Bulls were in command as key benchmark indices continued their
upward journey in mid-afternoon trade. Optimism about Q2 September
2009 which will start trickling in from the second week of October
2009, gains in European stocks and higher US index futures,
bolstered sentiment. The BSE 30-share Sensex was up 238.37 points
or 1.41%. The barometer index was trading above the psychological
17,000 level after crossing that level in morning trade. The BSE
Sensex and the S&P CNX Nifty today hit their highest level in more
than 16 months.
After a modest start, the market surged in mid-morning trade. The
market extended gains later. The market hit a fresh intraday high
in afternoon trade. A small correction pulled the market lower
later. The market surged in mid-afternoon trade with the Sensex
hitting a fresh intraday high on higher US index futures.
Metal, banking and IT stocks led the rally. Oil India was currently
trading at a premium of 9.25% over the IPO price of Rs 1,050.
Traders may refrain from building large positions this week because
this is a truncated trading week as the market remains closed on
Friday, 2 October 2009, on account of Gandhi Jayanti. Further,
shares bought in the cash segment on Tuesday, 29 September 2009,
cannot be sold today, 30 September 2009, due to settlement related
issues because commercial banks are closed today for half-yearly
closing of accounts.
There is optimism about Q2 September 2009 results after advance tax
collections registered a positive growth in the second quarter
after witnessing a negative growth in the first quarter. Corporate
advance tax and advance personal income-tax were up by 14.7% and
1.7%, respectively in the September 2009 quarter. Infosys
kickstarts the reporting season on 9 October 2009.
Latest economic data has been strong. The index of six core
industries having a combined weight of 26.7% in the index of
industrial production (IIP) registered a growth of 7.1% in August
2009 compared to a growth of 2.1% in August 2008. During
April-August 2009-10, six core industries registered a growth of
4.8% as against 3.3% during the corresponding period of the
previous year. Coal and cement sector boosted overall growth in the
six infrastructure industries in August 2009.
Meanwhile, the Reserve Bank of India (RBI) deputy governor K C
Chakrabarty has said that rising inflationary pressures could limit
the scope for a sustained growth supported monetary policy stance.
The central bank has aggressively cut policy rates and pumped huge
liquidity in the system in the aftermath of the global financial
crisis last year. It may be recalled Finance Minister Pranab
Mukherjee recently spoke of the need for the fiscal stimulus to
continue for a few more quarters until the economy is back on
track.
Coming back to equities, a section of the market is, however,
concerned that a glut in share sales may suck liquidity from the
secondary market. The corporate sector has raised large sums of
money through equity and equity related instruments in the past six
months or so to either to retire high cost debt or to fund
expansion. The supply of paper by Indian firms appear limitless,
raising concerns that additional share sales will suck liquidity
from the secondary market.
As per one report, companies plan to raise at least Rs 40,000 crore
through initial public offers (IPOs)/follow on public offers (FPOs)
in the second half of the current financial year. Power companies
such as GMR Energy, Indiabulls Power and JSW Energy and state-run
Bharat Heavy Electricals and NTPC are likely to tap the primary
market. Reliance Infratel also announced on Tuesday, 22 September
2009, its intention to raise Rs 5,000 crore from the primary
market. A number of companies are also in the fray to raise funds
by way of qualified institutional placement (QIP), reports suggest.
S. Pradhan, the joint secretary of the department of disinvestment,
Government of India, today said the government plans to sell stakes
in at least five state-run firms by the end of the fiscal year in
March 2010 following successful IPOs of two firms that raised $1.8
billion. His statement comes close on the heels of media reports
that the government is planning to announce a blueprint for selling
its stake in state-owned firms in the first week of October 2009.
The policy is expected to suggest how the government will
eventually bring down its stake in public sector companies to 75%
over a period of time.
European shares rose on Wednesday powered by gains in energy and
mining stocks, as commodity prices firmed on the final day of the
quarter, offsetting weakness in banks. The key benchmark indices in
France, Germany and UK were up by between 0.24% to 0.5%.
Asian stocks were mixed after a surprise fall in US consumer
confidence. Key benchmark indices in Japan, South Korea Hong Kong
and Singapore were down by between 0.39% to 1%. Key benchmark
indices in China, Japan and Taiwan were up by between 0.33% to
1.07%.
A gauge of China's manufacturing activity released Wednesday
indicated expansion for the sixth straight month in September,
although conditions cooled slightly from August, suggesting the
rebound in industrial activity remains intact but is beginning to
level off.
Japanese manufacturers increased production for a sixth month in
August, capping the longest stretch of gains in 12 years, as
emergency spending by governments worldwide rekindled global trade.
Factory output rose 1.8% last month after climbing 2.1% in July,
the Trade Ministry said today in Tokyo.
The International Monetary Fund (IMF) will reportedly raise its
2010 growth forecast for the world economy to 3.1% from 2.5% to
reflect improving economic conditions. The IMF is due to update its
forecasts in its World Economic Outlook to be released in Istanbul
on Thursday, 1 October 2009. The IMF is likely to revise its global
forecast for this year to a 1.1% contraction from a negative 1.4%
predicted earlier.
Trading in US index futures indicated the Dow could gain 31 points
at the bell on Wednesday, 30 September 2009.
US markets ended lower on Tuesday, 29 September 2009 as a drop in
consumer confidence dragged on the market. The Dow Jones Industrial
Average fell 47.16 points, or 0.5%, to 9,742.20. The S&P 500 index
dropped 2.38 points, or 0.2%, to 1,060.60, and the Nasdaq Composite
index shed 6.70 points, or 0.3%, to 2,124.04.
The US consumer-confidence index dropped to 53.1 in September from
54.5 in August. Economists had expected the gauge to rise to 57.
Meanwhile, the S&P/case-shiller home price report for July was
better-than-expected. The report showed a 13.3% year-over-year
decline, which was better than the 14.2% decline expected. Home
prices continued to rebound, up for a third straight month in July,
after a three-year slide.
At 14:20 IST, the BSE 30-share Sensex was up 238.37 points or 1.41%
to 17091.28. The Sensex rose 253.89 points at the day's high of
17,106.80 in mid-afternoon trade, its highest since 21 May 2008.
The barometer index rose 15.55 points at the day's low of 16,868.46
in early trade.
The S&P CNX Nifty was up 65.75 points or 1.31 % to 5,072.60. It hit
a high of 5,076.35 so far in the day, its highest level since 22
May 2008.
The market breadth, indicating the overall health of the market was
strong. On BSE, 1,535 shares rose as compared with 1,126 that
declined. A total of 86 shares remained unchanged.
Among the 30-member Sensex pack, 25 rose and rest fell.
The BSE Mid-Cap index rose 0.66% and the BSE Small-Cap index rose
1.02%.
Index heavyweight Reliance Industries (RIL) rose 1.8% to Rs
2204.90. In the face of opposition from the Power Ministry and Anil
Ambani group firm Reliance Infrastructure on the marketing margins
charged, Reliance Industries (RIL) has justified the levy saying it
was essential to cover risks and costs incurred in marketing of
gas.
Terming as illegal the market margin, Reliance Infra had refused to
pay the levy prompting RIL to issue a notice for suspension of fuel
supply for "default". NTPC has sought to know whether the margins
levied by RIL had government's approval.
RIL had said on 24 September 2009 it has signed gas supply
agreement with state-run utility NTPC to supply gas for some of its
power plants for five years. Reliance will supply 0.61 million
standard cubic metres a day (mscmd) to NTPC, and expects to start
supplies within a week.
Meanwhile, recent report suggest the outlook for Asian oil
refiners, previously hit by a sharp fall in margins, is now
improving on a likely ramp-up in demand and slowing capacity
expansion.
Oil exploration stocks were mixed on a decent debut of Oil India.
India's biggest state-run oil exploration firm by revenue Oil &
Natural Gas Corporation (ONGC) fell 1.36% to Rs 1170, off the day's
high of Rs 1213. ONGC on 23 September 2009 said it will invest over
Rs 5000 crore in the next two years in bringing new oil and gas
finds into production. Cairn India rose 0.42%.
India's second biggest oil and gas exploration firm by revenue Oil
India was trading at Rs 1,146.85, a premium of 9.22% over the IPO
price of Rs 1050. The stock debuted on the BSE at Rs 1019, a
discount of 2.95% over the IPO price of Rs 1050.
Metal stocks rose as LMEX, a gauge of six metals traded on the
London Metal Exchange gained 0.25% on Tuesday, 29 September 2009.
Tata Steel, Steel Authority of India, National Aluminum Company,
Hindustan Zinc, Hindalco Industries, JSW Steel rose by between
0.02% to 1.43%.
India's largest copper maker by sales Sterlite Industries rose
2.94%. A US bankruptcy judge on 24 September 2009 rejected attempts
by India's Sterlite Industries to sweeten its offer for U.S. copper
miner Asarco LLC, and recommended for the second time that rival
bidder Grupo Mexico SAB de CV regain control of the company.
Sterlite, however, maintained it was still in the race to acquire
the copper miner.
Sterlite said on 21 September 2009 said that it would release Grupo
Mexico from a potential legal liability of nearly $8 billion if the
Indian miner can win control of bankrupt US copper miner Asarco
LLC.
