There is fear and panic on the stock markets. The bourses suffered
heavy losses today on the back of global sell-off and on data
showing dismal industrial production growth in August 2008. The BSE
30-share Sensex lost 800.51 points. IT stocks suffered on downward
revision in guidance in dollar terms by IT bellwether Infosys
Technologies.
Banking stocks were volatile reacting to a slew of news such as cut
in cash reserve rate, slowdown in industrial production and fall in
inflation. Reliance Communications declined 21.02%, Reliance
Infrastructure and ICICI Bank lost more than 19% each and
Jaiprakash Associates shed 16.27%.
Securities & Exchange Board of India (Sebi) chief C B Bhave today
said there was no unusual activity in the stock market. He further
said there has been no shorting by institutions in cash markets.
Inflation based on the whole price index rose 11.8% in 12-months to
27 September 2008, lower than previous week's 11.99% rise, data
released by the government during trading hours today, showed.
Stocks fell across the globe despite worldwide central bank
measures to stave off a crisis. Bank bailouts, liquidity injections
and interest rate cuts across the world have failed to quell
investor anxiety with Asian stocks tumbling today, following
overnight setback in US stocks.
Back home, the Reserve Bank of India (RBI) toady cut the cash
Reserve Ratio (CRR) second time in the week. The central bank cut
CRR by 100 basis points after 50 basis point cut earlier in the
week.
Trading in US index futures suggested the Dow would fall 227 points
at the opening bell.
The BSE 30-share Sensex ended down 800.51 points or 7.07% to
10,527.86. The index plunged 1,088.50 points at the day's low of
10,239.76 at the onset of the trading session, its lowest level
since 24 July 2006. The Sensex fell 424.33 points at day's high of
10,904.13, in early trade.
The S&P CNX Nifty was down 233.70 points or 6.65% to 3,279.95.
Nifty hit a low of 3,198.95 in early trade, its lowest level since
9 August 2006.
From the recent high of 13,055.67 on 1 October 2008, the Sensex has
lost 2,527.81 points or 19.36%. The barometer index Sensex is down
9,759.13 points or 48.1% in the calendar year 2008 so far from its
close of 20,286.99 on 31 December 2007. It is 10,678.91 points or
50.35% below its all-time high of 21,206.77 struck on 10 January
2008.
BSE clocked a turnover of Rs 5,073 crore today as compared to a
turnover of Rs 5,135.12 crore on 8 October 2008.
Nifty October 2008 futures were at 3295, at a premium of 15.05
points as compared to spot closing of 3279.95. NSE's futures &
options (F&O) segment turnover was Rs 48,279.24 crore, which was
lower than Rs 57,666.95 crore on Wednesday, 8 October 2008.
The BSE Mid-Cap index ended down 8.34% at 3,676. The BSE Small-Cap
index was down 7.31% at 4,355.45. Both the indices underperformed
Sensex.
The market breadth was extremely weak. On BSE, 382 shares advanced
as compared to 2,189 that declined. 48 shares remained unchanged.
All the sectoral indices on BSE were in the red. BSE Realty index
(down 11.3% to 2,523.07), BSE Consumer Durables index (down 10.11%
to 2,139.50), BSE Metal index (down 9.25% to 6,542.27), BSE Capital
Goods index (down 9.22% to 7,983.04), BSE Power index (down 8.8% to
1,855.04), BSE Bankex (down 7.84% to 5,319.50) underperformed
Sensex.
BSE HealthCare index (down 3.92% to 3,213.28), BSE IT index (down
4.33% to 2,584.25), BSE FMCG index (down 4.46% to 1,860.56), BSE
PSU index (down 4.47% to 5,535.99), BSE Auto index (down 5.43% to
3,255.68), BSE Oil & Gas index (down 6.72% to 7,272.31), BSE Teck
index (down 6.74% to 2,112.03), outperformed Sensex.
Among the major sensex losers were, Jaiprakash Associates (down
16.27% to Rs 76.15), Reliance Infrastructure (down 19.25% to Rs
515.30) and Reliance Communications (down 21.02% to Rs 237.40)
slumped.
India's largest private sector company by market capitalization and
oil refiner Reliance Industries slumped 7.43% to Rs 1,527. The
stock recovered from the session's low of Rs 1,480.
India's largest drug maker by sales Ranbaxy Laboaratories spurted
4.71% to Rs 292.40 after the US government withdrew a motion
against Ranbaxy Laboratories after the drugmaker submitted a
comprehensive set of audit documents to the authorities.
India's biggest private sector bank by net profit ICICI Bank lost
19.71% to Rs 364.10. The stock came off session's low of Rs 326.70.
India's second-largest bank, has very small exposure to the global
financial crisis and there should be no concerns about liquidity,
its joint managing director Chanda Kochhar said. Her comments came
after the bank's stock fell as much as 28% today as panic-stricken
investors dumped the shares in a weak market.
India's second biggest private sector bank by market capitalisation
HDFC Bank was down 5.35% at Rs 1,046.35, off the session's low of
Rs 975.55.
India's largest state-run lender by market capitalisation State
Bank of India rose 2.27% to Rs 1,352.16, off a low of Rs 1181.15.
IT stocks recovered after earlier fall on Infosys's weak outlook.
India's second largest IT exporter by sales Infosys fell 2.2% to Rs
1,226.70. The stock recovered from the session's low of Rs 1,040.
Infosys said it has revised the US dollar guidance downwards to
reflect the current economic situation and the drastic depreciation
of major global currencies against the US dollar.
Infosys expects earnings per American depository share at $2.23 for
the year ending March 2009, a growth of 12.6%. At the time of Q1
June 2008 results, the company had forecast earnings per American
depository share at $2.31 to $2.35 for the year ending March 2009,
a growth of 16.7% to 18.7%.
Infosys consolidated net profit rose 9.9% to Rs 1432 crore on 11.6%
growth in sales to Rs 5418 crore in Q2 September 2008 over Q1 June
2008. The company announced the results before trading hours today,
10 October 2008.
Tata Consultancy Services, Wipro and Satyam Computer Services
tumbled between 4.32% to 6.69%.
The Indian rupee fell to a record low past 49.07 per dollar today
as the spreading global financial crisis hurt sentiment in Asian
stock markets, leading to concerns of a large outflow of foreign
funds from India. IT exporters benefit from the weaker rupee as
they derive most of their revenues in dollars.
India's largest steel maker by sales Tata Steel slumped 14.49% to
Rs 287.50. ArcelorMittal SA and Tata Steel have reportedly shown
interest in mining coal in collaboration with Coal India from the
latter's 18 abandoned underground mines.
India's largest aluminum maker by sales Hindalco Industries slumped
11.18% to Rs 80.65 even as the company said IGH Holdings, a
promoter of the company has acquired 8.94 lakh shares or 0.05% of
equity capital of the company by way of open markets purchases.
Tata Power Company declined 3.72% to Rs 774.70. The company is
reportedly exploring the option of raising its stake in Indonesia's
Bumi Resources Tbk, the world's second largest coal company, after
a sharp erosion in the value of the shares pledged by Bumi's parent
firm, Bakrie & Brothers, with various lenders.
ICICI Bank clocked the highest volume of 1.16 crore on BSE.
Reliance Natural Resources (94.27 lakh shares), Apollo Tyres (85.85
lakh shares), IFCI (85.41 lakh shares) and Jaiprakash Associates
(83.93 lakh shares) were the other volume toppers in that order.
ICICI Bank clocked the highest turnover of Rs 428.25 crore on BSE.
Reliance Industries (Rs 325.90 crore), Bharti Airtel (Rs 283.21
crore), Reliance Capital (Rs 230.99 crore), State Bank of India (Rs
186.57 crore) were other turnover toppers in that order.
Sintex Industries dropped 13.85% to Rs 195.70, even as the company
reported 62.54% growth in net profit to Rs 68.24 crore in Q2
September 2008 over Q2 September 2007.
Era Infra Engineering slipped 7.24% to Rs 75.55, even as the
company said its joint venture company has bagged a contract from
Airport Authority of India for construction of a new terminal at
Devi Ahilya Bai Holkar Airport, Indore
Aurobindo Pharma declined 7.56% to Rs 195, even as the company said
it has received US Food & Drug Administration approval to
manufacture and market Cyclobenzaprine hydrochloride tablets in
multiple strengths.
Cairn India plunged 11.38% to Rs 151.40, on reports the Rajasthan
government is yet to grant the crucial Right of Use (ROU) to Cairn
India for the part of the pipeline that will pass through the
state.
Ashok Leyland tumbled 8.01% to Rs 22.40 at 11:41 IST on BSE, after
the company reported 14.57% fall in total sales to 6,186 units in
September 2008 over September 2007.
JSW Steel rose 1.42% to Rs 296.80, having recovered from a 52-week
low of Rs 244, after the company posted 14% growth in net crude
steel production to 10.01 lakh tonnes in Q2 September 2008 over Q2
September 2007.
Biocon slipped 2.44% to Rs 134.15, even as the company said on
Friday, 10 October 2008, its joint venture company NeoBiocon has
launched Arbaxane in United Arab Emirates for the treatment of
breast cancer.
India's industrial production rose at a dismal 1.3% in August 2008
compared to a 10.9% growth in August 2007. Manufacturing grew a
poor 1.1% in August 2008 versus 10.7% growth in August 2007.
Consumer durables production rose 5.1% in August 2008 verses 6.2%
growth in August 2007. Capital goods prodcution rose 2.3% in August
2008 verses 14.7% growth in August 2007. Meanwhile, industrial
production growth for July 2008 was revised upwards to 7.4% from
7.1%.
European markets which opened after Indian market were sharply
lower. France's CAC 40, Germany's DAX and UK's FTSE 100 were down
between 7.49% to 8.41%.
Overnight, US stocks slumped more than 7% on fears that credit
markets would stay frozen, paralysing the world's financial system
and slowing economies to a standstill.
US light crude for November delivery fell $4.16, or 4.8%, to $82.43
a barrel today, 10 October 2008, just above its earlier low of
$82.00, in its biggest two-week decline since the start of the Iraq
war in 2003. Oil slipped on fears that market turmoil will send
demand for fuel slumping.
The Indonesian stock exchange suspended trading for a third day,
and exchanges in Bangkok and Vienna halted trading after shares
fell more than 10 %, triggering circuit-breaker rules.
In Moscow, the Russian Duma, or Parliament, approved a financial
sector bailout package valued at more than $80 billion. Trading on
Russian stock exchanges was suspended until further notice.
Friday, October 10, 2008
RBI cuts reserve ratio, scraps bond as markets tank
MUMBAI (Reuters) - Indian authorities slashed banks' reserve requirement on Friday and pledged more funds to ease a credit squeeze that drove short-term borrowing rates to 19-month highs and forced the government to scrap a bond sale.
The Reserve Bank of India (RBI) cut the cash reserve ratio by 1.5 percentage points to 7.5 percent, saying the move would free up around 600 billion Indian rupees ($12.38 billion) in funds. Finance Minister Palaniappan Chidambaram said the authorities would take further steps to provide more funds to the banking sector.
"We will take steps to infuse liquidity because we recognise that the flow of credit smoothly and efficiently through the system is vital to the stability of the financial system," he told Indian television.
The Reserve Bank of India sprung into action after overnight rates soared to as much as 23 percent in the money market when it reopened following a holiday on Thursday. The rupee hit an all-time low and the main stock index plunged more than 9 percent, joining a global selloff on recession fears despite unprecedented coordinated action by the world's leading RBIs to stave off a crisis.
Tight liquidity also prompted the government to call off an auction for $2 billion worth of government bonds.
A global round of interest rate cuts this week failed to cap overnight rates, which more than doubled from Wednesday's closing levels of around 10 percent.
"This is a short-term reaction to a huge panic crisis and a possibility of a run in the rupee. I think they will try their best to prevent the rupee from breaching 50 per dollar," said Abheek Barua, chief economist at HDFC Bank in New Delhi.
The rupee hit an all-time low of 49.30 per dollar in early trade, bringing this year's losses to 20 percent before it regained some ground with the help of state-run banks selling dollars and the cash reserve cut. The reserve easing also helped India's battered stocks recoup some of the early losses.
CLOSE WATCH
The finance minister did not elaborate on possible liquidity injections, but said market conditions should improve once government wins parliamentary approval for spending. Several spending measures, including a waiver on farm loans, aimed at propping up the economy await lawmakers' go-ahead.
Finance Secretary Arun Ramanathan also said in a statement that the RBI has assured the government it was keeping a close watch on the market and would take appropriate steps.
The government set up a panel, which includes representatives from the RBI, to assess the liquidity problem and report back within a week, he said.
The RBI also sought to soothe investors' frayed nerves, blaming the money market squeeze squarely on international conditions and assuring them that the Indian economy was in good health.
"It is important to note that the macroeconomic fundamentals of the Indian economy are strong and resilient and that India's financial system is sound, well-capitalised and well-regulated," it said.
Analysts were divided whether the RBI would follow the cut in reserve ratio with a reduction in its interest rates.
Some say high inflation limits the scope for monetary easing.
India's wholesale price index -- its main inflation gauge -- rose 11.8 percent in 12 months to Sept. 27, less than in the previous week, but still far away from the 7 percent level the RBI aims to achieve by the end of the current fiscal year ending in March 2009.
Others say a round of interest rate cuts worldwide, global recession fears and signs that Asia's third largest economy was cooling, have shifted the policy focus from battling inflation to providing enough credit to grease the wheels of the economy.
In another sign that the Indian economy was losing momentum, annual industrial output growth slowed to 1.3 percent in August, its lowest in nearly 10 years and much below a revised 7.4 percent expansion in July and market forecasts.
Output growth has slowed from double-digit levels seen last year as the RBI's monetary tightening dampened demand in the economy. The RBI raised rates three times this year bringing its benchmark lending rate to a seven-year high of 9 percent, but has kept it on hold since late July in the face of turmoil in global financial markets and slackening economic growth at home.
The Reserve Bank of India (RBI) cut the cash reserve ratio by 1.5 percentage points to 7.5 percent, saying the move would free up around 600 billion Indian rupees ($12.38 billion) in funds. Finance Minister Palaniappan Chidambaram said the authorities would take further steps to provide more funds to the banking sector.
"We will take steps to infuse liquidity because we recognise that the flow of credit smoothly and efficiently through the system is vital to the stability of the financial system," he told Indian television.
The Reserve Bank of India sprung into action after overnight rates soared to as much as 23 percent in the money market when it reopened following a holiday on Thursday. The rupee hit an all-time low and the main stock index plunged more than 9 percent, joining a global selloff on recession fears despite unprecedented coordinated action by the world's leading RBIs to stave off a crisis.
Tight liquidity also prompted the government to call off an auction for $2 billion worth of government bonds.
A global round of interest rate cuts this week failed to cap overnight rates, which more than doubled from Wednesday's closing levels of around 10 percent.
"This is a short-term reaction to a huge panic crisis and a possibility of a run in the rupee. I think they will try their best to prevent the rupee from breaching 50 per dollar," said Abheek Barua, chief economist at HDFC Bank in New Delhi.
The rupee hit an all-time low of 49.30 per dollar in early trade, bringing this year's losses to 20 percent before it regained some ground with the help of state-run banks selling dollars and the cash reserve cut. The reserve easing also helped India's battered stocks recoup some of the early losses.
CLOSE WATCH
The finance minister did not elaborate on possible liquidity injections, but said market conditions should improve once government wins parliamentary approval for spending. Several spending measures, including a waiver on farm loans, aimed at propping up the economy await lawmakers' go-ahead.
Finance Secretary Arun Ramanathan also said in a statement that the RBI has assured the government it was keeping a close watch on the market and would take appropriate steps.
The government set up a panel, which includes representatives from the RBI, to assess the liquidity problem and report back within a week, he said.
The RBI also sought to soothe investors' frayed nerves, blaming the money market squeeze squarely on international conditions and assuring them that the Indian economy was in good health.
"It is important to note that the macroeconomic fundamentals of the Indian economy are strong and resilient and that India's financial system is sound, well-capitalised and well-regulated," it said.
Analysts were divided whether the RBI would follow the cut in reserve ratio with a reduction in its interest rates.
Some say high inflation limits the scope for monetary easing.
India's wholesale price index -- its main inflation gauge -- rose 11.8 percent in 12 months to Sept. 27, less than in the previous week, but still far away from the 7 percent level the RBI aims to achieve by the end of the current fiscal year ending in March 2009.
Others say a round of interest rate cuts worldwide, global recession fears and signs that Asia's third largest economy was cooling, have shifted the policy focus from battling inflation to providing enough credit to grease the wheels of the economy.
In another sign that the Indian economy was losing momentum, annual industrial output growth slowed to 1.3 percent in August, its lowest in nearly 10 years and much below a revised 7.4 percent expansion in July and market forecasts.
Output growth has slowed from double-digit levels seen last year as the RBI's monetary tightening dampened demand in the economy. The RBI raised rates three times this year bringing its benchmark lending rate to a seven-year high of 9 percent, but has kept it on hold since late July in the face of turmoil in global financial markets and slackening economic growth at home.
