45-minute stoppage for sun outage. The barometer index had hit its
lowest level since 12 September 2006. Nifty hits its lowest level
since 7 March 2007.

Reliance Industries edged higher. Power stocks rose while
healthcare stocks declined. The market breadth was negative in
contrast to a strong breadth earlier in the day. Finance Minister P
Chidambaram expects 8% GDP growth in the current financial year
notwithstanding the global financial crises.

A recovery in Asian stocks following a larger than expected 100
basis points cut in interest rate by Australia's central bank
today, 7 October 2008, and higher US futures supported the domestic
bourses.

US futures were up. Nasdaq was up by 16.50 points and Dow Jones
futures were up 74 points.

In Europe, France's CAC 40 and UK's FTSE 100 were up between 0.3%
to 1.25%. Germany's DAX was down 0.08% .

At 13:29 IST, the BSE 30-share Sensex was up 34.82 points or 0.3%
to 11,836.52. The index fell 210.21 points at the day's low of
11,591.58, hit in early afternoon trade, its lowest level in more
than two years.

The Sensex surged 379.73 points at day's high of 12,181.43, in
early trade. The market regulator Securities & Exchange Board of
India (Sebi)'s decision to lift restriction on issue of
participatory notes and the Reserve Bank of India's surprise steep
50 basis cut in the cash reserve ratio had triggered a rebound on
the bourses in early trade after steep losses of the past two
trading sessions. Both the Sebi and RBI announcements were made
after trading hours on Monday, 6 October 2008.

The S&P CNX Nifty was up 26.35 points or 0.73% to 3,628.70. Nifty
hit a low of 3577.60, its lowest level since 7 March 2007.

The BSE Mid-Cap index was down 1.52% at 4,278.07 and the BSE
Small-Cap index was down 1.46% at 5,012.75.

The market breadth was weak on BSE with 812 shares advancing as
compared to 1,615 that declined. 79 shares remained unchanged.

India's largest private sector company by market capitalization and
oil refiner Reliance Industries rose 2.13% to Rs 1,676.80. The
stock had hit a 52 week low of 1,632.10 yesterday, 6 October 2008.

Power stocks rose. PowerGrid Corporation of India (up 5.25% to Rs
92.30), Reliance Power (up 5.2% to Rs 146.60), Reliance
Infrastructure (up 4.69% to Rs 667.90), NTPC (up 3.73% to Rs 175)
edged higher. However, Tata Power Company fell 0.54% to Rs 794.

Healthcare stocks declined. Cipla (down 1.81% to Rs 214.65), Dr
Reddy's Laboratories (down 2.18% to Rs 466.50) edged lower. However
India's largest drug amker by sales Ranbaxy Laboratories rose 5.5%
to Rs 260.

Bank shares pared gains after firm opening. India's largest private
sector bank by net profit ICICI Bank fell 0.18% to Rs 489.55. The
stock came off from the session's high of Rs 521.70. India's second
largest private sector bank by net profit HDFC Bank declined 1.82%
to Rs 1,180. The stock came off from the session's high of Rs
1,245. India's largest commercial bank State Bank of India rose
1.19% to Rs 1,451. The stock came off from the session's high of Rs
1,503.

The Reserve Bank of India (RBI), after trading hours on Monday, 6
October 2008, announced a 50 basis points cut in the cash reserve
ratio (CRR) to 8.5%, with effective from 11 October 2008. RBI said
the CRR cut is an ad hoc, temporary measure and it will be reviewed
on a continuous basis in the light of the evolving liquidity
conditions. RBI said it will give priority to liquidity management
over the period ahead given the turbulence in international
financial markets. RBI also said the overriding priority for
monetary policy is to eschew any further intensification of
inflationary pressures and to firmly anchor inflation expectations.

Larsen & Toubro (down 4.64% to Rs 1,033), ITC (down 4.64% to Rs
171.25), Sterlite Industries (down 2.97% to Rs 325.40), Mahindra &
Mahindra (down 3.62% to Rs 484.15), edged lower from the Sensex
pack.