In a court document filed on Monday, Sterlite said that if a
federal court approves its plan to acquire Asarco over rival bidder
Grupo Mexico's offer, it would not hold Grupo Mexico liable for
more than about $900 million of liability related to the 2003
transfer of a Peruvian mine. Sterlite, a unit of India-focused
mining company Vedanta Resources, has been facing off with Mexican
miner Grupo Mexico for acquiring control Asarco, which has been
under bankruptcy protection since 2005.
Banking stocks rose after Finance secretary Ashok Chawla on Tuesday
said there is a need to look at consolidation of banks and that
government is not discouraging Indian banks from making
acquisitions abroad. Bank stocks also got support on higher advance
tax payment by some top banks in the second installment this
fiscal.
India's largest bank by net profit and branch network State Bank of
India rose 4%. Chairman O.P. Bhatt on 8 September 2009 said the
bank's earnings are likely to grow 30-35% in Q2 September 2009 over
Q2 September 2008.
India's largest private sector bank by net profit ICICI Bank rose
3.12%. Its ADR rose 0.28% on Tuesday. India's second largest
private sector bank by net profit HDFC Bank rose 1.49% even as its
ADR fell 0.26% on Tuesday.
IT stocks rose for the second straight day as an increase in the
mergers & acquisitions in the United States suggested that
companies are more optimistic about the business outlook. US is the
biggest market for Indian IT firms. India's third largest software
services exporter by sales Wipro rose 3.11% as its American
depository receipt (ADR) rose 1.45% on Tuesday.
India's second largest software services exporter by sales Infosys
rose 1.28% as its ADR rose 0.42% on Tuesday.
India's largest IT exporter by sales Tata Consultancy Services rose
1.45% after the company said before market hours today it had
signed a multi-million dollar deal with a Singapore state
organisation to provide annual application management services for
two years.
A news agency recently quoted TCS chief executive S. Ramadorai as
saying that the company expects a recovery in the global banking
sector to boost its revenues this year. Ramadorai said the company
was seeing some signs of a recovery in the demand for outsourcing,
especially from the banking, financial services and insurance
sectors that account for 43% of its business.
India's largest engineering and construction firm by sales Larsen &
Toubro rose 1.92% on reports company is close to launching a $600
million share sale to institutional investors. Citigroup, Morgan
Stanley and Bank of America Merrill Lynch are the arrangers to the
offer.
Meanwhile, Larsen & Toubro is reportedly eyeing big bucks from the
nuclear power business with annual revenue projections of Rs
7,000-8,000 crore. The company, has already entered into agreement
with four major global vendors of nuclear power equipment.
India's largest power equipment maker by sales Bharat Heavy
Electricals rose 2.29% after the company said on Wednesday it had
won a Rs 270 crore ($56 million) contract in Belarus to build a 120
megawatts power plant.
Dr Reddys Laboratories fell 2.08% after the company voluntarily
recalled four products from its key US market as they had been
observed to contain some oversized tablets.
Wednesday, September 30, 2009
Sensex crosses 17,000 mark
The key benchmark indices extended gains in mid-morning trade. The
BSE 30-share Sensex was up 172.84 points or 1.03%. The BSE Sensex
crossed psychological 17,000 mark. The BSE Sensex and S&P CNX Nifty
hit their highest level in more than 16 months. IT, auto and
banking stocks rose. Oil exploration stocks also in demand after a
decent debut from state-run Oil India. The stock was currently
trading at a premium of 7.87% over the IPO price of Rs 1,050. The
market breadth was strong.
Overall volumes on the bourses may remain low as traders may
refrain from building large positions this week because this is a
truncated trading week as the market remains closed on Friday, 2
October 2009, on account of Gandhi Jayanti. Further, shares bought
in the cash segment on Tuesday, 29 September 2009, cannot be sold
today, 30 September 2009, due to settlement related issues because
commercial banks are closed today for half-yearly closing of
accounts
Meanwhile government disinvestment official said sees at least 5
stake sales in state firms by March 2010. Meanwhile, the government
is reportedly planning to announce a blueprint for selling its
stake in state-owned firms in the first week of October 2009. The
policy is expected to suggest how the government will eventually
bring down its stake in public sector companies to 75% over a
period of time.
The next trigger for the stock market is Q2 September 2009 results
of India Inc next month. There is optimism about Q2 September 2009
results after advance tax collections registered a positive growth
in the second quarter after witnessing a negative growth in the
first quarter. Corporate advance tax and advance personal
income-tax were up by 14.7% and 1.7%, respectively in the September
2009 quarter. Infosys kickstarts the reporting season on 9 October
2009.
Latest economic data has been strong. The index of six core
industries having a combined weight of 26.7% in the index of
industrial production (IIP) registered a growth of 7.1% in August
2009 compared to a growth of 2.1% in August 2008. During
April-August 2009-10, six core industries registered a growth of
4.8% as against 3.3% during the corresponding period of the
previous year. Coal and cement sector boosted overall growth in the
six infrastructure industries in August 2009.
Meanwhile, the Reserve Bank of India (RBI) deputy governor KC
Chakrabarty has said that rising inflationary pressures could limit
the scope for a sustained growth supported monetary policy stance.
The central bank has aggressively cut policy rates and pumped huge
liquidity in the system in the aftermath of the global financial
crisis last year. It may be recalled Finance Minister Pranab
Mukherjee recently spoke of the need for the fiscal stimulus to
continue for a few more quarters until the economy is back on
track.
Coming back to equities, a section of the market is concerned that
a glut in share sales may suck liquidity from the secondary market.
The corporate sector has raised large sums of money through equity
and equity related instruments in the past six months or so to
either to retire high cost debt or to fund expansion. The supply of
paper by Indian firms appear limitless, raising concerns that
additional share sales will suck liquidity from the secondary
market.
As per one report, companies plan to raise at least Rs 40,000 crore
through initial public offers (IPOs)/follow on public offers (FPOs)
in the second half of the current financial year. Power companies
such as GMR Energy, Indiabulls Power and JSW Energy and state-run
Bharat Heavy Electricals and NTPC are likely to tap the primary
market. Reliance Infratel also announced on Tuesday, 22 September
2009, its intention to raise Rs 5,000 crore from the primary
market. A number of companies are also in the fray to raise funds
by way of qualified institutional placement (QIP), reports suggest.
Most Asian stocks were mixed in volatile trade after a surprise
fall in U.S. consumer confidence. The key benchmark indices in
Japan, South Korea Hong Kong and Singapore fell by between 0.51% to
0.93%. Key benchmark indices in China, Japan and Taiwan were up by
between 0.01% to 1.46%.
Trading in US index futures indicated Dow could open flat today, 30
September 2009.
US markets ended lower on Tuesday, 29 September 2009 as a drop in
consumer confidence dragged on the market. The Dow Jones Industrial
Average fell 47.16 points, or 0.5%, to 9,742.20. The S&P 500 index
dropped 2.38 points, or 0.2%, to 1,060.60, and the Nasdaq Composite
index shed 6.70 points, or 0.3%, to 2,124.04.
The US consumer-confidence index dropped to 53.1 in September from
54.5 in August. Economists had expected the gauge to rise to 57.
Meanwhile, the S&P/case-shiller home price report for July was
better-than-expected. The report showed a 13.3% year-over-year
decline, which was better than the 14.2% decline expected. Home
prices continued to rebound, up for a third straight month in July,
after a three-year slide.
At 11:20 IST, the BSE 30-share Sensex was up 172.84 points or 1.03%
to 17025.75. The Sensex rose 175.88 points at the day's high of
17,028.79 in morning trade, its highest since 23 May 2008. The
barometer index rose 15.55 points at the day's low of 16,868.46 in
early trade.
The S&P CNX Nifty was up 40.85 points or 0.82 % to 5,047.70. It hit
a high of 5,051.40 its highest level since 23 May 2008.
The market breadth, indicating the overall health of the market was
strong. On BSE, 1355 shares rose as compared with 806 that
declined. A total of 65 shares remained unchanged.
Among the 30-member Sensex pack, 25 rose and rest fell.
The BSE Mid-Cap index rose 0.59% and the BSE Small-Cap index rose
0.8%.
BSE 30-share Sensex was up 172.84 points or 1.03%. The BSE Sensex
crossed psychological 17,000 mark. The BSE Sensex and S&P CNX Nifty
hit their highest level in more than 16 months. IT, auto and
banking stocks rose. Oil exploration stocks also in demand after a
decent debut from state-run Oil India. The stock was currently
trading at a premium of 7.87% over the IPO price of Rs 1,050. The
market breadth was strong.
Overall volumes on the bourses may remain low as traders may
refrain from building large positions this week because this is a
truncated trading week as the market remains closed on Friday, 2
October 2009, on account of Gandhi Jayanti. Further, shares bought
in the cash segment on Tuesday, 29 September 2009, cannot be sold
today, 30 September 2009, due to settlement related issues because
commercial banks are closed today for half-yearly closing of
accounts
Meanwhile government disinvestment official said sees at least 5
stake sales in state firms by March 2010. Meanwhile, the government
is reportedly planning to announce a blueprint for selling its
stake in state-owned firms in the first week of October 2009. The
policy is expected to suggest how the government will eventually
bring down its stake in public sector companies to 75% over a
period of time.