Post-Market report : Market suffers heavy losses in global rout in equities
The domestic bourses suffered heavy losses today on the back of global sell-off and on data showing dismal industrial production growth in August 2008. The BSE 30-share Sensex provisionally ended lost 791.67 points. IT stocks suffered on downward revision in guidance in dollar terms by IT bellwether Infosys Technologies.
Banking stocks were volatile reacting to a slew of news such as cut in cash reserve rate, slowdown in industrial production and fall in inflation. Reliance Communications declined 22.65%, Reliance Infrastructure lost 20.09% and Jaiprakash Associates shed 18.36%
Securities & Exchange Board of India (Sebi) chief C B Bhave today said there was no unusual activity in the stock market. He further said there has been no shorting by institutions in cash markets.
Inflation based on the whole price index rose 11.8% in 12-months to 27 September 2008, lower than previous week's 11.99% rise.
Stocks fell across the globe despite worldwide central bank measures to stave off a crisis. Bank bailouts, liquidity injections and interest rate cuts across the world have failed to quell investor anxiety with Asian stocks tumbling today, following overnight setback in US stocks.
Back home, the Reserve Bank of India (RBI) toady cut the cash Reserve Ratio (CRR) second time in the week. The central bank cut CRR by 100 basis points after 50 basis point cut earlier in the week.
Trading in US index futures suggested the Dow would fall 187 points at the opening bell.
The Indonesian stock exchange suspended trading for a third day, and exchanges in Bangkok and Vienna halted trading after shares fell more than 10 %, triggering circuit-breaker rules.
In Moscow, the Russian Duma, or Parliament, approved a financial sector bailout package valued at more than $80 billion. Trading on Russian stock exchanges was suspended until further notice.
As per the provisional figures, the BSE 30-share Sensex ended down 791.67 points or 6.99% to 10,536.69. The index plunged 1,088.50 points at the day's low of 10,239.76 at the onset of the trading session, its lowest level since 24 July 2006. The Sensex fell 424.33 points at day's high of 10,904.13, in early trade.
The S&P CNX Nifty was down 235,15 points or 6.69% to 3,278.50 as per the provisional figures. Nifty hit a low of 3,198.95 in early trade, its lowest level since 9 August 2006.
BSE clocked a turnover of Rs 5,073 crore today as compared to a turnover of Rs 5,135.12 crore on 8 October 2008.
The BSE Mid-Cap index ended down 8.62% at 3,664.75. The BSE Small-Cap index was down 7.32% at 4,355.17. Both the indices underperformed Sensex.
The market breadth was extremely weak. On BSE, 391 shares advanced as compared to 2,180 that declined. 47 shares remained unchanged.
India's largest private sector company by market capitalization and oil refiner Reliance Industries slumped 7.25% to Rs 1,530. The stock recovered from the session's low of Rs 1,480.
India's largest drug maker by sales Ranbaxy Laboaratories spurted 4.05% to Rs 290.55 after the US government withdrew a motion against Ranbaxy Laboratories after the drugmaker submitted a comprehensive set of audit documents to the authorities.
Among the major sensex losers were, Jaiprakash Associates (down 18.36% to Rs 74.25), Reliance Infrastructure (down 20.09% to Rs 510) and Reliance Communications (down 22.65% to Rs 232.050) slumped.
India's biggest private sector bank by net profit ICICI Bank lost 17.25% to Rs 375.25. The stock came off session's low of Rs 326.70. India's second-largest bank, has very small exposure to the global financial crisis and there should be no concerns about liquidity, its joint managing director Chanda Kochhar said. Her comments came after the bank's stock fell as much as 28% today as panic-stricken investors dumped the shares in a weak market.
India's second biggest private sector bank by market capitalisation HDFC Bank was down 4.66% at Rs 1,054, off the session's low of Rs 975.55.
India's largest state-run lender by market capitalisation State Bank of India rose 1.8% to Rs 1,346, off a low of Rs 1181.15.
IT stocks recovered after earlier fall on Infosys's weak outlook. India's second largest IT exporter by sales Infosys fell 2.74% to Rs 1,220. The stock recovered from the session's low of Rs 1,040. Infosys said it has revised the US dollar guidance downwards to reflect the current economic situation and the drastic depreciation of major global currencies against the US dollar. Infosys expects earnings per American depository share at $2.23 for the year ending March 2009, a growth of 12.6%. At the time of Q1 June 2008 results, the company had forecast earnings per American depository share at $2.31 to $2.35 for the year ending March 2009, a growth of 16.7% to 18.7%.
Infosys consolidated net profit rose 9.9% to Rs 1432 crore on 11.6% growth in sales to Rs 5418 crore in Q2 September 2008 over Q1 June 2008. The company announced the results before trading hours today, 10 October 2008.
Tata Consultancy Services, Wipro and Satyam Computer Services tumbled between 4.49% to 7.17%.
The Indian rupee fell to a record low past 49.07 per dollar today as the spreading global financial crisis hurt sentiment in Asian stock markets, leading to concerns of a large outflow of foreign funds from India. IT exporters benefit from the weaker rupee as they derive most of their revenues in dollars.
India's largest steel maker by sales Tata Steel slumped 17.56% to Rs 278.80. ArcelorMittal SA and Tata Steel have reportedly shown interest in mining coal in collaboration with Coal India from the latter's 18 abandoned underground mines.
India's largest aluminum maker by sales Hindalco Industries slumped 10.96% to Rs 86.20 even as the company said IGH Holdings, a promoter of the company has acquired 8.94 lakh shares or 0.05% of equity capital of the company by way of open markets purchases.
Tata Power Company declined 2.59% to Rs 783.80. The company is reportedly exploring the option of raising its stake in Indonesia's Bumi Resources Tbk, the world's second largest coal company, after a sharp erosion in the value of the shares pledged by Bumi's parent firm, Bakrie & Brothers, with various lenders.
India's industrial production rose at a dismal 1.3% in August 2008 compared to a 10.9% growth in August 2007. Manufacturing grew a poor 1.1% in August 2008 versus 10.7% growth in August 2007. Consumer durables production rose 5.1% in August 2008 verses 6.2% growth in August 2007. Capital goods prodcution rose 2.3% in August 2008 verses 14.7% growth in August 2007. Meanwhile, industrial production growth for July 2008 was revised upwards to 7.4% from 7.1%.
European markets which opened after Indian market were sharply lower. France's CAC 40, Germany's DAX and UK's FTSE 100 were down between 7.7% to 9.37%.
Banking stocks were volatile reacting to a slew of news such as cut in cash reserve rate, slowdown in industrial production and fall in inflation. Reliance Communications declined 22.65%, Reliance Infrastructure lost 20.09% and Jaiprakash Associates shed 18.36%
Securities & Exchange Board of India (Sebi) chief C B Bhave today said there was no unusual activity in the stock market. He further said there has been no shorting by institutions in cash markets.
Inflation based on the whole price index rose 11.8% in 12-months to 27 September 2008, lower than previous week's 11.99% rise.
Stocks fell across the globe despite worldwide central bank measures to stave off a crisis. Bank bailouts, liquidity injections and interest rate cuts across the world have failed to quell investor anxiety with Asian stocks tumbling today, following overnight setback in US stocks.
Back home, the Reserve Bank of India (RBI) toady cut the cash Reserve Ratio (CRR) second time in the week. The central bank cut CRR by 100 basis points after 50 basis point cut earlier in the week.
Trading in US index futures suggested the Dow would fall 187 points at the opening bell.
The Indonesian stock exchange suspended trading for a third day, and exchanges in Bangkok and Vienna halted trading after shares fell more than 10 %, triggering circuit-breaker rules.
In Moscow, the Russian Duma, or Parliament, approved a financial sector bailout package valued at more than $80 billion. Trading on Russian stock exchanges was suspended until further notice.
As per the provisional figures, the BSE 30-share Sensex ended down 791.67 points or 6.99% to 10,536.69. The index plunged 1,088.50 points at the day's low of 10,239.76 at the onset of the trading session, its lowest level since 24 July 2006. The Sensex fell 424.33 points at day's high of 10,904.13, in early trade.
The S&P CNX Nifty was down 235,15 points or 6.69% to 3,278.50 as per the provisional figures. Nifty hit a low of 3,198.95 in early trade, its lowest level since 9 August 2006.
BSE clocked a turnover of Rs 5,073 crore today as compared to a turnover of Rs 5,135.12 crore on 8 October 2008.
The BSE Mid-Cap index ended down 8.62% at 3,664.75. The BSE Small-Cap index was down 7.32% at 4,355.17. Both the indices underperformed Sensex.
The market breadth was extremely weak. On BSE, 391 shares advanced as compared to 2,180 that declined. 47 shares remained unchanged.
India's largest private sector company by market capitalization and oil refiner Reliance Industries slumped 7.25% to Rs 1,530. The stock recovered from the session's low of Rs 1,480.
India's largest drug maker by sales Ranbaxy Laboaratories spurted 4.05% to Rs 290.55 after the US government withdrew a motion against Ranbaxy Laboratories after the drugmaker submitted a comprehensive set of audit documents to the authorities.
Among the major sensex losers were, Jaiprakash Associates (down 18.36% to Rs 74.25), Reliance Infrastructure (down 20.09% to Rs 510) and Reliance Communications (down 22.65% to Rs 232.050) slumped.
India's biggest private sector bank by net profit ICICI Bank lost 17.25% to Rs 375.25. The stock came off session's low of Rs 326.70. India's second-largest bank, has very small exposure to the global financial crisis and there should be no concerns about liquidity, its joint managing director Chanda Kochhar said. Her comments came after the bank's stock fell as much as 28% today as panic-stricken investors dumped the shares in a weak market.
India's second biggest private sector bank by market capitalisation HDFC Bank was down 4.66% at Rs 1,054, off the session's low of Rs 975.55.
India's largest state-run lender by market capitalisation State Bank of India rose 1.8% to Rs 1,346, off a low of Rs 1181.15.
IT stocks recovered after earlier fall on Infosys's weak outlook. India's second largest IT exporter by sales Infosys fell 2.74% to Rs 1,220. The stock recovered from the session's low of Rs 1,040. Infosys said it has revised the US dollar guidance downwards to reflect the current economic situation and the drastic depreciation of major global currencies against the US dollar. Infosys expects earnings per American depository share at $2.23 for the year ending March 2009, a growth of 12.6%. At the time of Q1 June 2008 results, the company had forecast earnings per American depository share at $2.31 to $2.35 for the year ending March 2009, a growth of 16.7% to 18.7%.
Infosys consolidated net profit rose 9.9% to Rs 1432 crore on 11.6% growth in sales to Rs 5418 crore in Q2 September 2008 over Q1 June 2008. The company announced the results before trading hours today, 10 October 2008.
Tata Consultancy Services, Wipro and Satyam Computer Services tumbled between 4.49% to 7.17%.
The Indian rupee fell to a record low past 49.07 per dollar today as the spreading global financial crisis hurt sentiment in Asian stock markets, leading to concerns of a large outflow of foreign funds from India. IT exporters benefit from the weaker rupee as they derive most of their revenues in dollars.
India's largest steel maker by sales Tata Steel slumped 17.56% to Rs 278.80. ArcelorMittal SA and Tata Steel have reportedly shown interest in mining coal in collaboration with Coal India from the latter's 18 abandoned underground mines.
India's largest aluminum maker by sales Hindalco Industries slumped 10.96% to Rs 86.20 even as the company said IGH Holdings, a promoter of the company has acquired 8.94 lakh shares or 0.05% of equity capital of the company by way of open markets purchases.
Tata Power Company declined 2.59% to Rs 783.80. The company is reportedly exploring the option of raising its stake in Indonesia's Bumi Resources Tbk, the world's second largest coal company, after a sharp erosion in the value of the shares pledged by Bumi's parent firm, Bakrie & Brothers, with various lenders.
India's industrial production rose at a dismal 1.3% in August 2008 compared to a 10.9% growth in August 2007. Manufacturing grew a poor 1.1% in August 2008 versus 10.7% growth in August 2007. Consumer durables production rose 5.1% in August 2008 verses 6.2% growth in August 2007. Capital goods prodcution rose 2.3% in August 2008 verses 14.7% growth in August 2007. Meanwhile, industrial production growth for July 2008 was revised upwards to 7.4% from 7.1%.
European markets which opened after Indian market were sharply lower. France's CAC 40, Germany's DAX and UK's FTSE 100 were down between 7.7% to 9.37%.
Heavyweights power recovery; Infosys, SBI in green
Index heavyweights Reliance Industries, ICICI Bank and Infosys came
off from their lows pulling the key benchmark indices sharply off
the lower level in mid-afternoon trade. The BSE 30-share Sensex was
down 547.71 points, having recovered 540.79 points from the day's
low. Data showing lower inflation aided recovery. European markets
also recovered from sharp slump in early trade, helping the
recovery on the domestic bourses.
Weak industrial production data for August 2008 added to the gloom
on the bourses already hit by global equities sell-off caused by
global recession worries when the Sensex had tanked about 1000
points in early afternoon trade. A global sell-off in equities on
the worries about a global recession created havoc on the domestic
bourses at the onset of the trading session.
Banking stocks recovered from lows on lower inflation data.
Consumer durables stocks declined.
Securities & Exchange Board of India (Sebi) chief C B Bhave today
said there was no unusual activity in the stock market. He further
said there has been no shorting by institutions in cash markets.
Inflation based on the whole price index rose 11.8% in 12-months to
27 September 2008, lower than previous week's 11.99% rise.
European markets which opened after Indian market were lower.
France's CAC 40, Germany's DAX and UK's FTSE 100 were down between
4.78% to 6.76% .
Stocks fell across the globe despite worldwide central bank
measures to stave off a crisis. Bank bailouts, liquidity injections
and interest rate cuts across the world have failed to quell
investor anxiety with Asian stocks tumbling today, following
overnight setback in US stocks.
Back home, the Reserve Bank of India (RBI) toady cut the cash
Reserve Ratio (CRR) second time in the week. The central bank cut
CRR by 100 basis points after 50 basis point cut earlier in the
week.
Trading in US index futures suggested the Dow would fall 187 points
at the opening bell.
The Indonesian stock exchange suspended trading for a third day,
and exchanges in Bangkok and Vienna halted trading after shares
fell more than 10 %, triggering circuit-breaker rules.
In Moscow, the Russian Duma, or Parliament, approved a financial
sector bailout package valued at more than $80 billion. Trading on
Russian stock exchanges was suspended until further notice.
At 14:31 IST, the BSE 30-share Sensex was down 547.71 points or
4.89% to 10,774.46. The index plunged 1,088.50 points at the day's
low of 10,239.76 at the onset of the trading session, its lowest
level since 24 July 2006. The Sensex fell 424.33 points at day's
high of 10,904.13, in early trade.
The S&P CNX Nifty was down 157 points or 4.47% to 3,356.65. Nifty
hit a low of 3,198.95, its lowest level since 9 August 2006.
The BSE Mid-Cap index was down 8.17% at 3,682.95. The BSE Small-Cap
index was down 7.03% at 4,368.61. Both the indices underperformed
Sensex.
The market breadth was extremely weak. On BSE, 297 shares advanced
as compared to 2,213 that declined. 39 shares remained unchanged.
India's largest private sector company by market capitalization and
oil refiner Reliance Industries slumped 4.76% to Rs 1,571.10. The
stock recovered from the session's low of Rs 1,480.
Consumer durables stocks declined. Videocon Industries, Lloyd
Electric and Asian Star Company slumped between 11.25% to 12.67%.
Some banking shares recovered from lows on fall in inflation.
India's biggest private sector bank by market ICICI Bank lost
14.91% to Rs 385.50. The stock came off session's low of Rs 326.70.
India's second-largest bank, has very small exposure to the global
financial crisis and there should be no concerns about liquidity,
its joint managing director Chanda Kochhar said. Her comments came
after the bank's stock fell as much as 28% today as panic-stricken
investors dumped the shares in a weak market.
India's second biggest private sector bank by market capitalisation
HDFC Bank was down 5.58% at Rs 1,044, off the session's low of Rs
975.55.
India's largest state-run lender by market capitalisation State
Bank of India rose 1.65% to Rs 1,344, off a low of Rs 1181.15.
Capital goods declined on weak industrial production figures.
India's largest engineering and construction firm by sales Larsen
and Toubro fell 7.83% to Rs 891. International majors such as
Philips, General Electric (GE) and Siemens are reportedly in the
race for acquiring the medical equipment business of Larsen and
Toubro. Suzlon Energy and Bharat Heavy Electricals slumped between
14.75% to 5.97% .
IT stocks recovered after earlier fall on Infosys's weak outlook.
India's second largest IT exporter by sales Infosys rose 0.05% to
Rs 1,255. The stock recovered from the session's low of Rs 1,040.
Infosys said it has revised the US dollar guidance downwards to
reflect the current economic situation and the drastic depreciation
of major global currencies against the US dollar. Infosys expects
earnings per American depository share at $2.23 for the year ending
March 2009, a growth of 12.6%. At the time of Q1 June 2008 results,
the company had forecast earnings per American depository share at
$2.31 to $2.35 for the year ending March 2009, a growth of 16.7% to
18.7%.