DLF (up 3.53% to Rs 301), NTPC (up 3.26% to Rs 174.20), Bharat
Heavy Electricals (up 2.23% to Rs 1,481.65), Bharti Airtel (up
1.86% to Rs 743.25), edged higher from the Sensex pack.

India's largest oil exploration firm by revenue Oil and Natural Gas
Corporation rose 3.17% to Rs 1,011.20. The company will shortly tie
up with Uranium Corporation of India for exploring and mining the
fissile material, suggest reports.

European Union finance ministers gathered in Luxembourg on Tuesday,
7 October 2008, to discuss ways of protecting savers' deposits and
counter the market turmoil that saw the region's stock markets
suffer record losses on Monday, 6 October 2008. Australia's central
bank cut its benchmark cash rate by 100 basis points to 6%,
stunning investors with its biggest interest rate cut in 16 years.

Asian stocks outside Japan rose for the first time in four days on
Tuesday, 7 October 2008, after a surprisingly large interest rate
cut by Australia's central bank raised hopes that other
policymakers would follow suit. Taiwan stocks ended up 0.34%,
recouping sharp losses earlier in the day and rebounding from a
more than four-year closing low the previous session as government
funds helped bolster market heavyweights such as TSMC.

South Korea's KOSPI rebounded from a 21-month low and rose 0.54%.
The country's regulator said it was considering steps to reduce
volatility in the equity market, helping to stem some of the day's
losses.

China's stock market fell but ended well off its lows as hopes for
government support helped banks and property shares rebound from a
sharp early slide. The Shanghai Composite Index, which had dropped
as much as 4.64% in the morning, closed down 0.73% at 2,157.839
points. Singapore shares reversed early losses go gain about 2%.

Japan's Nikkei was down 3.03% after The Bank of Japan kept interest
rates unchanged at 0.5% on Tuesday, 7 October 2008, and maintained
its assessment on the economy, which it said was sluggish.

Back home, the Sebi decision on lifting of restriction on P-notes
comes at a time when foreign institutional investors (FIIs) have
been pulling out their investments from India and other emerging
markets to shore up resources to beat the global liquidity crunch.
In India, FIIs sold shares worth a net Rs 8278.10 crore last month.
The outflow has reached Rs 38037.30 crore in calendar year 2008
(till 3 October 2008).

Exactly a year ago, Securities & Exchange Board of India (Sebi) had
announced stringent restrictions on P-notes, totally banning fresh
issue of P-notes with Indian derivatives as underlying. It had also
mandated unwinding of such positions within 18 months. Sebi had
also restricted issuance of P-notes in the spot segment to 40% of
assets under custody. P-notes are issued by foreign institutional
investors registered in India to unregistered overseas investors.

As per provisional data released by the stock exchanges, foreign
funds sold shares worth a net Rs 1169.33 crore on Monday, 6 October
2008. Domestic funds bought shares worth a net Rs 661 crore.

Meanwhile, with the end of third quarter of the calendar year 2008
on Tuesday, 30 September 2008, hedge fund are bracing for heavy
redemption amid US financial sector crisis which has already spread
to Europe. Investors in hedge funds are usually allowed to exit
funds only on the final day of the financial quarter. Large-scale
investor redemption in hedge funds may trigger further selling by
foreign funds in India. Hedge funds mainly operate through the
participatory notes route in India. However, there is no data
available on the quantum of hedge funds' investment in India.

The troubles that started with an overheated housing market in the
US have infected financial markets around the world, making banks
fearful of lending to other banks, let alone to businesses and
consumers. That has led to worries that economies around the world
might not only sputter but slide into reverse. Recently,
governments across Europe rushed to prop up failing banks, while
the governments of Germany, Ireland and Greece also said they would
guarantee bank deposits.

Oil prices, down nearly 40% from their peak because of recession
worries, climbed back to over $90 a barrel.

According to Finance Minister P Chidambaram Indian business and
industry have placed India in a situation where the country can
weather the global financial crisis. He counts robust revenues,
exports and investment planned by Indian corporates as major
positive factors which would help India through the global crisis.

The Finance Minister expects 8% GDP growth in the current financial
year and 9% in financial year 2009-10.