The next trigger for the stock market is Q2 September 2009 results
of India Inc next month. There is optimism about Q2 September 2009
results after advance tax collections registered a positive growth
in the second quarter after witnessing a negative growth in the
first quarter. Corporate advance tax and advance personal
income-tax were up by 14.7% and 1.7%, respectively in the September
2009 quarter. Infosys kickstarts the reporting season on 9 October
2009.
Latest economic data has been strong. The index of six core
industries having a combined weight of 26.7% in the index of
industrial production (IIP) registered a growth of 7.1% in August
2009 compared to a growth of 2.1% in August 2008. During
April-August 2009-10, six core industries registered a growth of
4.8% as against 3.3% during the corresponding period of the
previous year. Coal and cement sector boosted overall growth in the
six infrastructure industries in August 2009.
Meanwhile, the Reserve Bank of India (RBI) deputy governor KC
Chakrabarty has said that rising inflationary pressures could limit
the scope for a sustained growth supported monetary policy stance.
The central bank has aggressively cut policy rates and pumped huge
liquidity in the system in the aftermath of the global financial
crisis last year. It may be recalled Finance Minister Pranab
Mukherjee recently spoke of the need for the fiscal stimulus to
continue for a few more quarters until the economy is back on
track.
Coming back to equities, a section of the market is concerned that
a glut in share sales may suck liquidity from the secondary market.
The corporate sector has raised large sums of money through equity
and equity related instruments in the past six months or so to
either to retire high cost debt or to fund expansion. The supply of
paper by Indian firms appear limitless, raising concerns that
additional share sales will suck liquidity from the secondary
market.
As per one report, companies plan to raise at least Rs 40,000 crore
through initial public offers (IPOs)/follow on public offers (FPOs)
in the second half of the current financial year. Power companies
such as GMR Energy, Indiabulls Power and JSW Energy and state-run
Bharat Heavy Electricals and NTPC are likely to tap the primary
market. Reliance Infratel also announced on Tuesday, 22 September
2009, its intention to raise Rs 5,000 crore from the primary
market. A number of companies are also in the fray to raise funds
by way of qualified institutional placement (QIP), reports suggest.
Most Asian stocks were mixed in volatile trade after a surprise
fall in U.S. consumer confidence. The key benchmark indices in
Japan, South Korea Hong Kong and Singapore fell by between 0.51% to
0.93%. Key benchmark indices in China, Japan and Taiwan were up by
between 0.01% to 1.46%.
Trading in US index futures indicated Dow could open flat today, 30
September 2009.
US markets ended lower on Tuesday, 29 September 2009 as a drop in
consumer confidence dragged on the market. The Dow Jones Industrial
Average fell 47.16 points, or 0.5%, to 9,742.20. The S&P 500 index
dropped 2.38 points, or 0.2%, to 1,060.60, and the Nasdaq Composite
index shed 6.70 points, or 0.3%, to 2,124.04.
The US consumer-confidence index dropped to 53.1 in September from
54.5 in August. Economists had expected the gauge to rise to 57.
Meanwhile, the S&P/case-shiller home price report for July was
better-than-expected. The report showed a 13.3% year-over-year
decline, which was better than the 14.2% decline expected. Home
prices continued to rebound, up for a third straight month in July,
after a three-year slide.
At 11:20 IST, the BSE 30-share Sensex was up 172.84 points or 1.03%
to 17025.75. The Sensex rose 175.88 points at the day's high of
17,028.79 in morning trade, its highest since 23 May 2008. The
barometer index rose 15.55 points at the day's low of 16,868.46 in
early trade.
The S&P CNX Nifty was up 40.85 points or 0.82 % to 5,047.70. It hit
a high of 5,051.40 its highest level since 23 May 2008.
The market breadth, indicating the overall health of the market was
strong. On BSE, 1355 shares rose as compared with 806 that
declined. A total of 65 shares remained unchanged.
Among the 30-member Sensex pack, 25 rose and rest fell.
The BSE Mid-Cap index rose 0.59% and the BSE Small-Cap index rose
0.8%.
Tuesday, May 19, 2009
Sensex off 775 points from the day's high
The key benchmark indices slipped into the red on profit taking
after a sharp surge at the onset of the trading session. The BSE
30-share Sensex was down 294.38 points or 2.06%, off close to 775
points from the day's high and up close to 150 points from the
day's low. Banking and IT stocks fell.
The wild swings in early trade followed a historic rally on Monday,
18 May 2009, when the key indices viz. the BSE Sensex and the S&P
CNX Nifty surged more than 17% each on hopes a new stable
government will be able to push reforms. Strong global cues may
further aid the rally.
A clear mandate for the Congress-led United Progressive Alliance
(UPA) has boosted hopes a strong coalition would be able to push
through economic reforms that would boost foreign investment.
Prime Minister Manmohan Singh's coalition defied predictions of a
tight election and was only about 11 seats short of an majority
from the 543 seats at stake. Congress' alliance took 261 seats,
sweeping aside its nearest rival, the bloc led by the
Hindu-nationalist Bharatiya Janata Party (BJP), which won only 159
combined. Congress, which alone won 205 seats, needs a handful of
partners to reach the 272 seats needed to take power, and is
expected to seek the support of more smaller parties or
independents.
Meanwhile, Dr Manmohan Singh met President Pratibha Patil on Monday
and submitted the resignations of his Council of Ministers.
Manmohan Singh formally stepped down as the Prime Minister.
President Pratibha Patil on Monday dissolved the 14th Lok Sabha
with immediate effect and asked the Prime Minister and his Council
of Ministers to continue in office till the new government is
formed. The President is expected to today, 19 May 2009, invite Dr.
Singh to form the next government.
Armed with a decisive mandate, Manmohan Singh will meet the
President to show the UPA alliance has the numbers, and formally
stake claim to form a new government at the Centre.
Financial sector reforms are likely to get a push in the coming
days, which were relegated to the back seat due to persistent
opposition from the Left parties, with the Congress-led UPA set to
form the next government.
A near term trigger for the market will be allocation of portfolios
in the new government. It remains to be seen who gets the key
ministries viz. power, transport and education sectors. Analysts
say growth in these three sectors are key for India to achieve
strong economic growth. If those seen as strong performers are
given charge of these three ministries, the market may extend
gains.
As per reports, Congress's strong showing in election means
reformers will almost certainly be named to key ministerial
portfolios, including finance, trade, defence and foreign affairs.
The ministers should be named this week. Fresh reformist faces may
also join the cabinet for the first time, including Rahul Gandhi,
heir to the powerful Gandhi dynasty and seen as pushing a new
generation of leaders into the Congress.
As per market talks, P Chidambaram could retain his home portfolio.
Among the contenders for the finance ministry are C Rangarajan, an
economic adviser to the prime minister, Montek Singh Ahluwalia,
deputy chairman of the Planning Commission, Trade Minister Kamal
Nath, and External Affairs Minister Pranab Mukherjee.
According to analysts the new government should give priority to
reforming the subsidy mechanism which is aimed at improving
delivery mechanism while at the same time reducing costs. Restoring
fiscal health is also required. In this regard, disinvestment is an
immediate channel for raising funds
Foreign funds have bought aggressively in Indian stocks in the
recent past. FII inflow in May 2009 totaled Rs 10,270.60 crore in
May 2009 (till 15 May 2009) while their inflow in calendar year
2009 totaled Rs 10,627.20 crore.
Asian stocks rose today as higher confidence among US homebuilders,
a surge in oil prices and a drop in bank borrowing costs stoked
optimism the global economy is recovering. Key benchmark indices in
China, Hong Kong, Japan, South Korea, Singapore and Taiwan, rose by
between 0.91% to 3.34%.
US markets on Monday, 18 May 2009 closed at the session's high
helped by banks and financial services stocks. The Dow gained
235.44 points, or 2.9%, to 8,504.08. The S&P 500 index gained 26.83
points, or 3%, to 909.71. The Nasdaq composite index added 52.22
points, or 3.1%, to 1,732.36. A reading showed home builder
sentiment rose for the second month in a row and at the highest
level since September 2008.
At 10:07 IST, The BSE 30-share Sensex was down 294.38 points or
2.06% to 13,989.83. The Sensex rose 473.61 points at the day's high
of 14.757.82 in early trade. At the day's low of 13,834.13, the
Sensex fell 450.08 points in early trade.
The S&P CNX Nifty was down 123.55 points or 2.86% to 4,199.60.
The market breadth, indicating the overall health of the market,
was positive. On BSE, 851 shares rose as compared with 654 that
fell. A total of 83 shares remained unchanged.
From the 30 share Sensex pack, 20 stocks fell while rest gained.
India's largest private sector firm by market capitalisation and
oil refiner Reliance Industries (RIL) fell 2.68% to Rs 2290 on
profit taking after a recent sharp surge. Analysts expect strong
growth in bottom line in coming quarters from sale of gas which it
started pumping last month from its deep-sea field off the east
coast.
Banking stocks fell on profit taking after a recent sharp surge.
India's largest private sector bank by net profit ICICI Bank fell
1.37% even as its American depository receipt (ADR) rose 25.22% on
Monday, 18 May 2009.
India's second largest private sector bank by operating income HDFC
Bank was down 3.91% even as its ADR rose 21.29% overnight.
But India's biggest bank in terms of branch network State Bank of
India was up 2.55%. State Bank of India has cut interest rates on
deposits by up to 50 basis points effective Monday, 18 May 2009.