Infosys consolidated net profit rose 9.9% to Rs 1432 crore on 11.6%
growth in sales to Rs 5418 crore in Q2 September 2008 over Q1 June
2008. The company announced the results before trading hours today,
10 October 2008.
Tata Consultancy Services, Wipro and Satyam Computer Services
tumbled between 3.22% to 5.18%.
The Indian rupee fell to a record low past 49.07 per dollar today
as the spreading global financial crisis hurt sentiment in Asian
stock markets, leading to concerns of a large outflow of foreign
funds from India. IT exporters benefit from the weaker rupee as
they derive most of their revenues in dollars.
Metal Stocks slumped as metal prices fell on global recession
worries. Sterlite Industries, Hindustan Zinc ,National Aluminum
Company, Steel Authority of India fell between 2.19% to 4.64%.
India's largest steel maker by sales Tata Steel slumped 10.65% to
Rs 301.50. ArcelorMittal SA and Tata Steel have reportedly shown
interest in mining coal in collaboration with Coal India from the
latter's 18 abandoned underground mines.
India's largest aluminum maker by sales Hindalco Industries slumped
6.33% to Rs 85.05 even as the company said IGH Holdings, a promoter
of the company has acquired 8.94 lakh shares or 0.05% of equity
capital of the company by way of open markets purchases.
Among the major sensex losers were, Jaiprakash Associates (down
11.65% to Rs 80.40), Reliance Infrastructure (down 13.52% to Rs
550) and Reliance Communications (down 13.91% to Rs 258.80
Tata Power Company declined 3.18% to Rs 770. The company is
reportedly exploring the option of raising its stake in Indonesia's
Bumi Resources Tbk, the world's second largest coal company, after
a sharp erosion in the value of the shares pledged by Bumi's parent
firm, Bakrie & Brothers, with various lenders.
Era Infra Engineering slipped 4.85% to Rs 77.50 even as the company
said its joint venture company has bagged a contract from Airport
Authority of India for construction of a new terminal at Devi
Ahilya Bai Holkar Airport, Indore
Aurobindo Pharma declined 9.41% to Rs 191.10, even as the company
said it has received US Food & Drug Administration approval to
manufacture and market Cyclobenzaprine hydrochloride tablets in
multiple strengths.
India's industrial production rose at a dismal 1.3% in August 2008
compared to a 10.9% growth in August 2007. Manufacturing grew a
poor 1.1% in August 2008 versus 10.7% growth in August 2007.
Consumer durables production rose 5.1% in August 2008 verses 6.2%
growth in August 2007. Capital goods prodcution rose 2.3% in August
2008 verses 14.7% growth in August 2007. Meanwhile, industrial
production growth for July 2008 was revised upwards to 7.4% from
7.1%.
Overnight, US stocks slumped more than 7% on fears that credit
markets would stay frozen, paralysing the world's financial system
and slowing economies to a standstill.
US light crude for November delivery fell $4.16, or 4.8%, to $82.43
a barrel today, 10 October 2008, just above its earlier low of
$82.00, in its biggest two-week decline since the start of the Iraq
war in 2003. Oil slipped on fears that market turmoil will send
demand for fuel slumping.
off from their lows pulling the key benchmark indices sharply off
the lower level in mid-afternoon trade. The BSE 30-share Sensex was
down 547.71 points, having recovered 540.79 points from the day's
low. Data showing lower inflation aided recovery. European markets
also recovered from sharp slump in early trade, helping the
recovery on the domestic bourses.
Weak industrial production data for August 2008 added to the gloom
on the bourses already hit by global equities sell-off caused by
global recession worries when the Sensex had tanked about 1000
points in early afternoon trade. A global sell-off in equities on
the worries about a global recession created havoc on the domestic
bourses at the onset of the trading session.
Banking stocks recovered from lows on lower inflation data.
Consumer durables stocks declined.
Securities & Exchange Board of India (Sebi) chief C B Bhave today
said there was no unusual activity in the stock market. He further
said there has been no shorting by institutions in cash markets.
Inflation based on the whole price index rose 11.8% in 12-months to
27 September 2008, lower than previous week's 11.99% rise.
European markets which opened after Indian market were lower.
France's CAC 40, Germany's DAX and UK's FTSE 100 were down between
4.78% to 6.76% .
Stocks fell across the globe despite worldwide central bank
measures to stave off a crisis. Bank bailouts, liquidity injections
and interest rate cuts across the world have failed to quell
investor anxiety with Asian stocks tumbling today, following
overnight setback in US stocks.
Back home, the Reserve Bank of India (RBI) toady cut the cash
Reserve Ratio (CRR) second time in the week. The central bank cut
CRR by 100 basis points after 50 basis point cut earlier in the
week.
Trading in US index futures suggested the Dow would fall 187 points
at the opening bell.
The Indonesian stock exchange suspended trading for a third day,
and exchanges in Bangkok and Vienna halted trading after shares
fell more than 10 %, triggering circuit-breaker rules.
In Moscow, the Russian Duma, or Parliament, approved a financial
sector bailout package valued at more than $80 billion. Trading on
Russian stock exchanges was suspended until further notice.
At 14:31 IST, the BSE 30-share Sensex was down 547.71 points or
4.89% to 10,774.46. The index plunged 1,088.50 points at the day's
low of 10,239.76 at the onset of the trading session, its lowest
level since 24 July 2006. The Sensex fell 424.33 points at day's
high of 10,904.13, in early trade.
The S&P CNX Nifty was down 157 points or 4.47% to 3,356.65. Nifty
hit a low of 3,198.95, its lowest level since 9 August 2006.
The BSE Mid-Cap index was down 8.17% at 3,682.95. The BSE Small-Cap
index was down 7.03% at 4,368.61. Both the indices underperformed
Sensex.
The market breadth was extremely weak. On BSE, 297 shares advanced
as compared to 2,213 that declined. 39 shares remained unchanged.
India's largest private sector company by market capitalization and
oil refiner Reliance Industries slumped 4.76% to Rs 1,571.10. The
stock recovered from the session's low of Rs 1,480.
Consumer durables stocks declined. Videocon Industries, Lloyd
Electric and Asian Star Company slumped between 11.25% to 12.67%.
Some banking shares recovered from lows on fall in inflation.
India's biggest private sector bank by market ICICI Bank lost
14.91% to Rs 385.50. The stock came off session's low of Rs 326.70.
India's second-largest bank, has very small exposure to the global
financial crisis and there should be no concerns about liquidity,
its joint managing director Chanda Kochhar said. Her comments came
after the bank's stock fell as much as 28% today as panic-stricken
investors dumped the shares in a weak market.
India's second biggest private sector bank by market capitalisation
HDFC Bank was down 5.58% at Rs 1,044, off the session's low of Rs
975.55.
India's largest state-run lender by market capitalisation State
Bank of India rose 1.65% to Rs 1,344, off a low of Rs 1181.15.
Capital goods declined on weak industrial production figures.
India's largest engineering and construction firm by sales Larsen
and Toubro fell 7.83% to Rs 891. International majors such as
Philips, General Electric (GE) and Siemens are reportedly in the
race for acquiring the medical equipment business of Larsen and
Toubro. Suzlon Energy and Bharat Heavy Electricals slumped between
14.75% to 5.97% .
IT stocks recovered after earlier fall on Infosys's weak outlook.
India's second largest IT exporter by sales Infosys rose 0.05% to
Rs 1,255. The stock recovered from the session's low of Rs 1,040.
Infosys said it has revised the US dollar guidance downwards to
reflect the current economic situation and the drastic depreciation
of major global currencies against the US dollar. Infosys expects
earnings per American depository share at $2.23 for the year ending
March 2009, a growth of 12.6%. At the time of Q1 June 2008 results,
the company had forecast earnings per American depository share at
$2.31 to $2.35 for the year ending March 2009, a growth of 16.7% to
18.7%.
Infosys consolidated net profit rose 9.9% to Rs 1432 crore on 11.6%
growth in sales to Rs 5418 crore in Q2 September 2008 over Q1 June
2008. The company announced the results before trading hours today,
10 October 2008.
Tata Consultancy Services, Wipro and Satyam Computer Services
tumbled between 3.22% to 5.18%.
The Indian rupee fell to a record low past 49.07 per dollar today
as the spreading global financial crisis hurt sentiment in Asian
stock markets, leading to concerns of a large outflow of foreign
funds from India. IT exporters benefit from the weaker rupee as
they derive most of their revenues in dollars.
Metal Stocks slumped as metal prices fell on global recession
worries. Sterlite Industries, Hindustan Zinc ,National Aluminum
Company, Steel Authority of India fell between 2.19% to 4.64%.
India's largest steel maker by sales Tata Steel slumped 10.65% to
Rs 301.50. ArcelorMittal SA and Tata Steel have reportedly shown
interest in mining coal in collaboration with Coal India from the
latter's 18 abandoned underground mines.
India's largest aluminum maker by sales Hindalco Industries slumped
6.33% to Rs 85.05 even as the company said IGH Holdings, a promoter
of the company has acquired 8.94 lakh shares or 0.05% of equity
capital of the company by way of open markets purchases.
Among the major sensex losers were, Jaiprakash Associates (down
11.65% to Rs 80.40), Reliance Infrastructure (down 13.52% to Rs
550) and Reliance Communications (down 13.91% to Rs 258.80
Tata Power Company declined 3.18% to Rs 770. The company is
reportedly exploring the option of raising its stake in Indonesia's
Bumi Resources Tbk, the world's second largest coal company, after
a sharp erosion in the value of the shares pledged by Bumi's parent
firm, Bakrie & Brothers, with various lenders.
Era Infra Engineering slipped 4.85% to Rs 77.50 even as the company
said its joint venture company has bagged a contract from Airport
Authority of India for construction of a new terminal at Devi
Ahilya Bai Holkar Airport, Indore
Aurobindo Pharma declined 9.41% to Rs 191.10, even as the company
said it has received US Food & Drug Administration approval to
manufacture and market Cyclobenzaprine hydrochloride tablets in
multiple strengths.
India's industrial production rose at a dismal 1.3% in August 2008
compared to a 10.9% growth in August 2007. Manufacturing grew a
poor 1.1% in August 2008 versus 10.7% growth in August 2007.
Consumer durables production rose 5.1% in August 2008 verses 6.2%
growth in August 2007. Capital goods prodcution rose 2.3% in August
2008 verses 14.7% growth in August 2007. Meanwhile, industrial
production growth for July 2008 was revised upwards to 7.4% from
7.1%.
Overnight, US stocks slumped more than 7% on fears that credit
markets would stay frozen, paralysing the world's financial system
and slowing economies to a standstill.
US light crude for November delivery fell $4.16, or 4.8%, to $82.43
a barrel today, 10 October 2008, just above its earlier low of
$82.00, in its biggest two-week decline since the start of the Iraq
war in 2003. Oil slipped on fears that market turmoil will send
demand for fuel slumping.
Infosys Q2 net rises 30 pct, beats f'cast
BANGALORE (Reuters) - Infosys Technologies, India's second-largest software services exporter, posted a 30.2 percent jump in quarterly profit, helped by a weaker rupee, beating market forecasts.
Infosys, which develops applications, designs supply chains and offers back-office services, said July-September consolidated net profit rose to 14.32 billion rupees ($291 million) from 11 billion rupees a year ago.
A Reuters poll of brokerages had estimated net profit of 13.99 billion rupees for Infosys, which has ABN AMRO, Goldman Sachs and Philips Electronics among its clients.
India's export-driven software service firms, who were used to a scorching pace of growth, have been badly hit by a slowdown in their main U.S. market and a spreading financial crisis.
Shares in Infosys, whose takeover bid for British consultancy Axon Group has been upstaged by a counter offer from a smaller Indian rival, fell 19 percent in July-September, worse than a 4.5 percent fall in the main Mumbai index.
Infosys, which develops applications, designs supply chains and offers back-office services, said July-September consolidated net profit rose to 14.32 billion rupees ($291 million) from 11 billion rupees a year ago.
A Reuters poll of brokerages had estimated net profit of 13.99 billion rupees for Infosys, which has ABN AMRO, Goldman Sachs and Philips Electronics among its clients.
India's export-driven software service firms, who were used to a scorching pace of growth, have been badly hit by a slowdown in their main U.S. market and a spreading financial crisis.
Shares in Infosys, whose takeover bid for British consultancy Axon Group has been upstaged by a counter offer from a smaller Indian rival, fell 19 percent in July-September, worse than a 4.5 percent fall in the main Mumbai index.
Oil hits 1-year low on fears of demand slump
Singapore: US crude oil futures tumbled by more than $4 a barrel on Friday, extending losses to fresh one-year lows, as traders feared the credit crisis would send the global economy into recession and hurt fuel demand.
US light, sweet crude for November delivery fell $4.26 to $82.33 a barrel, having earlier fallen to $82.10 a barrel.
Oil prices earlier fell by $3 to a fresh one-year low below $84 a barrel, as fears that market turmoil will send demand for fuel slumping outweighed news that Opec will hold an extraordinary meeting in November.
With the financial crisis now almost a month old, Japan’s Nikkei stock index plunged 11% on Friday, while the yen and gold rose on growing concerns that no government effort so far has kept the global economy from a path to recession.
Investors, who earlier this year piled into oil and other commodities as a hedge against inflation and the weak dollar, are putting cash into safer havens and have sent oil plummeting by more than $60 from its record high above $147 in July.
US light crude for November delivery fell $2.77, or 3.2%, to $83.82 a barrel, just above its earlier low of $83.78 and extending oil’s more than $20 drop during the past two weeks alone..
London Brent crude shed $2.26 to $80.40 a barrel, matching the previous session’s 12-month low.
“The decline in oil prices was despite Opec indicating that it will hold an extraordinary meeting on 18 November,” said David Moore, a commodity strategist at Commonwealth Bank of Australia.
Opec said it will hold the emergency meeting in Vienna to discuss the impact of the financial crisis on the oil market.
The statement came after calls from Opec ministers this week for action to halt a slide in oil prices.
Investors will also look to Washington, where finance ministers and central bankers from the Group of Seven major industrial nations will meet amid expectations that the group will present a united front on policy to contain the crisis.
The International Energy Agency (IEA) releases its monthly report on the oil market at 0900 GMT, and investors are expecting another cut in demand expectations for this year and next.
The slumping economy has already prompted analysts to revise downwards their global oil demand growth target, with the US Energy Information Administration this week dropping its 2009 projection by 140,000 barrels per day.
US light, sweet crude for November delivery fell $4.26 to $82.33 a barrel, having earlier fallen to $82.10 a barrel.
Oil prices earlier fell by $3 to a fresh one-year low below $84 a barrel, as fears that market turmoil will send demand for fuel slumping outweighed news that Opec will hold an extraordinary meeting in November.
With the financial crisis now almost a month old, Japan’s Nikkei stock index plunged 11% on Friday, while the yen and gold rose on growing concerns that no government effort so far has kept the global economy from a path to recession.
Investors, who earlier this year piled into oil and other commodities as a hedge against inflation and the weak dollar, are putting cash into safer havens and have sent oil plummeting by more than $60 from its record high above $147 in July.
US light crude for November delivery fell $2.77, or 3.2%, to $83.82 a barrel, just above its earlier low of $83.78 and extending oil’s more than $20 drop during the past two weeks alone..
London Brent crude shed $2.26 to $80.40 a barrel, matching the previous session’s 12-month low.
“The decline in oil prices was despite Opec indicating that it will hold an extraordinary meeting on 18 November,” said David Moore, a commodity strategist at Commonwealth Bank of Australia.
Opec said it will hold the emergency meeting in Vienna to discuss the impact of the financial crisis on the oil market.
The statement came after calls from Opec ministers this week for action to halt a slide in oil prices.
Investors will also look to Washington, where finance ministers and central bankers from the Group of Seven major industrial nations will meet amid expectations that the group will present a united front on policy to contain the crisis.
The International Energy Agency (IEA) releases its monthly report on the oil market at 0900 GMT, and investors are expecting another cut in demand expectations for this year and next.
The slumping economy has already prompted analysts to revise downwards their global oil demand growth target, with the US Energy Information Administration this week dropping its 2009 projection by 140,000 barrels per day.
Pre market 10 Oct 2008
The market is set to tumble today, 10 October 2008, on worries about a global recession despite worldwide central bank measures to stave off a crisis. Bank bailouts, liquidity injections and interest rate cuts across the world have failed to quell investor anxiety with Asian stocks tumbling today, following overnight setback in US stocks. Infosys Technologies, which reports its quarterly earnings before trading begins, will be in focus.
Japan's Nikkei 225 average was down 10.6% at 974.12. In other Asian shares, key benchmark indices in Hong Kong, South Korea, China and Singapore were down 5% to 7%.
Overnight, US stocks slumped more than 7% on fears that credit markets would stay frozen, paralysing the world's financial system and slowing economies to a standstill.
At the centre of a financial crisis now almost a month old, credit markets remained in deep distress. With banks desperate to protect capital, the interbank cost of borrowing dollars rocketed. Three-month interbank rates for dollar loans hit their highest level of the year.
The cost of protection against defaults in Asia's sovereign and corporate debt also soared to record highs on Friday, 10 October 2008, on fears financial crisis would spread to the region.
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 39707.10 crore in calendar year 2008 (till 7 October 2008).
