Likely government measures to pump prime the economy, hopes of a
further cut in interest rates, firm European stocks and rebound in
US index futures boosted the domestic bourses today. The BSE
30-share Sensex jumped 482.32 points, or 5.51%, led by a surge in
realty, metal, banking shares and index heavyweight Reliance
Industries (RIL). The barometer index breached the psychological
9,000 mark. All the sectoral indices on BSE were in the green.
Bank shares were in demand on as falling inflation heightened
expectations for an interest rate cute by the Reserve Bank of India
(RBI). As per the market buzz, the Reserve Bank of India (RBI) is
expected to cut repo and reverse repo rates to the extent of 200
basis points and 125 basis points respectively at the weekend, in
an attempt to shield the domestic economy from the global economic
slowdown. Repo rate is the rate at which RBI lends to commercial
banks and reverse repo rate is the rate at which RBI accepts
deposits from banks.
Inflation based on the wholesale price index rose 8.4% in the year
through 22 November 2008, lower than previous week's 8.84% rise,
data released by the government at about 13:15 IST showed.
Inflation had surged into double digits in early June this year
after an increase in state-set retail fuel prices, and peaked at
12.91% on, 2 August 2008, the highest reading since annual numbers
in the current data series became available in April 1995.
Reserve Bank of India (RBI) governor D Subbarao today, 4 December
2008, said India remains vulnerable to global financial and
economic developments and a period of painful adjustment was
inevitable. The RBI governor said India's economic fundamentals
were strong. He added that the outlook for India was mixed and
there was evidence of activity slowing down.
Meanwhile, the Indian government is slated to announce a slew of
measures at the weekend to pump prime the economy. The likely
measures include a Rs 2000-crore export package, a further
relaxation in external commercial borrowings norms and Rs
15,000-crore budgetary support for infrastructure.
A bout of volatility was witnessed earlier in the day. Likely
government measures to pump prime the economy and hopes of further
rate cuts by the Reserve bank of India gave a positive start to the
domestic bourses. But the market soon slipped into the red due to
lower US index futures, concerns about the weakening global economy
and due to tension between Indian and Pakistan following last
week's terror attacks in Mumbai may cap the upside. The market
firmed up again in early trade. After the recovery, the market
pared gains before bouncing back again. Sensex swung 518.35 points
between the day's high and low.
European stocks reversed early losses to rally on Thursday, 4
December 2008, rising for the third session in a row as investors
hoped deep interest rate cuts would help soothe the global economic
slump. The key benchmark indices in France, Germany and UK were up
by between 0.54% to 2.62%.
The Bank of England slashed interest rates by a full percentage
point today to shore up Britain's crumbling economy and head off
the threat of deflation. The cut took rates to 2% their lowest
level since 1951. The central bank in Sweden slashed its key
interest rate by a record 175 basis points to 2% on Thursday, a
shock move to try and prevent the economy from sliding deeper into
recession.
At its policy meeting later in the day, the European Central Bank
(ECB) is expected to cut rates by at least 75 basis points.
Meanwhile, economic, corporate and industry data continues to be
weak in major economies. Japan said on Thursday, 4 December 2008,
it may be in a deeper recession than first thought, in the latest
signal that the global economic downturn is sparing few corners of
the world. Earlier, a corporate survey in Japan signaled the
country's economic performance in the third quarter may have been
even worse than first reported. Australia's vehicle sales slumped
in November 2008.
US data on Wednesday, 3 December 2008, showed large job losses by
US employers and a slumping service sector. The US economy is
already in recession for a year.
Swiss Bank Credit Suisse today, 4 December 2008, reported a net
loss of about 3 billion Swiss francs ($2.5 billion) in the two
months to end-November 2008 and cut another 5,300 jobs.
Trading in US index futures indicated the Dow could rise 23 points
at the opening bell. The US index futures bounced back from steep
losses earlier in the day.
Closer home, the Indian government is reportedly considering
various options including a strike on Pakistan to dismantle its
terror bases in response to the recent Mumbai terror attacks. As a
strike on Pakistan could lead to a full scale war between the two
nuclear armed countries, India is maintaining a cautious approach
and wants to gauge every possible ramification of its decision,
reports suggest.
Tension between India and Pakistan have mounted after the Mumbai
attacks. India has blamed Islamist militants based in Pakistan for
the attacks.
The BSE 30-share Sensex was up 482.32 points, or 5.51%, to
9,229.75. At the day's high of 9,245.06 hit in late trade, the
Sensex rose 497.63 points. The Sensex lost 20.72 points at the
day's low of 8,726,71 hit in early trade.