India's biggest dedicated housing finance firm by operating income
HDFC was down 0.5%. As per recent reports, HDFC is likely to cut
deposit rates and follow it with a cut in lending rates
Outsourcing focussed IT stocks fell on a stronger rupee. India's
second largest software services exporter by sales Infosys fell
9.03% even after its American depository receipt (ADR) rose 8.99%
overnight.
India's largest software services exporter by sales TCS fell 4.89%.
TCS last week it has been selected for a five-year IT services
contract for auto maker Volkswagen group's operations in the United
Kingdom.
India's third largest software services exporter by sales Wipro
rose fell 7.45% even after its ADR rose 7.48% overnight.
The rupee rose to five-month high on Tuesday, extending a 3.2%
rally in the previous session, after a win for the ruling coalition
in elections boosted hopes for reforms and foreign investment. The
partially convertible rupee was at 47.36/37 against the dollar, 1.1
% above Monday's close of 47.88/90. A stronger rupee affects
operating margins of IT firms negatively as they derive maximum
revenue from US.
after a sharp surge at the onset of the trading session. The BSE
30-share Sensex was down 294.38 points or 2.06%, off close to 775
points from the day's high and up close to 150 points from the
day's low. Banking and IT stocks fell.
The wild swings in early trade followed a historic rally on Monday,
18 May 2009, when the key indices viz. the BSE Sensex and the S&P
CNX Nifty surged more than 17% each on hopes a new stable
government will be able to push reforms. Strong global cues may
further aid the rally.
A clear mandate for the Congress-led United Progressive Alliance
(UPA) has boosted hopes a strong coalition would be able to push
through economic reforms that would boost foreign investment.
Prime Minister Manmohan Singh's coalition defied predictions of a
tight election and was only about 11 seats short of an majority
from the 543 seats at stake. Congress' alliance took 261 seats,
sweeping aside its nearest rival, the bloc led by the
Hindu-nationalist Bharatiya Janata Party (BJP), which won only 159
combined. Congress, which alone won 205 seats, needs a handful of
partners to reach the 272 seats needed to take power, and is
expected to seek the support of more smaller parties or
independents.
Meanwhile, Dr Manmohan Singh met President Pratibha Patil on Monday
and submitted the resignations of his Council of Ministers.
Manmohan Singh formally stepped down as the Prime Minister.
President Pratibha Patil on Monday dissolved the 14th Lok Sabha
with immediate effect and asked the Prime Minister and his Council
of Ministers to continue in office till the new government is
formed. The President is expected to today, 19 May 2009, invite Dr.
Singh to form the next government.
Armed with a decisive mandate, Manmohan Singh will meet the
President to show the UPA alliance has the numbers, and formally
stake claim to form a new government at the Centre.
Financial sector reforms are likely to get a push in the coming
days, which were relegated to the back seat due to persistent
opposition from the Left parties, with the Congress-led UPA set to
form the next government.
A near term trigger for the market will be allocation of portfolios
in the new government. It remains to be seen who gets the key
ministries viz. power, transport and education sectors. Analysts
say growth in these three sectors are key for India to achieve
strong economic growth. If those seen as strong performers are
given charge of these three ministries, the market may extend
gains.
As per reports, Congress's strong showing in election means
reformers will almost certainly be named to key ministerial
portfolios, including finance, trade, defence and foreign affairs.
The ministers should be named this week. Fresh reformist faces may
also join the cabinet for the first time, including Rahul Gandhi,
heir to the powerful Gandhi dynasty and seen as pushing a new
generation of leaders into the Congress.
As per market talks, P Chidambaram could retain his home portfolio.
Among the contenders for the finance ministry are C Rangarajan, an
economic adviser to the prime minister, Montek Singh Ahluwalia,
deputy chairman of the Planning Commission, Trade Minister Kamal
Nath, and External Affairs Minister Pranab Mukherjee.
According to analysts the new government should give priority to
reforming the subsidy mechanism which is aimed at improving
delivery mechanism while at the same time reducing costs. Restoring
fiscal health is also required. In this regard, disinvestment is an
immediate channel for raising funds
Foreign funds have bought aggressively in Indian stocks in the
recent past. FII inflow in May 2009 totaled Rs 10,270.60 crore in
May 2009 (till 15 May 2009) while their inflow in calendar year
2009 totaled Rs 10,627.20 crore.
Asian stocks rose today as higher confidence among US homebuilders,
a surge in oil prices and a drop in bank borrowing costs stoked
optimism the global economy is recovering. Key benchmark indices in
China, Hong Kong, Japan, South Korea, Singapore and Taiwan, rose by
between 0.91% to 3.34%.
US markets on Monday, 18 May 2009 closed at the session's high
helped by banks and financial services stocks. The Dow gained
235.44 points, or 2.9%, to 8,504.08. The S&P 500 index gained 26.83
points, or 3%, to 909.71. The Nasdaq composite index added 52.22
points, or 3.1%, to 1,732.36. A reading showed home builder
sentiment rose for the second month in a row and at the highest
level since September 2008.
At 10:07 IST, The BSE 30-share Sensex was down 294.38 points or
2.06% to 13,989.83. The Sensex rose 473.61 points at the day's high
of 14.757.82 in early trade. At the day's low of 13,834.13, the
Sensex fell 450.08 points in early trade.
The S&P CNX Nifty was down 123.55 points or 2.86% to 4,199.60.
The market breadth, indicating the overall health of the market,
was positive. On BSE, 851 shares rose as compared with 654 that
fell. A total of 83 shares remained unchanged.
From the 30 share Sensex pack, 20 stocks fell while rest gained.
India's largest private sector firm by market capitalisation and
oil refiner Reliance Industries (RIL) fell 2.68% to Rs 2290 on
profit taking after a recent sharp surge. Analysts expect strong
growth in bottom line in coming quarters from sale of gas which it
started pumping last month from its deep-sea field off the east
coast.
Banking stocks fell on profit taking after a recent sharp surge.
India's largest private sector bank by net profit ICICI Bank fell
1.37% even as its American depository receipt (ADR) rose 25.22% on
Monday, 18 May 2009.
India's second largest private sector bank by operating income HDFC
Bank was down 3.91% even as its ADR rose 21.29% overnight.
But India's biggest bank in terms of branch network State Bank of
India was up 2.55%. State Bank of India has cut interest rates on
deposits by up to 50 basis points effective Monday, 18 May 2009.
India's biggest dedicated housing finance firm by operating income
HDFC was down 0.5%. As per recent reports, HDFC is likely to cut
deposit rates and follow it with a cut in lending rates
Outsourcing focussed IT stocks fell on a stronger rupee. India's
second largest software services exporter by sales Infosys fell
9.03% even after its American depository receipt (ADR) rose 8.99%
overnight.
India's largest software services exporter by sales TCS fell 4.89%.
TCS last week it has been selected for a five-year IT services
contract for auto maker Volkswagen group's operations in the United
Kingdom.
India's third largest software services exporter by sales Wipro
rose fell 7.45% even after its ADR rose 7.48% overnight.
The rupee rose to five-month high on Tuesday, extending a 3.2%
rally in the previous session, after a win for the ruling coalition
in elections boosted hopes for reforms and foreign investment. The
partially convertible rupee was at 47.36/37 against the dollar, 1.1
% above Monday's close of 47.88/90. A stronger rupee affects
operating margins of IT firms negatively as they derive maximum
revenue from US.
Monday, May 18, 2009
Sensex vaults 17% as market cheers UPA's thumping victory in election; trading halted for day
A clear mandate for the Congress-led United Progressive Alliance
(UPA) in Lok Sabha elections send stocks surging with trading on
the bourses halted for the day at about 11:55 IST. For the first
time in the history of the stock markets trading was halted because
the market-wide circuit were applied due to a solid surge. Earlier,
there have been instances when trading was halted when market-wide
circuit filters were applied due to a market crash.
The 30-share Sensex was up 2099.21 points or 17.24% at 14,272.63
and the 50-unit S&P CNX Nifty gained 636.40 points or 17.33% to
4,308.05, when trading was halted for the day
BSE clocked a paltry turnover of Rs 77 crore. The combined turnover
in the cash and the derivatives segment of BSE and NSE totaled Rs
3103. Only 846 stocks were traded on the BSE while 202 stocks
witnessed action on the NSE.
Trading was halted in just 16 seconds after the market re-opened at
11:55 IST. Earlier in the day, trading was halted within seconds of
opening as the market soared following a clear mandate in the Lok
Sabha election. A clear mandate for the Congress-led United
Progressive Alliance (UPA) boosted hopes a strong coalition would
be able to push through economic reforms that would boost foreign
investment. The 30-share Sensex surged 14.70% or 1,789.88 points to
13,963.30 and the 50-unit S&P CNX Nifty gained 531.65 points or
14.48% to 4203.30.
The BSE Sensex attained its highest closing since 11 September 2008
and the S&P CNX Nifty attained its highest closing since 10
September 2008.
The market breadth, indicating the overall health of the market,
was strong. On BSE, 833 shares rose as compared with 11 that fell.
A total of 2 shares remained unchanged.
The BSE Mid-Cap index rose 12.06% and the BSE Small-Cap index rose
9.09%. However, both these indices underperformed the Sensex.
The BSE Realty index (up 25.37%), the BSE Capital Goods index (up
23.47%), the BSE Bankex (up 20.27%), the BSE Oil & Gas index (up
19.57%) outperformed the Sensex.