As per provisional data released by the stock exchanges, foreign funds sold worth a net Rs 1055.51 crore on Wednesday, 8 October 2008. Domestic funds bought shares worth a net Rs 1083.56 crore.
Japan's Nikkei 225 average was down 10.6% at 974.12. In other Asian shares, key benchmark indices in Hong Kong, South Korea, China and Singapore were down 5% to 7%.
Overnight, US stocks slumped more than 7% on fears that credit markets would stay frozen, paralysing the world's financial system and slowing economies to a standstill.
At the centre of a financial crisis now almost a month old, credit markets remained in deep distress. With banks desperate to protect capital, the interbank cost of borrowing dollars rocketed. Three-month interbank rates for dollar loans hit their highest level of the year.
The cost of protection against defaults in Asia's sovereign and corporate debt also soared to record highs on Friday, 10 October 2008, on fears financial crisis would spread to the region.
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 39707.10 crore in calendar year 2008 (till 7 October 2008).
As per provisional data released by the stock exchanges, foreign funds sold worth a net Rs 1055.51 crore on Wednesday, 8 October 2008. Domestic funds bought shares worth a net Rs 1083.56 crore.
Asian markets tumble on heels of Wall Street sell-off
TOKYO (AP) -- Stock markets across Asia posted sharp losses in early trading Friday on the heels of a steep sell-off on Wall Street.
Tokyo's benchmark Nikkei 225 index lost 974.12 points, or 10.64 percent, to close the morning session at 8,183.37. At one point in the frantic morning trading, the index shed 11.4 percent.
"We are seeing a meltdown in the world stock market due to growing fears over a global recession," said Kazuhiro Takahashi, general manager at Daiwa Securities SMBC Co. Ltd.
The sell-off in Asian markets comes after the Dow Jones industrial average Thursday dropped a staggering 679 points, or 7.3 percent, to close below the 9,000-line for the first time in five years.
In Seoul, South Korea, the benchmark Korea Composite Stock Price Index fell 7.1 percent, or 92.05 points, to 1,202.84 after the first hour of trading. At one point the Kospi fell as much as 9 percent.
Hong Kong's blue chip Hang Seng index was down 7.6 percent, or 1,211.48 points, at 14,731.76 minutes after trading started. The index rose 3.3 percent on Thursday.
In active trading at midday, the Australian benchmark S&P/ASX200 was down 256.8 points, or 5.94 per cent, to 4064.1, after earlier falling 7.1 percent.
Lucinda Chan, associate director of Macquarie Equities in Sydney, called the market moves "ghastly."
"It is a very different and very unprecedented climate at the moment," she said. "Growth is going to be a major concern in this market and that is why the Australian market is getting a very hard pinch, because we are a commodity export nation."
New Zealand's benchmark NZX-50 index fell 3.52 percent in its first four hours of trading Friday, hitting its lowest level since November 2004 as the market notched up its sixth successive day of losses.
Meanwhile, the president of the Indonesian stock exchange said trading will be suspended indefinitely "to prevent deeper panic," after another huge drop on Wall Street.
Indonesian authorities had planned to reopen the market Friday morning after a suspension was imposed Wednesday.
Tokyo's benchmark Nikkei 225 index lost 974.12 points, or 10.64 percent, to close the morning session at 8,183.37. At one point in the frantic morning trading, the index shed 11.4 percent.
"We are seeing a meltdown in the world stock market due to growing fears over a global recession," said Kazuhiro Takahashi, general manager at Daiwa Securities SMBC Co. Ltd.
The sell-off in Asian markets comes after the Dow Jones industrial average Thursday dropped a staggering 679 points, or 7.3 percent, to close below the 9,000-line for the first time in five years.
In Seoul, South Korea, the benchmark Korea Composite Stock Price Index fell 7.1 percent, or 92.05 points, to 1,202.84 after the first hour of trading. At one point the Kospi fell as much as 9 percent.
Hong Kong's blue chip Hang Seng index was down 7.6 percent, or 1,211.48 points, at 14,731.76 minutes after trading started. The index rose 3.3 percent on Thursday.
In active trading at midday, the Australian benchmark S&P/ASX200 was down 256.8 points, or 5.94 per cent, to 4064.1, after earlier falling 7.1 percent.
Lucinda Chan, associate director of Macquarie Equities in Sydney, called the market moves "ghastly."
"It is a very different and very unprecedented climate at the moment," she said. "Growth is going to be a major concern in this market and that is why the Australian market is getting a very hard pinch, because we are a commodity export nation."
New Zealand's benchmark NZX-50 index fell 3.52 percent in its first four hours of trading Friday, hitting its lowest level since November 2004 as the market notched up its sixth successive day of losses.
Meanwhile, the president of the Indonesian stock exchange said trading will be suspended indefinitely "to prevent deeper panic," after another huge drop on Wall Street.
Indonesian authorities had planned to reopen the market Friday morning after a suspension was imposed Wednesday.
Shares of GM tumble to 58-year low on credit warning, fears of global drop in auto sales
NEW YORK (AP) -- Shares of General Motors Corp. lost nearly one-third of their value Thursday, plunging to their lowest level in more than 58 years after Standard & Poor's said the automaker's credit could fall further into junk status due to the "rapidly weakening state" of the global automotive market.
GM shares plummeted $2.15, or 31.1 percent, to close at $4.76 after falling as low as $4.65. That low marked the automaker's lowest trade since March 15, 1950, according to the Center for Research in Security Prices at the University of Chicago. At that time, the Korean War was three months away from beginning, and gasoline cost 27 cents a gallon.
Thursday marked the sixth straight day of losses for GM. The automaker's shares are down 50 percent from their close of $9.45 at the end of last month.
Brett Hoselton, an analyst who follows GM stock for KeyBanc Capital Markets, said a number of factors could be behind Thursday's drop, including the decline in banking stocks.
"Obviously, GM and Ford, they're closely tied to automotive financing," Hoselton said. "If you can't finance cars, you can't sell cars."
In addition, the three-week ban on short selling some stocks -- including GM's -- expired late Wednesday. Short selling involves borrowing a company's shares, selling them, and then buying them back when the stock falls and returning them to the lender. The practice allows investors to profit from the decline in a stock's value.
Dave Healy, analyst for Burnham Securities, said it's possible that the expiration of the short-sell ban hurt Ford and GM, though there is no way to know for sure.
"Both stocks have been favorites of the short-sellers" he said. "These are volatile stocks. They go down 10 percent when the market goes down 5 percent, and vice versa."
Still, the automobile industry has been bombarded by a spate of gloomy news. In the closing minutes of trading Thursday, Standard & Poor's Rating Services placed GM and its finance arm, GMAC, on "CreditWatch Negative," meaning a downgrade of its "B-" long-term corporate credit ratings could be forthcoming.
S&P did the same to Ford Motor Co., helping send the Dearborn, Mich., company's stock down 58 cents, or 21.8 percent, Thursday to close at $2.08. It had fallen as low as $2.03 earlier in the session, it's lowest price since June 1, 1983.
Analysts have voiced concerns that the ongoing slump in U.S. vehicle sales could last longer than they previously expected and could spread to other parts of the world, particularly Europe.
GM said Thursday that sales of its Opel and Vauxhall brands dropped more than 6 percent in Europe during the first nine months of the year -- a sign that the downturn is hitting economies globally and taking worldwide auto sales down with it.
S&P also cited capital market conditions "that will remain a serious challenge for the foreseeable future."
Healy called S&P's warning "shooting at the life boats." But given their perilous credit situation, he added the best step for the automakers is to conserve liquidity and focus on their most important model changes.
"They're limited on what they can borrow anyway," he said. "They have some liquidity. They have some contractual borrowing power from the banks, which doesn't depend on ratings. They also have some assets they can sell."
The company announced a plan in July that calls for cutting $10 billion in costs and raising another $5 billion through asset sales and borrowing through 2009.
GM had $21 billion in cash and $5 billion available through credit lines at the end of June for total liquidity of $26 billion but has been burning through cash at a pace of more than $1 billion a month.
Fitch ratings analyst Mark Oline has projected that GM could reach the minimum amount of cash required to run the business, $11 billion to $14 billion, within the next year.
Shares of GM have withered since peaking near $94 in 1999 and 2000, and they're down 89 percent from their 52-week high of $43.20 set a year ago Sunday.
Less obvious has been the precipitous drop in GM's market capitalization, which accounts for the value of all of the company's outstanding shares and represents the price at which a company could hypothetically be bought.
At Thursday's close, GM's market capitalization was $2.7 billion, down 81 percent from $14.1 billion at the start of the year. That's smaller than some of its parts suppliers, like Magna International Inc., which has a market cap of $4.1 billion. Toyota Motor Corp., GM's biggest global rival, dwarfs the Detroit automaker with a market cap of about $105 billion.
GM is also now the smallest of the 30 stocks that make up the Dow Jones industrial average, and it no longer meets one of the criteria -- $4 billion or more in market cap -- to join the Standard & Poor's 500 Index. S&P spokesman Dave Guarino declined to say if GM was in danger of being removed from the index because such announcements often move a stock.
Another possibility: With such a small market price, and assets worth far more, the company is vulnerable to a takeover, said David Cole, chairman of the Center for Automotive Research in Ann Arbor.
"Absolutely," he said when asked about the possibility. "Except for one thing: lots of debt. And most people are very reluctant. It's not just the current equity, it's the debt that you have to absorb at the same time."
At the end of June, GM reported more than $32 billion in long-term debt, and since then it has exercised $3.5 billion of a $4.5 billion line of credit.
Cole said GM's engine and transmission operations alone are probably worth $10 billion to $20 billion, far above its market capitalization.
KeyBanc's Hoselton was skeptical of the prospect of a GM takeover.
"While the market cap may be small, the breadth of the operation is overwhelming," Hoselton said. "It'd be very difficult from a strategic standpoint for virtually anybody to get around that company."
AP Auto Writers Bree Fowler in New York and Tom Krisher in Detroit contributed to this report.
GM shares plummeted $2.15, or 31.1 percent, to close at $4.76 after falling as low as $4.65. That low marked the automaker's lowest trade since March 15, 1950, according to the Center for Research in Security Prices at the University of Chicago. At that time, the Korean War was three months away from beginning, and gasoline cost 27 cents a gallon.
Thursday marked the sixth straight day of losses for GM. The automaker's shares are down 50 percent from their close of $9.45 at the end of last month.
Brett Hoselton, an analyst who follows GM stock for KeyBanc Capital Markets, said a number of factors could be behind Thursday's drop, including the decline in banking stocks.
"Obviously, GM and Ford, they're closely tied to automotive financing," Hoselton said. "If you can't finance cars, you can't sell cars."
In addition, the three-week ban on short selling some stocks -- including GM's -- expired late Wednesday. Short selling involves borrowing a company's shares, selling them, and then buying them back when the stock falls and returning them to the lender. The practice allows investors to profit from the decline in a stock's value.
Dave Healy, analyst for Burnham Securities, said it's possible that the expiration of the short-sell ban hurt Ford and GM, though there is no way to know for sure.
"Both stocks have been favorites of the short-sellers" he said. "These are volatile stocks. They go down 10 percent when the market goes down 5 percent, and vice versa."
Still, the automobile industry has been bombarded by a spate of gloomy news. In the closing minutes of trading Thursday, Standard & Poor's Rating Services placed GM and its finance arm, GMAC, on "CreditWatch Negative," meaning a downgrade of its "B-" long-term corporate credit ratings could be forthcoming.
S&P did the same to Ford Motor Co., helping send the Dearborn, Mich., company's stock down 58 cents, or 21.8 percent, Thursday to close at $2.08. It had fallen as low as $2.03 earlier in the session, it's lowest price since June 1, 1983.
Analysts have voiced concerns that the ongoing slump in U.S. vehicle sales could last longer than they previously expected and could spread to other parts of the world, particularly Europe.
GM said Thursday that sales of its Opel and Vauxhall brands dropped more than 6 percent in Europe during the first nine months of the year -- a sign that the downturn is hitting economies globally and taking worldwide auto sales down with it.
S&P also cited capital market conditions "that will remain a serious challenge for the foreseeable future."
Healy called S&P's warning "shooting at the life boats." But given their perilous credit situation, he added the best step for the automakers is to conserve liquidity and focus on their most important model changes.
"They're limited on what they can borrow anyway," he said. "They have some liquidity. They have some contractual borrowing power from the banks, which doesn't depend on ratings. They also have some assets they can sell."
The company announced a plan in July that calls for cutting $10 billion in costs and raising another $5 billion through asset sales and borrowing through 2009.
GM had $21 billion in cash and $5 billion available through credit lines at the end of June for total liquidity of $26 billion but has been burning through cash at a pace of more than $1 billion a month.
Fitch ratings analyst Mark Oline has projected that GM could reach the minimum amount of cash required to run the business, $11 billion to $14 billion, within the next year.
Shares of GM have withered since peaking near $94 in 1999 and 2000, and they're down 89 percent from their 52-week high of $43.20 set a year ago Sunday.
Less obvious has been the precipitous drop in GM's market capitalization, which accounts for the value of all of the company's outstanding shares and represents the price at which a company could hypothetically be bought.
At Thursday's close, GM's market capitalization was $2.7 billion, down 81 percent from $14.1 billion at the start of the year. That's smaller than some of its parts suppliers, like Magna International Inc., which has a market cap of $4.1 billion. Toyota Motor Corp., GM's biggest global rival, dwarfs the Detroit automaker with a market cap of about $105 billion.
GM is also now the smallest of the 30 stocks that make up the Dow Jones industrial average, and it no longer meets one of the criteria -- $4 billion or more in market cap -- to join the Standard & Poor's 500 Index. S&P spokesman Dave Guarino declined to say if GM was in danger of being removed from the index because such announcements often move a stock.
Another possibility: With such a small market price, and assets worth far more, the company is vulnerable to a takeover, said David Cole, chairman of the Center for Automotive Research in Ann Arbor.
"Absolutely," he said when asked about the possibility. "Except for one thing: lots of debt. And most people are very reluctant. It's not just the current equity, it's the debt that you have to absorb at the same time."
At the end of June, GM reported more than $32 billion in long-term debt, and since then it has exercised $3.5 billion of a $4.5 billion line of credit.
Cole said GM's engine and transmission operations alone are probably worth $10 billion to $20 billion, far above its market capitalization.
KeyBanc's Hoselton was skeptical of the prospect of a GM takeover.
"While the market cap may be small, the breadth of the operation is overwhelming," Hoselton said. "It'd be very difficult from a strategic standpoint for virtually anybody to get around that company."
AP Auto Writers Bree Fowler in New York and Tom Krisher in Detroit contributed to this report.
Dow plunges 679 points to trade below 9,000 for the first time in 5 years in afternoon sell-off
NEW YORK (AP) -- Stocks plunged Thursday, sending the Dow Jones industrial average down 679 points -- more than 7 percent -- to its lowest level in five years. Stocks took a nosedive after a major credit-rating agency said it might cut its rating on General Motors and Ford, further rattling investors already fretting over the impact of tight credit on the economy.
The Standard & Poor's 500 index also fell more than 7 percent.
The declines came on the one-year anniversary of the closing highs of the Dow and the S&P. The Dow has lost 5,585 points, or 39.4 percent, since closing at 14,164.53 on Oct. 9, 2007. It's the worst run for the Dow since the nearly two-year bear market that ended in December 1974 when the Dow lost 45 percent. The S&P 500, meanwhile, is off 655 points, or 41.9 percent, since recording its high of 1,565.15.
U.S. stock market paper losses totaled $872 billion Thursday and the value of shares over all has tumbled a stunning $8.33 trillion since last year's high. That's based on figures measured by the Dow Jones Wilshire 5000 Composite Index, which tracks 5,000 U.S.-based companies' stocks and represents almost all stocks traded in America.
Thursday's sell-off came as Standard & Poor's Ratings Services put General Motors Corp. and its finance affiliate GMAC LLC under review to see if its rating should be cut. The action means there is a 50 percent chance that S&P will lower GM's and GMAC's ratings in the next three months. GM has been struggling with weak car sales in North America.
S&P also put Ford Motor Co. on credit watch negative. The ratings agency said that GM and Ford have adequate liquidity now, but that could change in 2009.
GM, one of the 30 stocks that make up the Dow industrials, fell $2.15, or 31 percent, to $4.76, while Ford fell 58 cents, or 22 percent, to $2.08.
"The story is getting to be like that movie 'Groundhog Day,'" said Arthur Hogan, chief market analyst at Jefferies & Co. He pointed to the still-frozen credit markets, and Libor, the bank-to-bank lending rate that remains stubbornly high despite interest rate cuts this week by the Federal Reserve and other major central banks.
"Until that starts coming down, you'll be hard-pressed to find anyone getting excited about stocks," Hogan said. "Everything we're seeing is historic. The problem is historic, the solutions are historic, and unfortunately, the sell-off is historic. It's not the kind of history you want to be making."
The Dow ended the day at its lows, finishing down 678.91, or 7.3 percent, at 8,579.19. The blue chips hadn't closed below 9,000 since June 30, 2003, and haven't closed at this level since May 21, 2003.