The S&P CNX Nifty was up 131.55 points, or 4.95%, to 2,788.
The market breadth, indicating the overall health of the market,
was strong. On BSE, 1,503 shares rose as compared with 668 that
declined. 60 shares remained unchanged.
The BSE clocked a turnover of Rs 3727 crore today, higher than Rs
2,955.08 crore on Wednesday, 3 December 2008.
Nifty December 2008 futures were at 2796, at a premium of 8 points
as compared to the spot closing of 2788. Turnover in NSE's futures
& options (F&O) segment rose to Rs 34,123.92 crore from Rs
33,606.23 crore on Wednesday, 3 December 2008.
The barometer index BSE Sensex is down 11,057.24 points or 54.5% in
the calendar year 2008 so far from its close of 20,286.99 on 31
December 2007. It is 11,977.02 points or 56.47% below its all-time
high of 21,206.77 struck on 10 January 2008.
The BSE Realty index (up 12.44% to 1,753.65), the BSE Metal index
(up 7.93% to 4,803.91), the BSE Capital Goods index (up 6.91% to
6,506.98), the BSE Oil & Gas index (up 5.86% to 5,682.68), the BSE
Power index (up 5.7% to 1,676.43), the BSE Bankex (up 5.64% to
4,803.37) outperformed the Sensex.
The BSE HealthCare index (up 0.92% to 2,849.12), the BSE Consumer
Durables index (up 1.21% to 1,734.53), the BSE IT index (up 2.69%
to 2,464.74), the BSE FMCG index (up 2.8% to 1,954.75), the BSE
Auto index (up 3.22% to 2,243.11), the BSE Teck index (up 3.32% to
1,982.39) and the BSE PSU index (up 3.71% to 4,667.57),
underperformed the Sensex.
India's largest private sector company by market capitalization and
oil refiner Reliance Industries (RIL) surged 8.4% to Rs 1,159.30 on
recent reports it intends to restart retailing of petrol and diesel
soon after margins on the two fuels turned positive.
Realty stocks rose on reports the government will next week unveil
measures for the realty sector, which may include incentives for
low-cost housing and lower loan rates. Indiabulls Real Estate, DLF,
Unitech rose by between 11.28% to 17.17%.
Metal stocks rebounded from earlier slide on recovery in metal
prices on the London Metal Exchange (LME). Tata Steel, Hindalco
Industries, Sterlite Industries, Steel Authority of India, National
aluminum Company rose by between 2.65% to 13.84%.
Banking stocks edged higher on rate cut hopes. India's largest
private sector bank by net profit ICICI Bank rose 8.75% as American
depository receipt (ADR) gained 5.64% on Wednesday, 3 December
2008. India's largest commercial bank State Bank of India (SBI)
jumped 6.55%. India's second largest private sector bank by net
profit HDFC Bank gained 3.52% as ADR rose 2.6% on Wednesday.
Shares of housing finance firms rose on likely sops for the realty
sector, which may include incentives for low-cost housing and lower
loan rates. India's top mortgage lender by market capitalisation
Housing Development Finance Corporation (HDFC) rose 6.76% and
India's second-biggest mortgage lender by market capitalisation LIC
Housing Finance rose 10.37%.
Infrastructure Development Finance Company jumped 14.29% after a
block deal of 17.01 lakh shares was executed on BSE at Rs 58.50 per
share.
Indian Overseas Bank rose 3.04% after a block deal of ten lakh
shares was executed on BSE at Rs 67 per share.
IT stocks shrugged off a stronger rupee after India's second
largest IT exporter by sales Infosys' chief executive S.
Gopalakrishnan today, 4 December 2008, said though the company has
seen delays in orders there is no change in its third quarter
December 2008 guidance. Infosys rose 3.12%, recovering from a 4.29%
fall in the previous trading session.
India's fourth largest IT exporter by sales Wipro gained 4.71% as
ADR rose 1.95%. India's third largest IT exporter by sales Satyam
Computer Services rose 1.04% as ADR gained 2.43% on Wednesday, 3
December 2008. India's largest IT exporter by sales Tata
Consultancy Services rose 2.82%.