The BSE FMCG index (up 6.78%), the BSE Healthcare index (up 8.04%),
the BSE IT index (up 11.41%), the BSE Auto index (up 12.12%), the
BSE Consumer Durables index (up 13.63%), the BSE TECk index (up
14.95%), the BSE PSU index (up 15.76%), the BSE Metal index (up
16.64%), the BSE Power index (up 17.09%), underperfomed the Sensex.
The market soared today, 18 May 2009, following a thumping victory
of the Congress-led United Progressive Alliance (UPA) government in
the Lok Sabha elections. A clear mandate for the UPA boosted hopes
a strong coalition would be able to push through economic reforms
that would boost foreign investment
On BSE, Bharat Heavy Electricals, Reliance Industries, HDFC,
Reliance Infrastructure, ICICI Bank, Bharti Airtel, Larsen &
Toubro, DLF, Reliance Communications, Jaipraksh Associates, State
Bank of India, rose by between 20.76% to 32.72%.
Infrastructure shares jumped on hopes the Congress-led UPA
government may boost spending on infrastructure sector after
emerging victorious in the general elections. India's biggest
engineering & construction firm by revenue L&T rose nearly 30% to
Rs 1280. India's biggest power equipment maker by revenue Bharat
Heavy Electricals rose 32.7% to Rs 2266.
Among other infrastructure stocks, Jaiprakash Associates, Gammon
India, GVK Power & Infrastructure, GMR Infrastructure, and IVRCL
Infrastructures & Projects rose 20% to 38.3%
Punj Lloyd surged 23.2% ahead of the Q4 March 2009, ahead of the
announcement its Q4 March 2009 results later today, 18 May 2009.
Shares of power and capital goods companies surged following a
thumping victory of the Congress-led United Progressive Alliance
(UPA) government in the Lok Sabha elections, clearing the way for
the landmark civilian nuclear deal with the US. Areva T&D jumped
21%, Reliance Infrastructure rose 22%, Hindustan Construction
Company rose 25%, Crompton Greaves rose 13.8%, Tata Power Company
rose 13%, Rolta gained 13%, ABB rose 13.9%, NTPC gained 11.9%, and
Walchandnagar Industries rose 10%
State-run companies advanced on hopes of recommencement of the PSU
disinvestment programme after the Congress-led UPA government got a
clear mandate in the Lok Sabha election. Dredging Corporation of
India rose 20%, Engineers India advanced 19.3%, HMT rose 20%,
Neyveli Lignite Corporation advanced 17%, Shipping Corporation of
India rose 10%, Hindustan Copper rose 10%, MMTC rose 20%, NMDC rose
20%, Power Finance Corporation rose 13.3% and Central Bank of India
rose 18%
It may be recalled that the BJP-led National Democratic Alliance
(NDA) had vigorously pursued PSU divestment. However, it was put in
deep freeze in the last five years by the Congress-led United
Progressive Alliance (UPA) government as the Left parties which
supported the UPA government from outside, were bitterly opposed to
the idea.
Consequently, in the past five years, the government raised just Rs
8,500 crore from disinvestment as against Rs 28,000 crore raised by
the BJP-led government in the preceding five-year period.
The UPA government's thumping victory in the 15th Lok Sabha
elections without the support of the Left parties has raised
expectations that the government may revive disinvestment
programme. The Congress party had in its manifesto released before
polls promised to go ahead with disinvestment while retaining a
majority holding in the state-run companies.
India's largest bank in terms of assets and branch network State
Bank of India soared 20.76% on hopes the Congress-led UPA
government may go ahead on a plan to merge six associate banks with
State Bank of India to create a Indian banking behemoth.
The process of creating a Indian banking behemoth was set in motion
two years ago, but got derailed due to resistance from the Left
parties. Although the board of SBI and its associate bank, the
State Bank of Saurashtra, had approved the merger in August 2007,
the government approved it only in August 2008 after the Left
withdrew its support to the government.
A merger of the associate banks with itself will give SBI the full
benefit of size. SBI and its associate banks enjoy a fourth of the
market share.
The SBI management may well be keen to merge the six associates at
the earliest, but that will hinge on government approval since the
government controls 59.41% of the equity in the bank.
India's largest motorbike maker by sales Hero Honda Motors soared
15.83% as index focused mutual funds took position in the stock
ahead of its entry in the coveted BSE 30-share Sensex with effect
from 29 June 2009. After trading hours on Friday, 15 May 2009, the
BSE announced that Hero Honda will replace Ranbaxy Laboratories in
the barometer index BSE Sensex with effect from 29 June 2009
Prime Minister Manmohan Singh's coalition defied predictions of a
tight election and was only about 11 seats short of an majority
from the 543 seats at stake, according to election commission data.
Congress' alliance took 261 seats, sweeping aside its nearest
rival, the bloc led by the Hindu-nationalist Bharatiya Janata Party
(BJP), which won only 159 combined. Congress, which alone won 205
seats, needs a handful of partners to reach the 272 seats needed to
take power, and is expected to seek the support of more smaller
parties or independents. Congress leaders will meet on Tuesday to
officially endorse Manmohan Singh as prime minister, after which
the party will meet its coalition partners to decide potential new
allies.
Armed with a popular mandate, the Congress led UPA government is
going to stake claim today to run India for another five years. The
Congress and its allies will go to meet President Pratibha Patil
today to show that they have the numbers. The first meeting of the
newly-constituted Congress Parliamentary Party (CPP) is expected to
convened in a day or two to elect its leader. Singh, who is already
the Prime Ministerial candidate of the Congress, is also likely to
be elected by the MPs at a joint meeting of the UPA parties. The
Congress must form a government by 2 June 2009.
Financial sector reforms are likely to get a push in the coming
days, which were relegated to the back seat due to persistent
opposition from the Left parties, with the Congress-led UPA set to
form the next government. Left-less victory of the UPA over BJP-led
National Democratic Alliance (NDA) would not only signify the
formation of a stable government, but also revive hopes of a slew
of pro-market policy changes.
The index-based market-wide circuit breaker system applies at 3
stages of the index movement, either way viz. at 10%, 15% and 20%.
These circuit breakers when triggered, bring about a coordinated
trading halt in all equity and equity derivative markets
nationwide. The market-wide circuit breakers are triggered by
movement of either the BSE Sensex or the NSE S&P CNX Nifty,
whichever is breached earlier.
(UPA) in Lok Sabha elections send stocks surging with trading on
the bourses halted for the day at about 11:55 IST. For the first
time in the history of the stock markets trading was halted because
the market-wide circuit were applied due to a solid surge. Earlier,
there have been instances when trading was halted when market-wide
circuit filters were applied due to a market crash.
The 30-share Sensex was up 2099.21 points or 17.24% at 14,272.63
and the 50-unit S&P CNX Nifty gained 636.40 points or 17.33% to
4,308.05, when trading was halted for the day
BSE clocked a paltry turnover of Rs 77 crore. The combined turnover
in the cash and the derivatives segment of BSE and NSE totaled Rs
3103. Only 846 stocks were traded on the BSE while 202 stocks
witnessed action on the NSE.
Trading was halted in just 16 seconds after the market re-opened at
11:55 IST. Earlier in the day, trading was halted within seconds of
opening as the market soared following a clear mandate in the Lok
Sabha election. A clear mandate for the Congress-led United
Progressive Alliance (UPA) boosted hopes a strong coalition would
be able to push through economic reforms that would boost foreign
investment. The 30-share Sensex surged 14.70% or 1,789.88 points to
13,963.30 and the 50-unit S&P CNX Nifty gained 531.65 points or
14.48% to 4203.30.
The BSE Sensex attained its highest closing since 11 September 2008
and the S&P CNX Nifty attained its highest closing since 10
September 2008.
The market breadth, indicating the overall health of the market,
was strong. On BSE, 833 shares rose as compared with 11 that fell.
A total of 2 shares remained unchanged.
The BSE Mid-Cap index rose 12.06% and the BSE Small-Cap index rose
9.09%. However, both these indices underperformed the Sensex.
The BSE Realty index (up 25.37%), the BSE Capital Goods index (up
23.47%), the BSE Bankex (up 20.27%), the BSE Oil & Gas index (up
19.57%) outperformed the Sensex.
The BSE FMCG index (up 6.78%), the BSE Healthcare index (up 8.04%),
the BSE IT index (up 11.41%), the BSE Auto index (up 12.12%), the
BSE Consumer Durables index (up 13.63%), the BSE TECk index (up
14.95%), the BSE PSU index (up 15.76%), the BSE Metal index (up
16.64%), the BSE Power index (up 17.09%), underperfomed the Sensex.
The market soared today, 18 May 2009, following a thumping victory
of the Congress-led United Progressive Alliance (UPA) government in
the Lok Sabha elections. A clear mandate for the UPA boosted hopes
a strong coalition would be able to push through economic reforms
that would boost foreign investment
On BSE, Bharat Heavy Electricals, Reliance Industries, HDFC,
Reliance Infrastructure, ICICI Bank, Bharti Airtel, Larsen &
Toubro, DLF, Reliance Communications, Jaipraksh Associates, State
Bank of India, rose by between 20.76% to 32.72%.