The Dow's 2,271-point tumble over the last seven sessions is its steepest seven-day point drop ever. Its seven-day percentage decline of 20.9 percent is the largest since the seven-day plunge ending Oct. 26, 1987, when the Dow lost 23.8 percent. That sell-off included Black Monday, the Oct. 19, 1987 market crash that saw the Dow fall nearly 23 percent in a single day.
Broader stock indicators also tumbled Thursday. The S&P 500 fell 75.02, or 7.6 percent, to 909.92, while the Nasdaq composite index fell 95.21, or 5.5 percent, to 1,645.12.
The Russell 2000 index of smaller companies fell 47.37, or 8.7 percent, to 499.20.
A wave of fear about the economy sent stocks lower in the final two hours of trading after a volatile morning in which major indicators like the Dow and the S&P 500 index bobbed up and down. The Nasdaq, with a bevy of tech stocks, spent much of the session higher but eventually declined as the sell-off intensified. Still, its losses were less severe because of the relatively modest drops in names like Intel Corp. and Microsoft Corp.
On the New York Stock Exchange, declining issues came to nearly 3,000, while fewer than 250 advanced.
The sluggishness in the credit markets that triggered much of the heavy selling in markets around the world since mid-September appeared little changed Thursday following days of efforts by the Federal Reserve and other central banks to resuscitate lending.
Libor, the bank lending benchmark, for three-month dollar loans rose to 4.75 percent from 4.52 percent on Wednesday. That signals that banks remain hesitant to make loans for fear they won't be paid back.
The Fed and other leading central banks this week lowered key interest rates to help unclog the credit markets and promote lending to help the global economy. While a rate cut can take up to a year to work its way through the economy, the move was aimed as a boost to investor sentiment.
"We're stuck in a morass and I think it's going to take quite some time to come out of it," said Stephen Carl, principal and head of equity trading at The Williams Capital Group.
Demand remained high for short-term Treasurys, a refuge for investors willing to trade modest returns to protect their money. The yield on the three-month Treasury bill, which moves opposite its price, fell to 0.58 percent from 0.63 percent late Wednesday. Longer-term debt prices fell, with the yield on the 10-year note rising to 3.79 percent from 3.65 percent late Wednesday.
Investors across markets were mulling a plan being considered by the Bush administration to invest in hobbled U.S. banks as a way to stabilize the financial sector. The $700 billion rescue package signed into law last week allows the Treasury Department to inject fresh capital into financial institutions and obtain ownership shares in return.
Britain rolled out a similar plan, though no U.K. bank has received any investments. In Iceland, the government now has control of the country's three major banks as it struggles to contain the troubles there.
Wall Street is also looking for any effects of short selling now that a three-week ban imposed by regulators has expired. Short selling is a technique in which investors borrow shares in a company from a broker and sell them, hoping to buy them back later at a lower price. Essentially, it's a bet that a stock's price will fall. Short sellers can lose money if they have to repurchase the stock after it has risen.
Some analysts believe the unprecedented ban on short selling -- an effort to bolster investor confidence -- did more harm than good at a time of historic market volatility. They contend that short sellers help the market rally by covering their bets and creating demand for stocks.
"I think the market's way oversold. But I can't stand in the way of this falling knife -- I'd get sliced open," said Phil Orlando, chief equity market strategist at Federated Investors. "Investors are just saying, get me out at any price."
He also said that with the short-selling rule back in play, hedge funds might be shorting again to make up for their forced liquidations.
Energy names were among the biggest decliners as the price of oil fell and investors worried about a slowing economy. Exxon Mobil Corp. fell $9, or 12 percent, to $68, while Chevron Corp. fell $9.10, or 12 percent, to $64.
Light, sweet crude fell $1.81 to settle at $86.62 a barrel on the New York Mercantile Exchange, the lowest closing price since October last year.
Health insurer WellPoint Inc. fell $3.94, or 9.7 percent, to $36.50, while insurer and investment manager Lincoln National Corp. fell $9.66, or 35 percent, to $18.31.
The tech sector saw less selling than other parts of the market after IBM Corp. affirmed its forecast.
IBM fell $1.55, or 1.7 percent, to $89. Meanwhile, Intel fell 65 cents, or 4 percent, to $15.60 and Microsoft fell 71 cents, or 3.1 percent, to $22.30.
Consolidated trading volume on the NYSE came to 8.14 billion consolidated shares compared with 8.54 billion traded Wednesday.
In Asia, Japan's Nikkei 225 closed down 0.50 percent while the Hang Seng added 3.31 percent. In Europe, Britain's FTSE-100 fell 1.21 percent, Germany's DAX fell 2.53 percent, and France's CAC-40 declined 1.55 percent.
The Standard & Poor's 500 index also fell more than 7 percent.
The declines came on the one-year anniversary of the closing highs of the Dow and the S&P. The Dow has lost 5,585 points, or 39.4 percent, since closing at 14,164.53 on Oct. 9, 2007. It's the worst run for the Dow since the nearly two-year bear market that ended in December 1974 when the Dow lost 45 percent. The S&P 500, meanwhile, is off 655 points, or 41.9 percent, since recording its high of 1,565.15.
U.S. stock market paper losses totaled $872 billion Thursday and the value of shares over all has tumbled a stunning $8.33 trillion since last year's high. That's based on figures measured by the Dow Jones Wilshire 5000 Composite Index, which tracks 5,000 U.S.-based companies' stocks and represents almost all stocks traded in America.
Thursday's sell-off came as Standard & Poor's Ratings Services put General Motors Corp. and its finance affiliate GMAC LLC under review to see if its rating should be cut. The action means there is a 50 percent chance that S&P will lower GM's and GMAC's ratings in the next three months. GM has been struggling with weak car sales in North America.
S&P also put Ford Motor Co. on credit watch negative. The ratings agency said that GM and Ford have adequate liquidity now, but that could change in 2009.
GM, one of the 30 stocks that make up the Dow industrials, fell $2.15, or 31 percent, to $4.76, while Ford fell 58 cents, or 22 percent, to $2.08.
"The story is getting to be like that movie 'Groundhog Day,'" said Arthur Hogan, chief market analyst at Jefferies & Co. He pointed to the still-frozen credit markets, and Libor, the bank-to-bank lending rate that remains stubbornly high despite interest rate cuts this week by the Federal Reserve and other major central banks.
"Until that starts coming down, you'll be hard-pressed to find anyone getting excited about stocks," Hogan said. "Everything we're seeing is historic. The problem is historic, the solutions are historic, and unfortunately, the sell-off is historic. It's not the kind of history you want to be making."
The Dow ended the day at its lows, finishing down 678.91, or 7.3 percent, at 8,579.19. The blue chips hadn't closed below 9,000 since June 30, 2003, and haven't closed at this level since May 21, 2003.
The Dow's 2,271-point tumble over the last seven sessions is its steepest seven-day point drop ever. Its seven-day percentage decline of 20.9 percent is the largest since the seven-day plunge ending Oct. 26, 1987, when the Dow lost 23.8 percent. That sell-off included Black Monday, the Oct. 19, 1987 market crash that saw the Dow fall nearly 23 percent in a single day.
Broader stock indicators also tumbled Thursday. The S&P 500 fell 75.02, or 7.6 percent, to 909.92, while the Nasdaq composite index fell 95.21, or 5.5 percent, to 1,645.12.
The Russell 2000 index of smaller companies fell 47.37, or 8.7 percent, to 499.20.
A wave of fear about the economy sent stocks lower in the final two hours of trading after a volatile morning in which major indicators like the Dow and the S&P 500 index bobbed up and down. The Nasdaq, with a bevy of tech stocks, spent much of the session higher but eventually declined as the sell-off intensified. Still, its losses were less severe because of the relatively modest drops in names like Intel Corp. and Microsoft Corp.
On the New York Stock Exchange, declining issues came to nearly 3,000, while fewer than 250 advanced.
The sluggishness in the credit markets that triggered much of the heavy selling in markets around the world since mid-September appeared little changed Thursday following days of efforts by the Federal Reserve and other central banks to resuscitate lending.
Libor, the bank lending benchmark, for three-month dollar loans rose to 4.75 percent from 4.52 percent on Wednesday. That signals that banks remain hesitant to make loans for fear they won't be paid back.
The Fed and other leading central banks this week lowered key interest rates to help unclog the credit markets and promote lending to help the global economy. While a rate cut can take up to a year to work its way through the economy, the move was aimed as a boost to investor sentiment.
"We're stuck in a morass and I think it's going to take quite some time to come out of it," said Stephen Carl, principal and head of equity trading at The Williams Capital Group.
Demand remained high for short-term Treasurys, a refuge for investors willing to trade modest returns to protect their money. The yield on the three-month Treasury bill, which moves opposite its price, fell to 0.58 percent from 0.63 percent late Wednesday. Longer-term debt prices fell, with the yield on the 10-year note rising to 3.79 percent from 3.65 percent late Wednesday.
Investors across markets were mulling a plan being considered by the Bush administration to invest in hobbled U.S. banks as a way to stabilize the financial sector. The $700 billion rescue package signed into law last week allows the Treasury Department to inject fresh capital into financial institutions and obtain ownership shares in return.
Britain rolled out a similar plan, though no U.K. bank has received any investments. In Iceland, the government now has control of the country's three major banks as it struggles to contain the troubles there.
Wall Street is also looking for any effects of short selling now that a three-week ban imposed by regulators has expired. Short selling is a technique in which investors borrow shares in a company from a broker and sell them, hoping to buy them back later at a lower price. Essentially, it's a bet that a stock's price will fall. Short sellers can lose money if they have to repurchase the stock after it has risen.
Some analysts believe the unprecedented ban on short selling -- an effort to bolster investor confidence -- did more harm than good at a time of historic market volatility. They contend that short sellers help the market rally by covering their bets and creating demand for stocks.
"I think the market's way oversold. But I can't stand in the way of this falling knife -- I'd get sliced open," said Phil Orlando, chief equity market strategist at Federated Investors. "Investors are just saying, get me out at any price."
He also said that with the short-selling rule back in play, hedge funds might be shorting again to make up for their forced liquidations.
Energy names were among the biggest decliners as the price of oil fell and investors worried about a slowing economy. Exxon Mobil Corp. fell $9, or 12 percent, to $68, while Chevron Corp. fell $9.10, or 12 percent, to $64.
Light, sweet crude fell $1.81 to settle at $86.62 a barrel on the New York Mercantile Exchange, the lowest closing price since October last year.
Health insurer WellPoint Inc. fell $3.94, or 9.7 percent, to $36.50, while insurer and investment manager Lincoln National Corp. fell $9.66, or 35 percent, to $18.31.
The tech sector saw less selling than other parts of the market after IBM Corp. affirmed its forecast.
IBM fell $1.55, or 1.7 percent, to $89. Meanwhile, Intel fell 65 cents, or 4 percent, to $15.60 and Microsoft fell 71 cents, or 3.1 percent, to $22.30.
Consolidated trading volume on the NYSE came to 8.14 billion consolidated shares compared with 8.54 billion traded Wednesday.
In Asia, Japan's Nikkei 225 closed down 0.50 percent while the Hang Seng added 3.31 percent. In Europe, Britain's FTSE-100 fell 1.21 percent, Germany's DAX fell 2.53 percent, and France's CAC-40 declined 1.55 percent.
Asian markets plunge after huge Wall Street losses; Tokyo's Nikkei sinks more than 10 percent
TOKYO (AP) -- A massive sell-off on Wall Street and an escalating global equity crisis sent Asian stocks plunging Friday, with Japan's benchmark Nikkei 225 index tumbling more than 10 percent.
"Selling is unstoppable in New York and Tokyo," said Yutaka Miura, senior strategist at Shinko Securities Co. Ltd. in Tokyo. "Investors were gripped by fear."
Hong Kong's Hang Seng index tumbled more than 8 percent, South Korea's Kospi shed 7.4 percent, Shanghai's benchmark fell 4.1 percent, and Singapore's Straits Times index was off 7.0 percent. In Syndey, Australia's S&P/ASX200 was down 6.8 percent.
Friday's regional declines follow a 7.3 percent plunge in the Dow Jones industrial average Thursday to close below the 9,000-line for the first time in five years. Stocks nose-dived after a major credit-rating agency said it might cut its rating on General Motors Corp. and Ford Motor Co., further rattling investors already fretting over the impact of tight credit on the economy.
The Dow's 2,271-point tumble over the last seven sessions is its steepest seven-day point drop ever. Its seven-day percentage decline of 20.9 percent is the largest since the seven-day plunge ending Oct. 26, 1987, when the Dow lost 23.8 percent. That sell-off included Black Monday, the Oct. 19, 1987 market crash that saw the Dow fall nearly 23 percent in a single day.
Lucinda Chan, associate director of Macquarie Equities in Sydney, called the market moves "ghastly."
"It is a very different and very unprecedented climate at the moment," she said. "Growth is going to be a major concern in this market and that is why the Australian market is getting a very hard pinch because we are a commodity export nation."
Miura in Tokyo said the ongoing meltdown in global financial markets showed "confusion and uncertainty" among investors worldwide.
Asia's falls come as finance ministers and central bankers from the Group of Seven industrialized nations prepared to meet later Friday in Washington.
"Investors are not so sure that the G7 will announce effective measures to contain the global financial crisis," Miura said.
In currencies, the dollar was hovering just above the 99-yen level Friday morning in Asia, strengthening from 98.82 yen late Thursday. The euro stood at $1.3595 from $1.3560.
"Selling is unstoppable in New York and Tokyo," said Yutaka Miura, senior strategist at Shinko Securities Co. Ltd. in Tokyo. "Investors were gripped by fear."
Hong Kong's Hang Seng index tumbled more than 8 percent, South Korea's Kospi shed 7.4 percent, Shanghai's benchmark fell 4.1 percent, and Singapore's Straits Times index was off 7.0 percent. In Syndey, Australia's S&P/ASX200 was down 6.8 percent.
Friday's regional declines follow a 7.3 percent plunge in the Dow Jones industrial average Thursday to close below the 9,000-line for the first time in five years. Stocks nose-dived after a major credit-rating agency said it might cut its rating on General Motors Corp. and Ford Motor Co., further rattling investors already fretting over the impact of tight credit on the economy.
The Dow's 2,271-point tumble over the last seven sessions is its steepest seven-day point drop ever. Its seven-day percentage decline of 20.9 percent is the largest since the seven-day plunge ending Oct. 26, 1987, when the Dow lost 23.8 percent. That sell-off included Black Monday, the Oct. 19, 1987 market crash that saw the Dow fall nearly 23 percent in a single day.
Lucinda Chan, associate director of Macquarie Equities in Sydney, called the market moves "ghastly."
"It is a very different and very unprecedented climate at the moment," she said. "Growth is going to be a major concern in this market and that is why the Australian market is getting a very hard pinch because we are a commodity export nation."
Miura in Tokyo said the ongoing meltdown in global financial markets showed "confusion and uncertainty" among investors worldwide.
Asia's falls come as finance ministers and central bankers from the Group of Seven industrialized nations prepared to meet later Friday in Washington.
"Investors are not so sure that the G7 will announce effective measures to contain the global financial crisis," Miura said.
In currencies, the dollar was hovering just above the 99-yen level Friday morning in Asia, strengthening from 98.82 yen late Thursday. The euro stood at $1.3595 from $1.3560.
Dow plunges 679 for 6th triple-digit loss in a row on runaway train of an afternoon sell-off
NEW YORK (AP) -- A runaway train of a sell-off turned the anniversary of the stock market peak into one of the darkest days in Wall Street history Thursday, driving the Dow Jones industrials down a breathtaking 679 points and deepening a financial crisis that has defied all efforts to stop it.
Stocks lost more than 7 percent, $872 billion of investments evaporated, and the Dow fell to 8,579. When the average crashed through the 9,000 level for the first time in five years in the final hour of trading, sellers had only begun to hit the gas pedal.
As bad as the day was, even worse was the cumulative effect of a historic run of declines: The Dow suffered a triple-digit loss for the sixth day in a row, a first, and the average dropped for the seventh day in a row, a losing streak not seen since 2002.
"Right now the market is just panicked," said David Wyss, chief economist at Standard & Poor's in New York. "Nobody wants to take on any risk. Everybody just wants to get their money and put it under the mattress."
It all took place one year to the day after the Dow closed at its record high of 14,164. Since that day, frozen credit, record foreclosures, cascading job losses and outright fear have seized the market and sapped 39 percent of its value.
Paper losses for the year add up to an staggering $8.3 trillion, according to figures measured by the Dow Jones Wilshire 5000 Composite Index, which tracks 5,000 U.S.-based companies representing almost all stocks traded in America.
It was the second straight day that Wall Street was rocked by a final-hour sell-off, but this one was particularly shocking.
Most of the day was relatively calm, and the trading floor was quieter than usual because of the Jewish holiday of Yom Kippur. Wall Street awoke to news the federal government was brandishing a new weapon against the financial crisis -- considering seeking an equity stake in major U.S. banks in order to stabilize them.
But that step appeared to be as ineffectual as the others Washington has rolled out in recent weeks, including a $700 billion bailout of the financial industry, a coordinated interest rate cut by central banks around the world and direct lending by the Federal Reserve to private companies to provide them with short-term cash.