The Indian rupee was stronger in afternoon trade on Thursday as
hefty gains in the domestic share market raised expectations of
fresh capital inflows while a drop in oil prices also eased
concerns of a widening trade deficit. The partially convertible
rupee was at 49.78/80 per dollar, stronger than its Wednesday's
close of 49.99/50.01. On Tuesday, the rupee had hit a record low of
50.65. A stronger rupee affects IT firms negatively as they earn
most of their revenues from exports.
Auto stocks rose on hopes lower interest rates will spur demand
which is mainly driven by finance and on possible measures by the
government to boost the commercial vehicles sector. Mahindra &
Mahindra, Maruti Suzuki India and Hero Honda Motors rose by between
0.56% to 4.74%.
India's largest commercial vehicle maker by sales Tata Motors up
13.29% on reports of possible excise duty cut on commercial
vehicles as a part of the government's package to boost the
economy.
Capital goods stocks rose on hopes government efforts to boost
economy will lift orders. Larsen & Toubro, Suzlon Energy, Bharat
Heavy Electricals, Crompton Greaves and Thermax rose by between
2.87% to 10.24%.
Power stocks rose on reports the likely government measures to
boost the economy may include special credit window for the power
sector. Tata Power Company, Reliance Infrastructure, Reliance
Power, Power Grid Corporation of India jumped by between 3.21% to
7.46%.
India's largest drug maker by sales Ranbaxy Laboratories rose 3.57%
on signing a pact with a US drug firm.
Orchid Chemicals & Pharmaceuticals rose 2.51% on receiving US
approval for a new drug.
Infrastructure stocks extended gains for the second day in a row on
hopes a likely government package to boost the economy will give
thrust to the infrastructure sector. Hindustan Construction
Company, Nagarjuna Construction Company, and IVRCL Infrastructure &
Projects rose by between 5.46% to 11.88%.
Marg was locked at 5% upper limit at Rs 34.45 at 12:54 IST on BSE,
on bagging a contract for developing an airport at Bijapur in
Karnataka.
PSU OMCs rose on fall in crude oil prices. BPCL, HPCL and Indian
Oil Corporation rose by between 0.66% to 1.28%. Crude oil fell for
a fifth day to the lowest in almost four years after a report
showed US fuel demand extended declines because of the country's
deepening economic slump. Crude oil for January 2008 delivery
dropped as much as $1.49, or 3.2%, to $45.30 a barrel on the New
York Mercantile Exchange. Lower oil prices will reduce
underrecoveries at the state-run oil firms on domestic sale of
petrol, diesel, LPG and kerosene at a controlled price.
Hindustan Oil Exploration Company rose 6.12% on bagging two oil and
gas blocks.
Consumer durables stocks rose on hopes further rate cuts by the
Reserve Bank of India would spur demand which is mainly driven by
finance. Videocon Indusries, Blue Star,Titan Industries, Lloyd
Electric and Rajesh Exports rose by between 1.52% to 3.56%.
Cement stocks rose on hopes likely government measures to boost the
infrastructure sector will spurt demand. ACC, Birla Corporation of
India, Ultratech Cement, Ambuja Cements and Grasim Industries rose
by between 1.13% to 6.6%.
Unitech clocked the highest volume of 3.19 crore shares on BSE.
Suzlon Energy (2.46 crore shares), GVK Power & Infrastructure (1.82
crore shares), Housing Development & Infrastructure (1.1 crore
shares) and Jaiprakash Associates (82.64 lakh shares) were the
other volume toppers in that order.
Reliance Industries clocked the highest turnover of Rs 404.61 crore
on BSE. State Bank of India (Rs 203.61 crore), Educomp Solutions
(Rs 178.33 crore), Reliance Infrastructure (Rs 153.18 crore) and
DLF (Rs 132.49 crore) were the other turnover toppers in that
order.
Haldyn Glass Gujarat spurted 8.51% on increase in the promoters'
stake in the company.
Nava Bharat Ventures jumped 20.28% on share buyback plan.
PVR galloped 4.88% on reports it plans to set up entertainment
centres across the country.
Chinese stocks rose after the government on Wednesday, 3 December
2008, announced measures whereby it will use financial policy to
support the economy. The Shanghai Composite was up 1.84%. But most
Asian shares weakened after earlier gains. Key benchmark indices in
South Korea, Hong Kong, Japan and Taiwan were down by between 0.58%
to 1.58%.
China will make use of required reserves as well as interest rates
and the exchange rate to ensure ample liquidity in the banking
system, the government said on Wednesday. The State Council,
China's cabinet, also approved measures aimed at stabilising the
domestic stock market, boosting bond issuance and increasing the
supply of credit.
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