Infrastructure shares jumped on hopes the Congress-led UPA
government may boost spending on infrastructure sector after
emerging victorious in the general elections. India's biggest
engineering & construction firm by revenue L&T rose nearly 30% to
Rs 1280. India's biggest power equipment maker by revenue Bharat
Heavy Electricals rose 32.7% to Rs 2266.
Among other infrastructure stocks, Jaiprakash Associates, Gammon
India, GVK Power & Infrastructure, GMR Infrastructure, and IVRCL
Infrastructures & Projects rose 20% to 38.3%
Punj Lloyd surged 23.2% ahead of the Q4 March 2009, ahead of the
announcement its Q4 March 2009 results later today, 18 May 2009.
Shares of power and capital goods companies surged following a
thumping victory of the Congress-led United Progressive Alliance
(UPA) government in the Lok Sabha elections, clearing the way for
the landmark civilian nuclear deal with the US. Areva T&D jumped
21%, Reliance Infrastructure rose 22%, Hindustan Construction
Company rose 25%, Crompton Greaves rose 13.8%, Tata Power Company
rose 13%, Rolta gained 13%, ABB rose 13.9%, NTPC gained 11.9%, and
Walchandnagar Industries rose 10%
State-run companies advanced on hopes of recommencement of the PSU
disinvestment programme after the Congress-led UPA government got a
clear mandate in the Lok Sabha election. Dredging Corporation of
India rose 20%, Engineers India advanced 19.3%, HMT rose 20%,
Neyveli Lignite Corporation advanced 17%, Shipping Corporation of
India rose 10%, Hindustan Copper rose 10%, MMTC rose 20%, NMDC rose
20%, Power Finance Corporation rose 13.3% and Central Bank of India
rose 18%
It may be recalled that the BJP-led National Democratic Alliance
(NDA) had vigorously pursued PSU divestment. However, it was put in
deep freeze in the last five years by the Congress-led United
Progressive Alliance (UPA) government as the Left parties which
supported the UPA government from outside, were bitterly opposed to
the idea.
Consequently, in the past five years, the government raised just Rs
8,500 crore from disinvestment as against Rs 28,000 crore raised by
the BJP-led government in the preceding five-year period.
The UPA government's thumping victory in the 15th Lok Sabha
elections without the support of the Left parties has raised
expectations that the government may revive disinvestment
programme. The Congress party had in its manifesto released before
polls promised to go ahead with disinvestment while retaining a
majority holding in the state-run companies.
India's largest bank in terms of assets and branch network State
Bank of India soared 20.76% on hopes the Congress-led UPA
government may go ahead on a plan to merge six associate banks with
State Bank of India to create a Indian banking behemoth.
The process of creating a Indian banking behemoth was set in motion
two years ago, but got derailed due to resistance from the Left
parties. Although the board of SBI and its associate bank, the
State Bank of Saurashtra, had approved the merger in August 2007,
the government approved it only in August 2008 after the Left
withdrew its support to the government.
A merger of the associate banks with itself will give SBI the full
benefit of size. SBI and its associate banks enjoy a fourth of the
market share.
The SBI management may well be keen to merge the six associates at
the earliest, but that will hinge on government approval since the
government controls 59.41% of the equity in the bank.
India's largest motorbike maker by sales Hero Honda Motors soared
15.83% as index focused mutual funds took position in the stock
ahead of its entry in the coveted BSE 30-share Sensex with effect
from 29 June 2009. After trading hours on Friday, 15 May 2009, the
BSE announced that Hero Honda will replace Ranbaxy Laboratories in
the barometer index BSE Sensex with effect from 29 June 2009
Prime Minister Manmohan Singh's coalition defied predictions of a
tight election and was only about 11 seats short of an majority
from the 543 seats at stake, according to election commission data.
Congress' alliance took 261 seats, sweeping aside its nearest
rival, the bloc led by the Hindu-nationalist Bharatiya Janata Party
(BJP), which won only 159 combined. Congress, which alone won 205
seats, needs a handful of partners to reach the 272 seats needed to
take power, and is expected to seek the support of more smaller
parties or independents. Congress leaders will meet on Tuesday to
officially endorse Manmohan Singh as prime minister, after which
the party will meet its coalition partners to decide potential new
allies.
Armed with a popular mandate, the Congress led UPA government is
going to stake claim today to run India for another five years. The
Congress and its allies will go to meet President Pratibha Patil
today to show that they have the numbers. The first meeting of the
newly-constituted Congress Parliamentary Party (CPP) is expected to
convened in a day or two to elect its leader. Singh, who is already
the Prime Ministerial candidate of the Congress, is also likely to
be elected by the MPs at a joint meeting of the UPA parties. The
Congress must form a government by 2 June 2009.
Financial sector reforms are likely to get a push in the coming
days, which were relegated to the back seat due to persistent
opposition from the Left parties, with the Congress-led UPA set to
form the next government. Left-less victory of the UPA over BJP-led
National Democratic Alliance (NDA) would not only signify the
formation of a stable government, but also revive hopes of a slew
of pro-market policy changes.
The index-based market-wide circuit breaker system applies at 3
stages of the index movement, either way viz. at 10%, 15% and 20%.
These circuit breakers when triggered, bring about a coordinated
trading halt in all equity and equity derivative markets
nationwide. The market-wide circuit breakers are triggered by
movement of either the BSE Sensex or the NSE S&P CNX Nifty,
whichever is breached earlier.
Friday, February 27, 2009
Market slumps on lower-than-expected Q3 GDP growth
Data showing a disappointing Q3 December 2008 gross domestic
product (GDP) growth pulled the key benchmark indices sharply lower
in mid-morning trade. Selling was witnessed in IT, auto, banking,
realty stocks and index heavyweight Reliance Industries (RIL). The
BSE 30-share Sensex was down 192.36 points, or 2.15% and was near
the day's low. Weak rupee and dismal global economic data also
weighted on the sentiment.
India's GDP grew a slower-than-expected 5.3% in Q3 December 2008 as
the global economic crisis cut demand and exports. The figure is
sharply lower from 7.6% in Q2 September 2008. The manufacturing
sector fell 0.2% in in Q3 December 2008 from a year earlier, while
the farm sector contracted an annual 2.2%, government data showed
on Friday, 27 February 2009. India's economy grew 7.6% in the
September 2008 quarter and 7.9% in the June 2008 quarter. India has
estimated the economy to grow 7.1% in 2008/09, slowing from the 9%
in the previous year.
Meanwhile, a sharp slide in rupee which hit a record low against
the dollar heightened worries that some foreign funds may refrain
from buying stocks. The rupee today hit a record low against the
dollar. A fall in rupee reduces the valuation of the portfolio of
foreign funds to that extent. The impact can be mitigated by
hedging. Currently, foreign funds are dependent on the relatively
less transparent over-the-counter markets. Foreign funds are not
allowed to trade in currency futures market in India.
In fact, foreign funds are in selling mode in Indian stocks, having
dumped shares worth Rs 6431.90 crore in calender year 2009 (till 25
February 2009).
Concerns about rising borrowing costs for Indian corporates linger
in the minds of investors as fears of a downgrade of India's
sovereign rating by global rating agencies loom large. Rating
agency S&P on Tuesday, 24 February 2009, cut its outlook on India's
long-term sovereign credit rating to negative from stable citing
worsening government finances, which could raise Indian firms'
overseas borrowing costs and weaken the rupee. Moody's Economy.com
on Wednesday, 25 February 2009, said India's wider fiscal deficit
will boost funding costs and weaken investor confidence.
Meanwhile, global economic data continued to paint a worsening
picture of the global economy. Data on Thursday showed US jobless
claims hit a 26-year high, while Japanese data early Friday
confirmed the bleak outlook for the world's second biggest economy,
with industrial output falling 10.0% in January 2009 and shipments
down 11.4%, the biggest on-month falls on record.
Asian markets were trading mixed today, 27 February 2009, as
technology companies gained on brokerage upgrades and commodity
shares advanced on higher metal prices. Key benchmark indices in
Hong Kong, Taiwan, Singapore, and Japan were up by between 0.17%
and 1.24%. Indices in China and South Korea were down 0.21% and
1.42%.
US markets ended lower on Thursday, 26 February 2009, in volatile
trade as a spate of sour economic data and worries that President
Obama's budget proposal will strangle profits forced investors to
sell off stocks across the board. The Obama administration sees the
FY09 deficit at $1.75 trillion.
The Dow Jones industrial average declined 88.81 points, or 1.2%, to
7,182.08. The S&P 500 index slipped 12.07 points, or 1.6%, to
752.83 and the Nasdaq Composite index lost 33.96 points, or 2.4%,
to 1,391.47.
Obama proposed almost $1 trillion in higher taxes over the next
decade on the highest-earning Americans, Wall Street financiers,
US-based multinational corporations and oil companies to pay for
permanent tax breaks for lower earners.
At 11:26 IST, the BSE 30-share Sensex was down 192.36 points, or
2.15%, to 8,757. At the day's low of 8,750.34 the Sensex lost
204.52 points in mid-morning trade. At the day's high of 8,944.11
Sensex fell 10.75 points in early trade.
The S&P CNX Nifty was down 64.05 points, or 2.3%, to 2,721.60.
The market breadth, indicating the overall health of the market,
turned weak on BSE with 769 shares advancing as compared with 1,114
that declined. A total of 80 shares remained unchanged. The bread
was positive in early trade before the GDP data
From the 30 share Sensex pack 28 stocks fell while rest rose. ACC,
Reliance Communications, Bharti Airtel fell by between 3.19% to
5.12%.