Acquiring a stake in the banks would be yet another startling intervention by the government in the free market, but economists said President Bush was left with little choice because of the credit markets, where tight lending has choked off the everyday cash that is the lifeblood of the economy.
"In normal times, this would be out of the question, but in the present dire situation, I think the government should be employing all the powers that it can," said Sung Won Sohn, an economics professor at California State University, Channel Islands.
After the closing bell, shellshocked traders and bankers gathered at Bobby Van's Steakhouse and downed beers and drinks to chase the ghastly numbers. One Wall Streeter joked things had gotten so bad that he should apply for a job as a waiter.
"It was an ugly day, there's no ways to put it," said another customer, Alan Valdes, director of floor operations for Hallard, Lyons. "Guys were frustrated, just fed up. ... We're in an area no one has been in since 1930."
Wall Street has been teetering on the brink of panic for a month now, vulnerable to any bad news. Thursday's sell-off was triggered when a major credit rating agency put General Motors Corp. and its finance affiliate under review to determine whether it should be downgraded.
Stock in GM, one of the 30 components of the Dow Jones industrials, lost 31 percent of its value and closed at $4.76 -- its lowest in more than half a century, since the Korean War began.
For the Dow, it has been nothing short of a free fall:
--The average is down 2,338 points, or 21 percent, in the last four weeks, since the Lehman Brothers bankruptcy escalated a long-running credit crunch into a full-fledged crisis.
--The point decline Thursday was the third-worst in Dow history. The worst, 778 points, came less than two weeks ago.
--Of the last 19 trading days, there have been 11 triple-digit losses -- including the unprecedented six straight. The six gains have all been triple-digits, and only one of them was enough to make up the losses of the day before.
--The Dow now stands only about 1,300 points above its lowest close of the bear market that followed 9/11. In a market as volatile as this, that gap can be closed in a couple of trading days, or less.
In fact, triple-digit declines can happen almost in an instant.
On Thursday, the Dow was above 9,200 after 1:30 p.m. and still above 9,000 after 3 p.m. The pressure to sell was so intense that the Dow kept dropping precipitously for 10 minutes after the 4 p.m. closing bell as the day's losses were tabulated.
In percentage terms, the drop in the Dow exceeded the day the markets reopened after the Sept. 11, 2001, terrorist attacks. It was not close to the 22.6-percent decline on Black Monday in 1987, the last stock market crash.
Still, it is becoming increasingly clear that Washington has ever fewer places to reach in its toolbox to stop, or perhaps even slow, the crisis. Among the options still left are buying up foreclosed properties and making direct loans to homeowners, both of them hard for free-market supporters to swallow.
Speaking in the afternoon before the market closed, President Bush told an audience on the South Lawn of the White House that the economy was going through a "very tough stretch." But, he said: "I'm confident in our economy's long-term prospects."
After the market closed, the White House said Americans should remain confident despite the market plunge, and Bush planned to speak from the Rose Garden on Friday morning -- though he was not expected to unveil any new policy proposals.
House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid asked Bush on Thursday to call an emergency meeting of the G-8 industrial nations' heads of state to address the continuing global credit freeze and instability in world markets. The G-8 comprises France, Germany, Italy, Great Britain, Japan, the United States, Canada and Russia.
In the markets Thursday, the broader stock indicators registered similar declines to the Dow's. The Standard & Poor's 500 index fell 7.6 percent to the 909 level, and the Nasdaq composite index fell 5.5 percent to 1,645.
Meanwhile, the credit markets remained stubbornly locked-up. The benchmark rate that banks charge each other for loans, known as Libor, rose to 4.75 percent from 4.52 percent a day earlier, signaling banks are still afraid to make loans because they worry they won't be paid back.
"The story is getting to be like that movie Groundhog Day," said Arthur Hogan, chief market analyst at Jefferies & Co. "Everything we're seeing is historic. The problem is historic, the solutions are historic, and unfortunately, the sell-off is historic. It's not the kind of history you want to be making."
Adding to Wall Street's nervousness, a ban on short selling -- a process in which investors borrow shares of stock and essentially bet the value will fall -- expired.
With three and a half weeks before voters elect Bush's successor, there was also no immediate comment on the Wall Street action from the presidential candidates, Democratic Sen. Barack Obama and Republican Sen. John McCain.
Earlier in the day in Dayton, Ohio, Obama took aim at McCain's plan to have the government absorb the full cost of renegotiating mortgages for borrowers under strain from the dramatic decline of the values of their homes.
McCain rolled out the idea at the second presidential debate earlier this week, a forum in which he also told voters it was important to have a steady hand in the White House during a time of economic crisis.
AP Economics Writer Martin Crutsinger reported from Washington. Associated Press writers Tom Raum in Washington and Patrick Rizzo in New York contributed to this story.
Stocks lost more than 7 percent, $872 billion of investments evaporated, and the Dow fell to 8,579. When the average crashed through the 9,000 level for the first time in five years in the final hour of trading, sellers had only begun to hit the gas pedal.
As bad as the day was, even worse was the cumulative effect of a historic run of declines: The Dow suffered a triple-digit loss for the sixth day in a row, a first, and the average dropped for the seventh day in a row, a losing streak not seen since 2002.
"Right now the market is just panicked," said David Wyss, chief economist at Standard & Poor's in New York. "Nobody wants to take on any risk. Everybody just wants to get their money and put it under the mattress."
It all took place one year to the day after the Dow closed at its record high of 14,164. Since that day, frozen credit, record foreclosures, cascading job losses and outright fear have seized the market and sapped 39 percent of its value.
Paper losses for the year add up to an staggering $8.3 trillion, according to figures measured by the Dow Jones Wilshire 5000 Composite Index, which tracks 5,000 U.S.-based companies representing almost all stocks traded in America.
It was the second straight day that Wall Street was rocked by a final-hour sell-off, but this one was particularly shocking.
Most of the day was relatively calm, and the trading floor was quieter than usual because of the Jewish holiday of Yom Kippur. Wall Street awoke to news the federal government was brandishing a new weapon against the financial crisis -- considering seeking an equity stake in major U.S. banks in order to stabilize them.
But that step appeared to be as ineffectual as the others Washington has rolled out in recent weeks, including a $700 billion bailout of the financial industry, a coordinated interest rate cut by central banks around the world and direct lending by the Federal Reserve to private companies to provide them with short-term cash.
Acquiring a stake in the banks would be yet another startling intervention by the government in the free market, but economists said President Bush was left with little choice because of the credit markets, where tight lending has choked off the everyday cash that is the lifeblood of the economy.
"In normal times, this would be out of the question, but in the present dire situation, I think the government should be employing all the powers that it can," said Sung Won Sohn, an economics professor at California State University, Channel Islands.
After the closing bell, shellshocked traders and bankers gathered at Bobby Van's Steakhouse and downed beers and drinks to chase the ghastly numbers. One Wall Streeter joked things had gotten so bad that he should apply for a job as a waiter.
"It was an ugly day, there's no ways to put it," said another customer, Alan Valdes, director of floor operations for Hallard, Lyons. "Guys were frustrated, just fed up. ... We're in an area no one has been in since 1930."
Wall Street has been teetering on the brink of panic for a month now, vulnerable to any bad news. Thursday's sell-off was triggered when a major credit rating agency put General Motors Corp. and its finance affiliate under review to determine whether it should be downgraded.
Stock in GM, one of the 30 components of the Dow Jones industrials, lost 31 percent of its value and closed at $4.76 -- its lowest in more than half a century, since the Korean War began.
For the Dow, it has been nothing short of a free fall:
--The average is down 2,338 points, or 21 percent, in the last four weeks, since the Lehman Brothers bankruptcy escalated a long-running credit crunch into a full-fledged crisis.
--The point decline Thursday was the third-worst in Dow history. The worst, 778 points, came less than two weeks ago.
--Of the last 19 trading days, there have been 11 triple-digit losses -- including the unprecedented six straight. The six gains have all been triple-digits, and only one of them was enough to make up the losses of the day before.
--The Dow now stands only about 1,300 points above its lowest close of the bear market that followed 9/11. In a market as volatile as this, that gap can be closed in a couple of trading days, or less.
In fact, triple-digit declines can happen almost in an instant.
On Thursday, the Dow was above 9,200 after 1:30 p.m. and still above 9,000 after 3 p.m. The pressure to sell was so intense that the Dow kept dropping precipitously for 10 minutes after the 4 p.m. closing bell as the day's losses were tabulated.
In percentage terms, the drop in the Dow exceeded the day the markets reopened after the Sept. 11, 2001, terrorist attacks. It was not close to the 22.6-percent decline on Black Monday in 1987, the last stock market crash.
Still, it is becoming increasingly clear that Washington has ever fewer places to reach in its toolbox to stop, or perhaps even slow, the crisis. Among the options still left are buying up foreclosed properties and making direct loans to homeowners, both of them hard for free-market supporters to swallow.
Speaking in the afternoon before the market closed, President Bush told an audience on the South Lawn of the White House that the economy was going through a "very tough stretch." But, he said: "I'm confident in our economy's long-term prospects."
After the market closed, the White House said Americans should remain confident despite the market plunge, and Bush planned to speak from the Rose Garden on Friday morning -- though he was not expected to unveil any new policy proposals.
House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid asked Bush on Thursday to call an emergency meeting of the G-8 industrial nations' heads of state to address the continuing global credit freeze and instability in world markets. The G-8 comprises France, Germany, Italy, Great Britain, Japan, the United States, Canada and Russia.
In the markets Thursday, the broader stock indicators registered similar declines to the Dow's. The Standard & Poor's 500 index fell 7.6 percent to the 909 level, and the Nasdaq composite index fell 5.5 percent to 1,645.
Meanwhile, the credit markets remained stubbornly locked-up. The benchmark rate that banks charge each other for loans, known as Libor, rose to 4.75 percent from 4.52 percent a day earlier, signaling banks are still afraid to make loans because they worry they won't be paid back.
"The story is getting to be like that movie Groundhog Day," said Arthur Hogan, chief market analyst at Jefferies & Co. "Everything we're seeing is historic. The problem is historic, the solutions are historic, and unfortunately, the sell-off is historic. It's not the kind of history you want to be making."
Adding to Wall Street's nervousness, a ban on short selling -- a process in which investors borrow shares of stock and essentially bet the value will fall -- expired.
With three and a half weeks before voters elect Bush's successor, there was also no immediate comment on the Wall Street action from the presidential candidates, Democratic Sen. Barack Obama and Republican Sen. John McCain.
Earlier in the day in Dayton, Ohio, Obama took aim at McCain's plan to have the government absorb the full cost of renegotiating mortgages for borrowers under strain from the dramatic decline of the values of their homes.
McCain rolled out the idea at the second presidential debate earlier this week, a forum in which he also told voters it was important to have a steady hand in the White House during a time of economic crisis.
AP Economics Writer Martin Crutsinger reported from Washington. Associated Press writers Tom Raum in Washington and Patrick Rizzo in New York contributed to this story.
TCS picks up Citi’s back-office business
Bangalore: Citigroup Inc., reeling from $61 billion (Rs2.97 trillion) in credit-related losses, agreed to sell its back-office unit in India for $505 million in cash to Tata Consultancy Services Ltd, or TCS, as the deepening financial crisis forces banks to raise funds.
As part of the accord, Citigroup will award orders worth $2.5 billion over nine-and-a-half years to TCS, India’s largest software services provider said in an emailed statement on Wednesday.
Big deal: S. Ramadorai says the move will help drive TCS’ growth. AFPCitigroup, which is battling with Wells Fargo and Co. to buy the deposits of Wachovia Corp., is also cutting 500 jobs and reducing by 90% the number of independent mortgage brokers it does business with, a company spokesman said.
The deal allows TCS to more than double its number of back-office workers, helping the it widen its lead over Infosys Technologies Ltd and Wipro Ltd.
“We view this as a positive move for TCS,” Diviya Nagarajan, a Mumbai-based analyst at JM Financial Ltd, said in an emailed note to clients. The deal gives the Indian provider “much needed visibility and stability with a top client in the context of the current demand environment”, she wrote.
“This transaction will complement our domain expertise and bring new capabilities to TCS that will help drive growth,” the company’s chief executive S. Ramadorai said.
TCS said the deal, expected to close this quarter, will start contributing to revenue in the March 2009 quarter.
Citigroup Global Services Ltd, formerly known as E-serve International, employs 12,000 back-office workers and offers transaction processing and customer services for the New York-based financial firm’s businesses globally, according to its website.
TCS employed about 8,000 back-office workers, N.V.K. Raman, head of Tata’s back-office outsourcing unit, had said in a February interview.
The sale “fits squarely into (Citigroup CEO) Vikram (Pandit)’s goal to reorganize Citi, strengthen our balance sheet, divest assets that are not aligned with our growth strategy to free up resources that can be better used as investments in higher-growth, higher-return opportunities,” Sanjay Nayar, chief executive of Citigroup’s India operations, wrote in an email to employees. “This is a strategic step in Citi’s stated objective to focus on our core competencies.”
Talks for Genpact Ltd to buy the Citigroup back-office division failed after the firm was unwilling to pay $700 million for the division, The Economic Times had reported in February, citing unidentified people.
The deal comes two days after Nomura Holdings Inc., Japan’s biggest securities firm, agreed to buy the back-office operations of Lehman Brothers Holdings Inc. in Mumbai, which employed 3,000 workers. Nomura is also buying the Asian, West Asian and European operations of Lehman, which filed for bankruptcy last month.
TCS has no plan to merge the Citigroup unit with itself, and will retain the current management team, chief operating officer N. Chandrasekaran told reporters.
In 2004, General Electric Co. sold 60% of its Indian back-office unit, now Genpact, for $500 million to buyout firms General Atlantic Llc. and Oak Hill Capital Partners Lp. British Airways Plc. sold its controlling stake in WNS Holdings Ltd in 2002.
Citigroup has the largest amount of losses tied to the collapse of the mortgage market with $61 billion, followed by Wachovia Corp.’s $53 billion, according to data compiled by Bloomberg. Globally, asset write-downs and credit losses have cost the world’s biggest banks and securities firms a combined $593 billion, according to Bloomberg data.
Shares of TCS fell 5.07% to close at Rs546.60 each on the Bombay Stock Exchange on Wednesday, on a day when the exchange’s benchmark Sensex index fell 3.14% to 11,328.36. TCS shares have lost 51% this year compared with a 45% decline for the Sensex.
As part of the accord, Citigroup will award orders worth $2.5 billion over nine-and-a-half years to TCS, India’s largest software services provider said in an emailed statement on Wednesday.
Big deal: S. Ramadorai says the move will help drive TCS’ growth. AFPCitigroup, which is battling with Wells Fargo and Co. to buy the deposits of Wachovia Corp., is also cutting 500 jobs and reducing by 90% the number of independent mortgage brokers it does business with, a company spokesman said.
The deal allows TCS to more than double its number of back-office workers, helping the it widen its lead over Infosys Technologies Ltd and Wipro Ltd.
“We view this as a positive move for TCS,” Diviya Nagarajan, a Mumbai-based analyst at JM Financial Ltd, said in an emailed note to clients. The deal gives the Indian provider “much needed visibility and stability with a top client in the context of the current demand environment”, she wrote.
“This transaction will complement our domain expertise and bring new capabilities to TCS that will help drive growth,” the company’s chief executive S. Ramadorai said.
TCS said the deal, expected to close this quarter, will start contributing to revenue in the March 2009 quarter.
Citigroup Global Services Ltd, formerly known as E-serve International, employs 12,000 back-office workers and offers transaction processing and customer services for the New York-based financial firm’s businesses globally, according to its website.
TCS employed about 8,000 back-office workers, N.V.K. Raman, head of Tata’s back-office outsourcing unit, had said in a February interview.
The sale “fits squarely into (Citigroup CEO) Vikram (Pandit)’s goal to reorganize Citi, strengthen our balance sheet, divest assets that are not aligned with our growth strategy to free up resources that can be better used as investments in higher-growth, higher-return opportunities,” Sanjay Nayar, chief executive of Citigroup’s India operations, wrote in an email to employees. “This is a strategic step in Citi’s stated objective to focus on our core competencies.”
Talks for Genpact Ltd to buy the Citigroup back-office division failed after the firm was unwilling to pay $700 million for the division, The Economic Times had reported in February, citing unidentified people.
The deal comes two days after Nomura Holdings Inc., Japan’s biggest securities firm, agreed to buy the back-office operations of Lehman Brothers Holdings Inc. in Mumbai, which employed 3,000 workers. Nomura is also buying the Asian, West Asian and European operations of Lehman, which filed for bankruptcy last month.
TCS has no plan to merge the Citigroup unit with itself, and will retain the current management team, chief operating officer N. Chandrasekaran told reporters.
In 2004, General Electric Co. sold 60% of its Indian back-office unit, now Genpact, for $500 million to buyout firms General Atlantic Llc. and Oak Hill Capital Partners Lp. British Airways Plc. sold its controlling stake in WNS Holdings Ltd in 2002.
Citigroup has the largest amount of losses tied to the collapse of the mortgage market with $61 billion, followed by Wachovia Corp.’s $53 billion, according to data compiled by Bloomberg. Globally, asset write-downs and credit losses have cost the world’s biggest banks and securities firms a combined $593 billion, according to Bloomberg data.
Shares of TCS fell 5.07% to close at Rs546.60 each on the Bombay Stock Exchange on Wednesday, on a day when the exchange’s benchmark Sensex index fell 3.14% to 11,328.36. TCS shares have lost 51% this year compared with a 45% decline for the Sensex.
Chemcel Biotech IPO Listing Information
IPO Listing Date: Monday, October 13, 2008
BSE Script Code: 533026
Listing in: 'B' Group of Securities
ISIN: INE213J01012
Issue Price: Rs 16/- Per Equity Share
Face Value: Rs 10/- Per Equity Share
BSE Script Code: 533026
Listing in: 'B' Group of Securities
ISIN: INE213J01012
Issue Price: Rs 16/- Per Equity Share
Face Value: Rs 10/- Per Equity Share
TCS’ exposure to banking sector
Software company Tata Consultancy Services Ltd’s (TCS) acquisition of Citigroup Global Services Ltd gives further credence to the view that Indian IT players are buying revenues to offset the expected slowdown in global IT spend. TCS’ $505 million (Rs2,459 crore) purchase comes close on the heels of larger bids by Infosys Technologies Ltd and HCL Technologies Ltd for Europe-based consulting firm Axon Group Plc.
The difference is that the valuation of Citigroup Global Services seems more reasonable. Adjusted for the cash on its books, Citigroup’s captive BPO (business process outsourcing) firm is valued at a little more than eight times estimated earnings before interest and tax for 2008. That’s slightly lower than TCS’ own battered-down valuation of about 8.5 times estimated 12-month earnings till December. In Axon’s case, however, HCL Technologies has valued the target firm higher than its current valuation.
For a captive BPO firm, Citigroup Global Services has surprisingly high operating margins of 20%. Normally, when a third party runs back-office operations, it’s able to extract higher margins. But it remains to be seen if TCS is able to improve margins, given the troubles faced by the whole banking industry currently.
But the greater risk is the increased exposure to the financial services sector and one client within the sector. According to an analyst, TCS would now generate revenue worth $400 million from Citigroup Inc., or about 5.5-6% of its annual revenue. Its exposure to the financial services sector is already rather high at 42.5%. The underperformance of TCS’ shares vis-a-vis Infosys in the recent past shows that the markets aren’t happy with this high level of exposure.
The difference is that the valuation of Citigroup Global Services seems more reasonable. Adjusted for the cash on its books, Citigroup’s captive BPO (business process outsourcing) firm is valued at a little more than eight times estimated earnings before interest and tax for 2008. That’s slightly lower than TCS’ own battered-down valuation of about 8.5 times estimated 12-month earnings till December. In Axon’s case, however, HCL Technologies has valued the target firm higher than its current valuation.
For a captive BPO firm, Citigroup Global Services has surprisingly high operating margins of 20%. Normally, when a third party runs back-office operations, it’s able to extract higher margins. But it remains to be seen if TCS is able to improve margins, given the troubles faced by the whole banking industry currently.
But the greater risk is the increased exposure to the financial services sector and one client within the sector. According to an analyst, TCS would now generate revenue worth $400 million from Citigroup Inc., or about 5.5-6% of its annual revenue. Its exposure to the financial services sector is already rather high at 42.5%. The underperformance of TCS’ shares vis-a-vis Infosys in the recent past shows that the markets aren’t happy with this high level of exposure.
Trouble ahead? Top bank borrows Rs1,000 cr @ 20%
A large Indian commercial bank borrowed Rs1,000 crore from another major domestic bank at more than 20% interest rate earlier this week, a desperate move that underscores the gravity of the liquidity scarcity for some Indian banks, notwithstanding assurances to the contrary by regulators and politicians alike.
The short-term money was raised through certificates of deposits, or CDs, essentially a promissory note that bears a maturity date and a specified fixed interest rate.
It appears that this is the highest interest rate charged by any Indian bank on a 45-day loan given to another bank since the mid-1990s, when liquidity was scarce and interest rates soared, following a tight monetary policy by the central bank against what was then a backdrop of rising inflation.
This time around, the root of the problem is global liquidity crunch and banks’ sudden and growing aversion to lend to each other as the general confidence level in the banking system has declined sharply in the past one month.
Banker’s Trust is unable to name the banks involved because that was a precondition to confirming details of this sensitive transaction.
While the structural stability of the Indian banking system hasn’t come in question in the global meltdown that has already taken down several banks, even Indian banks that can afford to lend now don’t want be stuck just in case there is another bank collapse and would rather keep as much cash as possible in case they, too, have to deal with any large withdrawals by depositors, especially companies and funds.
The good news is Indian banks can still find money within their ranks, unlike those in the US and UKIn this particular case, the borrower of the money was desperately looking for funds to tide over short-term asset-liability mismatches in its overseas operations. Most of the large Indian banks, both state-run as well as private ones, have overseas presence. The aggressive ones have been building assets overseas by rolling over their liabilities, raised from the inter-bank market.
But these money lines are now fast drying up and it is difficult to replenish them as overseas banks are not rolling over the credit any more even though the London interbank offered rate, or Libor, an international benchmark for interest rate, is soaring. Libor is now much higher than the yield on three-month US treasury bill, and this illustrates the risk perception of financial institutions about each other. If they have money, they would lend to the US government and not to a fellow institution.
So, if an Indian bank faces a liquidity crunch abroad, it is now being forced to borrow from India, convert the money into foreign currency, and then quickly export the funds to support the bank’s overseas operations.
The short-term money was raised through certificates of deposits, or CDs, essentially a promissory note that bears a maturity date and a specified fixed interest rate.
It appears that this is the highest interest rate charged by any Indian bank on a 45-day loan given to another bank since the mid-1990s, when liquidity was scarce and interest rates soared, following a tight monetary policy by the central bank against what was then a backdrop of rising inflation.
This time around, the root of the problem is global liquidity crunch and banks’ sudden and growing aversion to lend to each other as the general confidence level in the banking system has declined sharply in the past one month.
Banker’s Trust is unable to name the banks involved because that was a precondition to confirming details of this sensitive transaction.
While the structural stability of the Indian banking system hasn’t come in question in the global meltdown that has already taken down several banks, even Indian banks that can afford to lend now don’t want be stuck just in case there is another bank collapse and would rather keep as much cash as possible in case they, too, have to deal with any large withdrawals by depositors, especially companies and funds.
The good news is Indian banks can still find money within their ranks, unlike those in the US and UKIn this particular case, the borrower of the money was desperately looking for funds to tide over short-term asset-liability mismatches in its overseas operations. Most of the large Indian banks, both state-run as well as private ones, have overseas presence. The aggressive ones have been building assets overseas by rolling over their liabilities, raised from the inter-bank market.
But these money lines are now fast drying up and it is difficult to replenish them as overseas banks are not rolling over the credit any more even though the London interbank offered rate, or Libor, an international benchmark for interest rate, is soaring. Libor is now much higher than the yield on three-month US treasury bill, and this illustrates the risk perception of financial institutions about each other. If they have money, they would lend to the US government and not to a fellow institution.
So, if an Indian bank faces a liquidity crunch abroad, it is now being forced to borrow from India, convert the money into foreign currency, and then quickly export the funds to support the bank’s overseas operations.
Wednesday, October 8, 2008
Nikkei dives 9.4 percent, biggest 1-day fall since '87
TOKYO (Reuters) - The Nikkei average plunged 9.4 percent on Wednesday, its biggest drop since the 1987 stock market crash, as growing fears of a global recession led investors to wipe $250 billion off the value of Tokyo shares.
Toyota Motor Corp (Tokyo:7203.T - News) tumbled more than 11 percent on growing expectations that the crisis would bite deeper into its profits, while the yen hit a six-month high against the dollar, adding to the pressure on exporter shares.
Panic over the fast-spreading financial crisis dragged down markets across Asia, with Japanese steelmakers such as Nippon Steel Corp (Tokyo:5401.T - News) sliding, as the Nikkei set another five-year closing low. It has lost 19 percent in the past five days.
"The deteriorating outlook for the economy and the deepening financial crisis are pushing fear to its limit," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.
"Investors want to dump shares as their willingness to take risks has shrunk, but no one wants to buy even if stocks are valued cheaply."
The yen climbed to a six-month high against the tumbling U.S. dollar, as investors stampeded away from stocks and risky positions. (FRX/)
The Nikkei posted its biggest one-day fall since a 14.9 percent drop on October 20, 1987, the day after Black Monday, and logged the third-largest one-day drop ever.
The Indonesia Stock Exchange halted trading on Wednesday after the benchmark composite index (Jakarta:^JKSE - News) dropped more than 10 percent, while Hong Kong's main stock market index (HKSE:^HSI - News) dropped more than 5 percent.
The benchmark Nikkei (Osaka:^N225 - News) slid 952.58 points to 9,203.32, its lowest close since June 2003.
The broader Topix (^TOPX - News) lost 8.0 percent to 899.01.
Trade picked up on the Tokyo exchange's first section, with 2.86 billion shares changing hands, compared with last week's daily average of 2.08 billion.
Declining stocks outnumbered advancing ones by more than 37 to 1.
The value of the Tokyo exchange's first section finished Wednesday at 287 trillion yen ($2,835 billion), down $250 billion. (.MV1.T)
Analysts said that even at lower valuations, investors would still shun stocks as more companies were expected to cut their earnings forecasts.
"Investors are not selling because Japanese stocks are good or bad, but because of the credit squeeze," said Kenichi Hirano, operating officer at Tachibana Securities.
"I see around 9,300 as the possible bottom for the Nikkei average, considering projected corporate earnings for the year ending March 2009."
The projected price-earnings ratio of the Nikkei stock average tumbled to a 37-year low at 12.5 times on Tuesday, according to the Nikkei business daily.
Daisuke Uno, chief strategist at Sumitomo Mitsui Banking Corp, said the Nikkei was likely to see further declines due to a lack of policy responses from Japanese authorities, such as additional fiscal spending steps to support the economy.
He added it was also hard to expect any major initiatives from the meeting of Group of Seven finance ministers on Friday.
"If there was something they could do, I think they would have already done it," Uno said.
Still, Prime Minister Taro Aso said on Wednesday the fall in Japanese shares was abnormal.
EXPORTERS BATTERED
"Toyota is such a symbolic issue in Japan's manufacturing sector, and the fact that the company is likely to post an earnings decline of this scale, has got to have a severe impact on investor sentiment," said Mizuho Asset Management fund manager Yoshihisa Okamoto.
Shares of Toyota tumbled 11.6 percent to 3,280 yen. The automaker is considering cutting its annual earnings forecasts due to sluggish demand in industrialized nations, slowing sales in emerging markets and a firmer yen, a company source said.
Among other exporters, Advantest Corp (Tokyo:6857.T - News), the world's No.1 maker of chip testers, tumbled 14.9 percent to 1,538 yen, while Honda Motor Corp (Tokyo:7267.T - News) sank 10.3 percent to 2,305 yen.
Shares of Nippon Steel lost 11.9 percent to 281 yen, while shipping firm Mitsui OSK Lines (Tokyo:9104.T - News) shed 12.8 percent to 622 yen.
Financial shares also fell but many outperformed the overall market. Top lender Mitsubishi UFJ Financial Group (Tokyo:8306.T - News) dropped 5.9 percent to 763 yen, and No.2 Mizuho Financial Group (Tokyo:8411.T - News) slid 7.7 percent to 361,000 yen.
Investors punished stocks with earnings worries.
Hitachi Construction Machinery Co (Tokyo:6305.T - News), Japan's second-biggest earth-moving equipment maker, plunged 16.5 percent to 1,516 yen.
The Nikkei business paper reported that Hitachi Construction could see a first profit decline in seven years in the year to March 2009 due to a sharp fall in demand in Europe and signs of weakening sales in countries such as India and Russia.
Toyota Motor Corp (Tokyo:7203.T - News) tumbled more than 11 percent on growing expectations that the crisis would bite deeper into its profits, while the yen hit a six-month high against the dollar, adding to the pressure on exporter shares.
Panic over the fast-spreading financial crisis dragged down markets across Asia, with Japanese steelmakers such as Nippon Steel Corp (Tokyo:5401.T - News) sliding, as the Nikkei set another five-year closing low. It has lost 19 percent in the past five days.
"The deteriorating outlook for the economy and the deepening financial crisis are pushing fear to its limit," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.
"Investors want to dump shares as their willingness to take risks has shrunk, but no one wants to buy even if stocks are valued cheaply."
The yen climbed to a six-month high against the tumbling U.S. dollar, as investors stampeded away from stocks and risky positions. (FRX/)
The Nikkei posted its biggest one-day fall since a 14.9 percent drop on October 20, 1987, the day after Black Monday, and logged the third-largest one-day drop ever.
The Indonesia Stock Exchange halted trading on Wednesday after the benchmark composite index (Jakarta:^JKSE - News) dropped more than 10 percent, while Hong Kong's main stock market index (HKSE:^HSI - News) dropped more than 5 percent.
The benchmark Nikkei (Osaka:^N225 - News) slid 952.58 points to 9,203.32, its lowest close since June 2003.
The broader Topix (^TOPX - News) lost 8.0 percent to 899.01.
Trade picked up on the Tokyo exchange's first section, with 2.86 billion shares changing hands, compared with last week's daily average of 2.08 billion.
Declining stocks outnumbered advancing ones by more than 37 to 1.
The value of the Tokyo exchange's first section finished Wednesday at 287 trillion yen ($2,835 billion), down $250 billion. (.MV1.T)
Analysts said that even at lower valuations, investors would still shun stocks as more companies were expected to cut their earnings forecasts.
"Investors are not selling because Japanese stocks are good or bad, but because of the credit squeeze," said Kenichi Hirano, operating officer at Tachibana Securities.
"I see around 9,300 as the possible bottom for the Nikkei average, considering projected corporate earnings for the year ending March 2009."
The projected price-earnings ratio of the Nikkei stock average tumbled to a 37-year low at 12.5 times on Tuesday, according to the Nikkei business daily.
Daisuke Uno, chief strategist at Sumitomo Mitsui Banking Corp, said the Nikkei was likely to see further declines due to a lack of policy responses from Japanese authorities, such as additional fiscal spending steps to support the economy.
He added it was also hard to expect any major initiatives from the meeting of Group of Seven finance ministers on Friday.
"If there was something they could do, I think they would have already done it," Uno said.
Still, Prime Minister Taro Aso said on Wednesday the fall in Japanese shares was abnormal.
EXPORTERS BATTERED
"Toyota is such a symbolic issue in Japan's manufacturing sector, and the fact that the company is likely to post an earnings decline of this scale, has got to have a severe impact on investor sentiment," said Mizuho Asset Management fund manager Yoshihisa Okamoto.
Shares of Toyota tumbled 11.6 percent to 3,280 yen. The automaker is considering cutting its annual earnings forecasts due to sluggish demand in industrialized nations, slowing sales in emerging markets and a firmer yen, a company source said.
Among other exporters, Advantest Corp (Tokyo:6857.T - News), the world's No.1 maker of chip testers, tumbled 14.9 percent to 1,538 yen, while Honda Motor Corp (Tokyo:7267.T - News) sank 10.3 percent to 2,305 yen.
Shares of Nippon Steel lost 11.9 percent to 281 yen, while shipping firm Mitsui OSK Lines (Tokyo:9104.T - News) shed 12.8 percent to 622 yen.
Financial shares also fell but many outperformed the overall market. Top lender Mitsubishi UFJ Financial Group (Tokyo:8306.T - News) dropped 5.9 percent to 763 yen, and No.2 Mizuho Financial Group (Tokyo:8411.T - News) slid 7.7 percent to 361,000 yen.
Investors punished stocks with earnings worries.
Hitachi Construction Machinery Co (Tokyo:6305.T - News), Japan's second-biggest earth-moving equipment maker, plunged 16.5 percent to 1,516 yen.
The Nikkei business paper reported that Hitachi Construction could see a first profit decline in seven years in the year to March 2009 due to a sharp fall in demand in Europe and signs of weakening sales in countries such as India and Russia.
Taiwan shares tumble following Wall Street's overnight plunge
TAIPEI, Taiwan (AP) -- Taiwanese shares fell sharply Wednesday, losing 5.76 percent, following Wall Street's overnight plunge.
The weighted price index of the Taiwan Stock market lost 318.26 points to close at the session low of 5,206.40.
The financial sector was the biggest loser, plunging 6.7 percent. Cement shares dropped 6.2 percent.
The tumble came despite media speculation that the government had injected large amounts of money into the market.
The weighted price index of the Taiwan Stock market lost 318.26 points to close at the session low of 5,206.40.
The financial sector was the biggest loser, plunging 6.7 percent. Cement shares dropped 6.2 percent.
The tumble came despite media speculation that the government had injected large amounts of money into the market.
Wall Street heads for higher open after Federal Reserve emergency rate cut
NEW YORK (AP) -- Wall Street turned around early Wednesday, with stock index futures rising in response to emergency interest rate cuts by the Federal Reserve and other central banks. There was still caution in the market, however, as futures gave back some of their early pop higher.