India's largest private sector company by market capitalization and
oil refiner Reliance Industries (RIL) fell 2.24% to Rs 1,261 on
fears a worsening global economy will hit demand for
petrochemicals.
India's largest drugmaker by sales Ranbaxy Laboratories fell 1.06%
extending fall after the US Food and Drug Administration (US FDA)
on Wednesday, 25 February 2009, said Ranbaxy falsified data of over
two dozen drugs made in Poanta Sahib plant in India and it will
halt approval of pending and new drugs from the plant. The
allegation sent the Ranbaxy stock tumbling 18% in a single trading
session on Thursday.
Meanwhile, Daiichi Sankyo, the new owner of India's largest
drugmaker Ranbaxy Laboratories, said it has formed a team to solve
the ongoing issues with the US drug regulator.
Outsourcing focussed IT firms extended fall on fears a weak global
economy would cut the amount firms spent on technology and on fall
in ADRs overnight. India's third largest software services
exporter, Wipro fell 2.99% as its ADR fell 1.82% overnight. India's
second largest software services exporter Infosys Technologies
slipped 2.2% as its ADR fell 1.71% overnight. However India's
largest software services exporter by sales TCS fell 2.47%.
IT firms derive a lion's share of revenue from exports to US. There
have been concerns of cut back in technology spend by global firms
amid a recession in the US economy and due to the global financial
sector crisis.
IT stocks fell despite rupee hitting a record low against the
dollar. The rupee weakened to an all-time low past 50.65 against
the dollar early on Friday, weighed down by heavy dollar demand
from importers to meet month-end commitments. The partially
convertible rupee was at 50.75 and weaker than its Thursday's close
of 50.45/47. A weak rupee boosts revenues of IT firms in rupee
terms as IT companies earn a lion's share of revenue from exports.
India's largest steel maker by sales Tata Steel fell 0.8% to Rs
161.80 off the day's high of Rs 165.20 ahead of the announcement of
Q3 December 2008 consolidated result of the company today. The
steel maker is seen reporting a hefty consolidated loss.
Other metal stocks, Hindalco Industries, National Aluminum Company,
Steel Authority of India and Sterlite Industries, fell by between
0.64% to 5.51%.
India's largest commercial vehicle maker by sales Tata Motors
gained 0.67% extending gains for the second straight day after
company said bookings for its Rs 1-lakh car Naco will commence from
the second week of April 2009. The stock had jumped 7.26%
yesterday, 26 February 2009 boosted by the announcement during
trading hours
But other auto stocks fell on profit taking after recent strong
gains. Mahindra & Mahindra, Maruti Suzuki India and Hero Honda
Motor fell by between 1.03% to 4.93%.
Banking stocks fell as fears of rising defaults in a weakening
economy and on fall in American Depository Receipts (ADRs) offset
hopes a further fall in interest rates may boost lending growth.
India's largest private sector bank by net profit ICICI Bank fell
2.71% to Rs 315.75 off the day's high of Rs 328.50 as its American
Depository Receipts (ADR) slipped 5.17% on Thursday, 26 February
2009. Recently, Life Insurance Corporation of India hiked its stake
in ICICI Bank by 2.04% to 9.38%.
India's largest bank in terms of assets and branch network State
Bank of India fell 0.61% to Rs 1,017.60 off the day's high of Rs
1,037.80. The Indian government on Tuesday 24 February 2009
introduced a bill in Parliament which will enable it to increase
the capital base of State Bank of India's subsidiaries and issue
preference and bonus shares of these entities. However, India's
second largest private sector bank by net profit HDFC Bank slipped
3.33% as its ADR fell 1.93% on Thursday.
As per the latest data by the Reserve Bank of India, the banking
sector lent over Rs 10000 crore in the fortnight ended 13 February
2009. Food credit rose Rs 547.82 crore, while non-food credit rose
went up by Rs 9124.95 crore. This is the highest fortnightly growth
in bank loans since November 2007.
Despite a steep cut in policy rates in India since October 2008,
there has not been a commensurate reduction in lending rates by
banks as fears of rising bad loans have made banks cautious in
increasing advances.
Rate sensitive realty stocks fell on recent reports falling
interest rates have failed to revive housing demand. DLF, Unitech
and Indiabulls Real Estate fell by between 1.97% to 2.94%. Most of
the realty deals including sale of commercial property and housing
sales are driven by finance.
Meanwhile, the Cabinet Committee on Economic Affairs (CCEA) on
Thursday, 26 February 2009, approved a scheme to encourage states
to increase the supply of land and construct 10 lakh affordable
houses. The Centre will provide finance assistance of Rs 5000 crore
over the next four years for the affordable housing projects.
Construction and development is envisaged in public-private
partnership (PPP) mode. Private Sector developers and builders as
well as state housing boards are expected to be partners to the
government and construct and develop projects with funding from
institutional sources. Real estate developers looking to affordable
housing during the downturn will now have an opportunity to take up
projects where demand for housing is still high, a release by the
government after the CCEA meeting said. The urban housing shortage
is estimated at 24.7 million, largely for the weaker and low income
households.
KNR Constructions jumped 5% after a joint venture of the company
bagged an order worth Rs 576.38 crore from Hyderabad Growth
Corridor for a road project in Hyderabad.
product (GDP) growth pulled the key benchmark indices sharply lower
in mid-morning trade. Selling was witnessed in IT, auto, banking,
realty stocks and index heavyweight Reliance Industries (RIL). The
BSE 30-share Sensex was down 192.36 points, or 2.15% and was near
the day's low. Weak rupee and dismal global economic data also
weighted on the sentiment.
India's GDP grew a slower-than-expected 5.3% in Q3 December 2008 as
the global economic crisis cut demand and exports. The figure is
sharply lower from 7.6% in Q2 September 2008. The manufacturing
sector fell 0.2% in in Q3 December 2008 from a year earlier, while
the farm sector contracted an annual 2.2%, government data showed
on Friday, 27 February 2009. India's economy grew 7.6% in the
September 2008 quarter and 7.9% in the June 2008 quarter. India has
estimated the economy to grow 7.1% in 2008/09, slowing from the 9%
in the previous year.
Meanwhile, a sharp slide in rupee which hit a record low against
the dollar heightened worries that some foreign funds may refrain
from buying stocks. The rupee today hit a record low against the
dollar. A fall in rupee reduces the valuation of the portfolio of
foreign funds to that extent. The impact can be mitigated by
hedging. Currently, foreign funds are dependent on the relatively
less transparent over-the-counter markets. Foreign funds are not
allowed to trade in currency futures market in India.
In fact, foreign funds are in selling mode in Indian stocks, having
dumped shares worth Rs 6431.90 crore in calender year 2009 (till 25
February 2009).
Concerns about rising borrowing costs for Indian corporates linger
in the minds of investors as fears of a downgrade of India's
sovereign rating by global rating agencies loom large. Rating
agency S&P on Tuesday, 24 February 2009, cut its outlook on India's
long-term sovereign credit rating to negative from stable citing
worsening government finances, which could raise Indian firms'
overseas borrowing costs and weaken the rupee. Moody's Economy.com
on Wednesday, 25 February 2009, said India's wider fiscal deficit
will boost funding costs and weaken investor confidence.
Meanwhile, global economic data continued to paint a worsening
picture of the global economy. Data on Thursday showed US jobless
claims hit a 26-year high, while Japanese data early Friday
confirmed the bleak outlook for the world's second biggest economy,
with industrial output falling 10.0% in January 2009 and shipments
down 11.4%, the biggest on-month falls on record.
Asian markets were trading mixed today, 27 February 2009, as
technology companies gained on brokerage upgrades and commodity
shares advanced on higher metal prices. Key benchmark indices in
Hong Kong, Taiwan, Singapore, and Japan were up by between 0.17%
and 1.24%. Indices in China and South Korea were down 0.21% and
1.42%.
US markets ended lower on Thursday, 26 February 2009, in volatile
trade as a spate of sour economic data and worries that President
Obama's budget proposal will strangle profits forced investors to
sell off stocks across the board. The Obama administration sees the
FY09 deficit at $1.75 trillion.
The Dow Jones industrial average declined 88.81 points, or 1.2%, to
7,182.08. The S&P 500 index slipped 12.07 points, or 1.6%, to
752.83 and the Nasdaq Composite index lost 33.96 points, or 2.4%,
to 1,391.47.
Obama proposed almost $1 trillion in higher taxes over the next
decade on the highest-earning Americans, Wall Street financiers,
US-based multinational corporations and oil companies to pay for
permanent tax breaks for lower earners.
At 11:26 IST, the BSE 30-share Sensex was down 192.36 points, or
2.15%, to 8,757. At the day's low of 8,750.34 the Sensex lost
204.52 points in mid-morning trade. At the day's high of 8,944.11
Sensex fell 10.75 points in early trade.
The S&P CNX Nifty was down 64.05 points, or 2.3%, to 2,721.60.
The market breadth, indicating the overall health of the market,
turned weak on BSE with 769 shares advancing as compared with 1,114
that declined. A total of 80 shares remained unchanged. The bread
was positive in early trade before the GDP data
From the 30 share Sensex pack 28 stocks fell while rest rose. ACC,
Reliance Communications, Bharti Airtel fell by between 3.19% to
5.12%.