The stock market had been heading to another sharp drop, joining world markets that were plunging in response to spiraling worries about the global financial system, when the Fed announced it was cutting rates by a half-percentage point. The central bank noted that the market turmoil posed a further threat to an already shaky economy; it was joined in the rate cut by banks including the European Central Bank and the Bank of England.
Dow Jones industrial average futures rose 102, or 1.05 percent, to 9,640. Standard & Poor's 500 index futures added 21.60, or 2.812 percent, to 1,028.10, while Nasdaq 100 futures rose 2.41, or 2.41 percent, to 1,368.75.
But futures came off their highs and were fluctuating, a sign that while the markets are happy about the rate cut, investors realize that the stagnant credit markets and the economy remain extremely troubled and are likely to remain so for some time.
"With all of this occuring as a coordinated effort is showing that everybody out there is trying to fight this thing, and that should bring some confidence back to the market," said Scott Fullman, director of derivatives investment strategy for WJB Capital Group. "But, the big question now is can the credit market open for business."
In Asia, the Nikkei 225 closed 9.38 percent lower and Hang Seng tumbled 8.17 percent hours before the rate cuts were announced; their declines showed the extent of the worldwide gloom. European indexes, which were down about 5 percent before the rate cut, pared their losses. In Britain, the FTSE-100 fell 0.65 percent, Germany's DAX dropped 2.15 percent, and France's CAC-40 gave up 1.87 percent.
Investors had been extremely anxious in recent days for a rate cut, and while the Fed had taken other steps this week to try to ease the stagnant credit markets, including buying commercial paper, the short-term debt used by companies, its moves weren't enough to stanch losses that have taken the Dow Jones industrials down 875 points in just two days this week.
It is very likely that stocks won't begin to recover for good until investors are certain the credit markets are functioning in a more normal fashion. But there are also severe economic problems including heavy job losses and high unemployment that will also need to show improvement.
Credit has all but dried up in the weeks after the failure of Lehman Brothers Holdings Inc. Banks have been reluctant to lend for fear they won't be paid back. That in turn has been stifling the economy, and led to the huge plunges on Wall Street in recent weeks.
Demand for short-term Treasurys remained high because of their safety after the rate cut; investors are willing to take extremely low returns just to have their money in a secure place. The yield on the three-month Treasury bill, which moves opposite its price, dropped to 0.72 percent from 0.81 percent late Tuesday.
Investors also were buying longer-term Treasury bonds, which don't draw as much demand as shorter-term debt in times of fear. The yield on the 10-year note fell to 3.46 percent from 3.51 percent late Tuesday.
The first third-quarter earnings reports are showing signs of strain on companies, and that is adding more uncertainty to the stock market. After the close Tuesday, Alcoa Inc. said it would conserve cash by suspending its stock buyback program and all non-critical capital projects. The aluminum company's earnings fell 52 percent.
The stock market had been heading to another sharp drop, joining world markets that were plunging in response to spiraling worries about the global financial system, when the Fed announced it was cutting rates by a half-percentage point. The central bank noted that the market turmoil posed a further threat to an already shaky economy; it was joined in the rate cut by banks including the European Central Bank and the Bank of England.
Dow Jones industrial average futures rose 102, or 1.05 percent, to 9,640. Standard & Poor's 500 index futures added 21.60, or 2.812 percent, to 1,028.10, while Nasdaq 100 futures rose 2.41, or 2.41 percent, to 1,368.75.
But futures came off their highs and were fluctuating, a sign that while the markets are happy about the rate cut, investors realize that the stagnant credit markets and the economy remain extremely troubled and are likely to remain so for some time.
"With all of this occuring as a coordinated effort is showing that everybody out there is trying to fight this thing, and that should bring some confidence back to the market," said Scott Fullman, director of derivatives investment strategy for WJB Capital Group. "But, the big question now is can the credit market open for business."
In Asia, the Nikkei 225 closed 9.38 percent lower and Hang Seng tumbled 8.17 percent hours before the rate cuts were announced; their declines showed the extent of the worldwide gloom. European indexes, which were down about 5 percent before the rate cut, pared their losses. In Britain, the FTSE-100 fell 0.65 percent, Germany's DAX dropped 2.15 percent, and France's CAC-40 gave up 1.87 percent.
Investors had been extremely anxious in recent days for a rate cut, and while the Fed had taken other steps this week to try to ease the stagnant credit markets, including buying commercial paper, the short-term debt used by companies, its moves weren't enough to stanch losses that have taken the Dow Jones industrials down 875 points in just two days this week.
It is very likely that stocks won't begin to recover for good until investors are certain the credit markets are functioning in a more normal fashion. But there are also severe economic problems including heavy job losses and high unemployment that will also need to show improvement.
Credit has all but dried up in the weeks after the failure of Lehman Brothers Holdings Inc. Banks have been reluctant to lend for fear they won't be paid back. That in turn has been stifling the economy, and led to the huge plunges on Wall Street in recent weeks.
Demand for short-term Treasurys remained high because of their safety after the rate cut; investors are willing to take extremely low returns just to have their money in a secure place. The yield on the three-month Treasury bill, which moves opposite its price, dropped to 0.72 percent from 0.81 percent late Tuesday.
Investors also were buying longer-term Treasury bonds, which don't draw as much demand as shorter-term debt in times of fear. The yield on the 10-year note fell to 3.46 percent from 3.51 percent late Tuesday.
The first third-quarter earnings reports are showing signs of strain on companies, and that is adding more uncertainty to the stock market. After the close Tuesday, Alcoa Inc. said it would conserve cash by suspending its stock buyback program and all non-critical capital projects. The aluminum company's earnings fell 52 percent.
Fed leads global coordinated rate cut, eases by half point
WASHINGTON (Reuters) - The U.S. Federal Reserve led a coordinated round of global official rate cuts on Wednesday, easing by a half percentage-point, as did the European Central Bank, Bank of England and Swiss, Canadian and Swedish central banks. In an attempt to stem unprecedented global market turmoil, the Fed cut its key federal funds lending rate by half a percentage point to 1.5 percent and also lowered its discount rate by the same amount to 1.75 percent.
The ECB also cut by a half-point to 3.75 percent as did the Bank of England, taking its rate to 4.5 percent.
China also joined the effort, cutting its key rate 27 basis points.
The Bank of Japan, with rates at just 0.5 percent, did not ease but the Fed said the BOJ expressed its strong support for the coordinated policy action.
"Incoming economic data suggests that the pace of economic activity has slowed markedly in recent months," the Fed said in a statement.
"Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit."
The Fed said that while inflation has been high, recent declines in energy and other commodity prices had tempered inflation risks.
It said the vote to cut U.S. rates was unanimous and that inflation expectations appeared to be diminishing which could help support price stability.
"The recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability," the Fed said.
The ECB also cut by a half-point to 3.75 percent as did the Bank of England, taking its rate to 4.5 percent.
China also joined the effort, cutting its key rate 27 basis points.
The Bank of Japan, with rates at just 0.5 percent, did not ease but the Fed said the BOJ expressed its strong support for the coordinated policy action.
"Incoming economic data suggests that the pace of economic activity has slowed markedly in recent months," the Fed said in a statement.
"Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit."
The Fed said that while inflation has been high, recent declines in energy and other commodity prices had tempered inflation risks.
It said the vote to cut U.S. rates was unanimous and that inflation expectations appeared to be diminishing which could help support price stability.
"The recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability," the Fed said.
Post Market Report:08/10/2008
Key benchmark indices extended earlier recovery from intraday sharp
fall in late trade as European markets and US futures cut losses.
The BSE 30-share Sensex ended down 366.88 points or 3.14% to
11,328.36. The Sensex had dwindled nearly 950 points at intraday
low in early afternoon trade on concerns that the deepening of the
credit crisis will push the global economy into a recession. Both
the key benchmark Sensex and Nifty had hit fresh 2-year lows in
early afternoon trade.
Just after the Indian market closed, the Federal Reserve, European
Central Bank and four other central banks announced cut in interest
rates in an unprecedented, emergency coordinated bid to ease the
economic effects of the financial crisis. The Fed cut its benchmark
rate by a half point to 1.5%.
Earlier in the day, in a major development, the UK Treasury
announced a $87.4 billion plan to inject money into the banking
system to prevent a collapse of the U.K. banking system.
Ranbaxy Laboaratories spurted close to 10%. Reliance Industries,
Reliance communications, Maruti Suzuki India recovered.
The BSE 30-share Sensex ended down 366.88 points or 3.14% to
11,328.36. The index tanked 954.48 points at the day's low of
10,740.76 in early afternoon trade, its lowest level since 2 August
2006. The Sensex fell 289.51 points at day's high of 11,405.73, in
late trade.
The S&P CNX Nifty was down 73.25 points or 2.03% to 3,533.35 as per
the provisional figures. The index hit a low of 3,329.45 in early
afternoon trade, its lowest level since 12 September 2006.
BSE clocked the turnover of Rs 5085 crore today as compared to a
turnover of Rs 4,741.54 on 7 October 2008.
The BSE Mid-Cap index was down 5.79% at 4,010.48 and the BSE
Small-Cap index was down 5.57% at 4,699.19. Both these indices
underperformed the Sensex.
The market breadth was extremely weak. On BSE, 457 shares advanced
as compared to 2,151 that declined. 44 shares remained unchanged.
India's largest private sector company by market capitalization and
oil refiner Reliance Industries was down 1.54% to Rs 1,649.60. The
stock recovered from 52-week low of 1,511 hit today. Reliance
Industries will reportedly commission a new 5,80,000 barrels per
day (bpd) refinery by the end of November 2008, ahead of the
targeted December 2008 deadline.
Six stocks rose while rest 24 stocks fell from the Sensex pack.
India's largest drug maker by sales Ranbaxy Laboaratories spurted
9.38% to Rs 280 on reports the US Department of Justice had
withdrawn a motion against the drugmaker for allegedly bringing
adulterated and misbranded medications into the Unietd States. The
stock was the major gainer form the sensex pack. The stock
recovered from intraday low of Rs 280.
Tata Power Company rose 6% to Rs 813.90. The stock recovered from
intraday low of Rs 671. DLF jumped 3.66% to Rs 314. The stock
recovered from intraday low of Rs 279. Reliance Communications rose
2.95% to Rs 309. The stock recovered from intraday low of Rs
263.80. Mahindra & Mahindra rose 2.75% to Rs 486. The stock
recovered from intraday low of Rs 447.10. Maruti Suzuki India
jumped 3.13% to Rs 692. The stock recovered from intraday low of Rs
628.
India's largest commercial vehicle maker by sales Tata Motors fell
5.27% to Rs 299.90. The stock hit a 52 week low of Rs 295.20 today.
The company on Tuesday, 7 October 2008, signed an agreement with
Gujarat to make the Nano car there days after the company pulled
out of West Bengal.
Among the major losers from Sensex pack were, Jaiprakash Associates
(down 9.91% to Rs 90.95), Wipro (down 7.91% to Rs 282.35), Sterlite
Industries (down 6.95% to Rs 292.55), ICICI Bank (down 6.53% to Rs
453.50), State Bank of India (down 6.1% to Rs 1,322.15).
India's second largest IT exporter by sales Infosys Technologies
lost 3.81% at Rs 1,254.35 ahead of its Q2 September 2008 results on
Friday, 10 October 2008. The stock recovered from a 52 week low of
Rs 1,196 today. Reports suggest that Infosys Technologies is widely
expected to lower its dollar guidance for the current year ending
March 2009 on the back of the events that have shaken the financial
world. It is also expected to miss its revenue guidance in dollar
terms for the September 2008 quarter. However, the company is
likely to beat its rupee guidance aided by the rupee's depreciation
against the dollar.
India's largest IT exporter by sales Tata Consultancy Services
(TCS) fell 5.07% to Rs 546.60. The stock hit a 52-week low of Rs
510 today. The company announced today it will acquire Citigroup
Global Services, the India based captive business process
outsourcing (BPO) arm of Citigroup Inc for all cash consideration
of $ 505 million. In addition, TCS will provide process outsourcing
services to Citi for $2.5 billion over a period of 9.5 years.
Though Europe markets were in the red, they had pared ealier steep
losses. France's CAC 40, Germany's DAX and UK's FTSE 100 were down
between 2.76% to 4.39%.
Key benchmark indices in Asia were down by between 3.04% to 9.38%
today, 8 October 2008.
fall in late trade as European markets and US futures cut losses.
The BSE 30-share Sensex ended down 366.88 points or 3.14% to
11,328.36. The Sensex had dwindled nearly 950 points at intraday
low in early afternoon trade on concerns that the deepening of the
credit crisis will push the global economy into a recession. Both
the key benchmark Sensex and Nifty had hit fresh 2-year lows in
early afternoon trade.
Just after the Indian market closed, the Federal Reserve, European
Central Bank and four other central banks announced cut in interest
rates in an unprecedented, emergency coordinated bid to ease the
economic effects of the financial crisis. The Fed cut its benchmark
rate by a half point to 1.5%.
Earlier in the day, in a major development, the UK Treasury
announced a $87.4 billion plan to inject money into the banking
system to prevent a collapse of the U.K. banking system.
Ranbaxy Laboaratories spurted close to 10%. Reliance Industries,
Reliance communications, Maruti Suzuki India recovered.
The BSE 30-share Sensex ended down 366.88 points or 3.14% to
11,328.36. The index tanked 954.48 points at the day's low of
10,740.76 in early afternoon trade, its lowest level since 2 August
2006. The Sensex fell 289.51 points at day's high of 11,405.73, in
late trade.
The S&P CNX Nifty was down 73.25 points or 2.03% to 3,533.35 as per
the provisional figures. The index hit a low of 3,329.45 in early
afternoon trade, its lowest level since 12 September 2006.
BSE clocked the turnover of Rs 5085 crore today as compared to a
turnover of Rs 4,741.54 on 7 October 2008.
The BSE Mid-Cap index was down 5.79% at 4,010.48 and the BSE
Small-Cap index was down 5.57% at 4,699.19. Both these indices
underperformed the Sensex.
The market breadth was extremely weak. On BSE, 457 shares advanced
as compared to 2,151 that declined. 44 shares remained unchanged.
India's largest private sector company by market capitalization and
oil refiner Reliance Industries was down 1.54% to Rs 1,649.60. The
stock recovered from 52-week low of 1,511 hit today. Reliance
Industries will reportedly commission a new 5,80,000 barrels per
day (bpd) refinery by the end of November 2008, ahead of the
targeted December 2008 deadline.
Six stocks rose while rest 24 stocks fell from the Sensex pack.
India's largest drug maker by sales Ranbaxy Laboaratories spurted
9.38% to Rs 280 on reports the US Department of Justice had
withdrawn a motion against the drugmaker for allegedly bringing
adulterated and misbranded medications into the Unietd States. The
stock was the major gainer form the sensex pack. The stock
recovered from intraday low of Rs 280.
Tata Power Company rose 6% to Rs 813.90. The stock recovered from
intraday low of Rs 671. DLF jumped 3.66% to Rs 314. The stock
recovered from intraday low of Rs 279. Reliance Communications rose
2.95% to Rs 309. The stock recovered from intraday low of Rs
263.80. Mahindra & Mahindra rose 2.75% to Rs 486. The stock
recovered from intraday low of Rs 447.10. Maruti Suzuki India
jumped 3.13% to Rs 692. The stock recovered from intraday low of Rs
628.
India's largest commercial vehicle maker by sales Tata Motors fell
5.27% to Rs 299.90. The stock hit a 52 week low of Rs 295.20 today.
The company on Tuesday, 7 October 2008, signed an agreement with
Gujarat to make the Nano car there days after the company pulled
out of West Bengal.
Among the major losers from Sensex pack were, Jaiprakash Associates
(down 9.91% to Rs 90.95), Wipro (down 7.91% to Rs 282.35), Sterlite
Industries (down 6.95% to Rs 292.55), ICICI Bank (down 6.53% to Rs
453.50), State Bank of India (down 6.1% to Rs 1,322.15).
India's second largest IT exporter by sales Infosys Technologies
lost 3.81% at Rs 1,254.35 ahead of its Q2 September 2008 results on
Friday, 10 October 2008. The stock recovered from a 52 week low of
Rs 1,196 today. Reports suggest that Infosys Technologies is widely
expected to lower its dollar guidance for the current year ending
March 2009 on the back of the events that have shaken the financial
world. It is also expected to miss its revenue guidance in dollar
terms for the September 2008 quarter. However, the company is
likely to beat its rupee guidance aided by the rupee's depreciation
against the dollar.
India's largest IT exporter by sales Tata Consultancy Services
(TCS) fell 5.07% to Rs 546.60. The stock hit a 52-week low of Rs
510 today. The company announced today it will acquire Citigroup
Global Services, the India based captive business process
outsourcing (BPO) arm of Citigroup Inc for all cash consideration
of $ 505 million. In addition, TCS will provide process outsourcing
services to Citi for $2.5 billion over a period of 9.5 years.
Though Europe markets were in the red, they had pared ealier steep
losses. France's CAC 40, Germany's DAX and UK's FTSE 100 were down
between 2.76% to 4.39%.
Key benchmark indices in Asia were down by between 3.04% to 9.38%
today, 8 October 2008.
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