India's largest private sector company by market capitalization and
oil refiner Reliance Industries (RIL) fell 2.24% to Rs 1,261 on
fears a worsening global economy will hit demand for
petrochemicals.
India's largest drugmaker by sales Ranbaxy Laboratories fell 1.06%
extending fall after the US Food and Drug Administration (US FDA)
on Wednesday, 25 February 2009, said Ranbaxy falsified data of over
two dozen drugs made in Poanta Sahib plant in India and it will
halt approval of pending and new drugs from the plant. The
allegation sent the Ranbaxy stock tumbling 18% in a single trading
session on Thursday.
Meanwhile, Daiichi Sankyo, the new owner of India's largest
drugmaker Ranbaxy Laboratories, said it has formed a team to solve
the ongoing issues with the US drug regulator.
Outsourcing focussed IT firms extended fall on fears a weak global
economy would cut the amount firms spent on technology and on fall
in ADRs overnight. India's third largest software services
exporter, Wipro fell 2.99% as its ADR fell 1.82% overnight. India's
second largest software services exporter Infosys Technologies
slipped 2.2% as its ADR fell 1.71% overnight. However India's
largest software services exporter by sales TCS fell 2.47%.
IT firms derive a lion's share of revenue from exports to US. There
have been concerns of cut back in technology spend by global firms
amid a recession in the US economy and due to the global financial
sector crisis.
IT stocks fell despite rupee hitting a record low against the
dollar. The rupee weakened to an all-time low past 50.65 against
the dollar early on Friday, weighed down by heavy dollar demand
from importers to meet month-end commitments. The partially
convertible rupee was at 50.75 and weaker than its Thursday's close
of 50.45/47. A weak rupee boosts revenues of IT firms in rupee
terms as IT companies earn a lion's share of revenue from exports.
India's largest steel maker by sales Tata Steel fell 0.8% to Rs
161.80 off the day's high of Rs 165.20 ahead of the announcement of
Q3 December 2008 consolidated result of the company today. The
steel maker is seen reporting a hefty consolidated loss.
Other metal stocks, Hindalco Industries, National Aluminum Company,
Steel Authority of India and Sterlite Industries, fell by between
0.64% to 5.51%.
India's largest commercial vehicle maker by sales Tata Motors
gained 0.67% extending gains for the second straight day after
company said bookings for its Rs 1-lakh car Naco will commence from
the second week of April 2009. The stock had jumped 7.26%
yesterday, 26 February 2009 boosted by the announcement during
trading hours
But other auto stocks fell on profit taking after recent strong
gains. Mahindra & Mahindra, Maruti Suzuki India and Hero Honda
Motor fell by between 1.03% to 4.93%.
Banking stocks fell as fears of rising defaults in a weakening
economy and on fall in American Depository Receipts (ADRs) offset
hopes a further fall in interest rates may boost lending growth.
India's largest private sector bank by net profit ICICI Bank fell
2.71% to Rs 315.75 off the day's high of Rs 328.50 as its American
Depository Receipts (ADR) slipped 5.17% on Thursday, 26 February
2009. Recently, Life Insurance Corporation of India hiked its stake
in ICICI Bank by 2.04% to 9.38%.
India's largest bank in terms of assets and branch network State
Bank of India fell 0.61% to Rs 1,017.60 off the day's high of Rs
1,037.80. The Indian government on Tuesday 24 February 2009
introduced a bill in Parliament which will enable it to increase
the capital base of State Bank of India's subsidiaries and issue
preference and bonus shares of these entities. However, India's
second largest private sector bank by net profit HDFC Bank slipped
3.33% as its ADR fell 1.93% on Thursday.
As per the latest data by the Reserve Bank of India, the banking
sector lent over Rs 10000 crore in the fortnight ended 13 February
2009. Food credit rose Rs 547.82 crore, while non-food credit rose
went up by Rs 9124.95 crore. This is the highest fortnightly growth
in bank loans since November 2007.
Despite a steep cut in policy rates in India since October 2008,
there has not been a commensurate reduction in lending rates by
banks as fears of rising bad loans have made banks cautious in
increasing advances.
Rate sensitive realty stocks fell on recent reports falling
interest rates have failed to revive housing demand. DLF, Unitech
and Indiabulls Real Estate fell by between 1.97% to 2.94%. Most of
the realty deals including sale of commercial property and housing
sales are driven by finance.
Meanwhile, the Cabinet Committee on Economic Affairs (CCEA) on
Thursday, 26 February 2009, approved a scheme to encourage states
to increase the supply of land and construct 10 lakh affordable
houses. The Centre will provide finance assistance of Rs 5000 crore
over the next four years for the affordable housing projects.
Construction and development is envisaged in public-private
partnership (PPP) mode. Private Sector developers and builders as
well as state housing boards are expected to be partners to the
government and construct and develop projects with funding from
institutional sources. Real estate developers looking to affordable
housing during the downturn will now have an opportunity to take up
projects where demand for housing is still high, a release by the
government after the CCEA meeting said. The urban housing shortage
is estimated at 24.7 million, largely for the weaker and low income
households.
KNR Constructions jumped 5% after a joint venture of the company
bagged an order worth Rs 576.38 crore from Hyderabad Growth
Corridor for a road project in Hyderabad.
Thursday, February 26, 2009
Ranbaxy slumps 13%
The BSE 30-share Sensex was down 75.55 points, or 0.89% and was
near the day's low.
The weekly inflation data due later in the day may influence the
trend on the bourses during the course of the day, with market
expecting a rate cut by the Reserve Bank of India (RBI) to support
faltering economic growth.
However, volatility is also likely to remain high ahead of the
February series F&O expiry today, 26 February 2009. As per reports,
rollover of Nifty positions from February 2009 series to March 2009
series stood at 62% while marketwide rollover of positions was 57%,
as on Wednesday, 25 February 2009.
There are expectations that the Reserve Bank of India (RBI) will
cut interest rates further to support faltering growth. A sharp
fall in inflation to 13-month low in the week ended 7 February
2009, raised speculation of the central bank having more room to
cut rates. As per reports, RBI governor D Subbarao will meet select
heads of banks on Friday, 27 February 2009, to hold discussions on
issues like credit flow and liquidity conditions.
The global financial sector crisis and recession in key global
economies have pushed economic growth in India down to a six-year
low. The Central Statistical Organisation (CSO) has pegged India's
projected GDP growth for the year ending March 2009 at 7.1%, the
slowest in six years and below the previous year's 9% rise.
Asian shares rose Thursday, cuing off a late run higher on Wall
Street on Wednesday, but markets faded in and out of positive
territory in early trade suggesting a lack of clear direction in
the near-term. Key benchmark indices in Taiwan, Japan and Singapore
were up by between 0.24% and 0.53%. However, indices in China,
South korea and Hong Kong fell by between 0.19% to 0.8%.
The Dow Jones Industrial Average, which had been off nearly 200
points earlier in the session, ended the day down 80.05 points, or
1.09%, at 7270.89. US bank stocks rose after US officials unveiled
details of the Treasury's plan to convert stakes to common stock,
although the wider index remained anchored by a bleak housing
report from The National Association of Realtors.
At 10:24 IST, the BSE 30-share Sensex was down 75.55 points, or
0.89%, to 8,823.71. At the day's high of 8,905.56 Sensex gained 3
points in early trade. At the day's low of 8,820.89 the Sensex lost
81.67 points in early trade.
The S&P CNX Nifty was down 17.65 points, or 0.64%, to 2,744.85.
The market breadth, indicating the overall health of the market,
was weak on BSE with 687 shares advancing as compared with 820 that
declined. A total of 75 shares remained unchanged.
From the 30 share Sensex pack 20 stocks fell while rest rose. HDFC,
Bharat Heavy Electricals and Sterlite Industries fell by between
0.57% to 3.05%.
near the day's low.
The weekly inflation data due later in the day may influence the
trend on the bourses during the course of the day, with market
expecting a rate cut by the Reserve Bank of India (RBI) to support
faltering economic growth.
However, volatility is also likely to remain high ahead of the
February series F&O expiry today, 26 February 2009. As per reports,
rollover of Nifty positions from February 2009 series to March 2009
series stood at 62% while marketwide rollover of positions was 57%,
as on Wednesday, 25 February 2009.
There are expectations that the Reserve Bank of India (RBI) will
cut interest rates further to support faltering growth. A sharp
fall in inflation to 13-month low in the week ended 7 February
2009, raised speculation of the central bank having more room to
cut rates. As per reports, RBI governor D Subbarao will meet select
heads of banks on Friday, 27 February 2009, to hold discussions on
issues like credit flow and liquidity conditions.
The global financial sector crisis and recession in key global
economies have pushed economic growth in India down to a six-year
low. The Central Statistical Organisation (CSO) has pegged India's
projected GDP growth for the year ending March 2009 at 7.1%, the
slowest in six years and below the previous year's 9% rise.
Asian shares rose Thursday, cuing off a late run higher on Wall
Street on Wednesday, but markets faded in and out of positive
territory in early trade suggesting a lack of clear direction in
the near-term. Key benchmark indices in Taiwan, Japan and Singapore
were up by between 0.24% and 0.53%. However, indices in China,
South korea and Hong Kong fell by between 0.19% to 0.8%.
The Dow Jones Industrial Average, which had been off nearly 200
points earlier in the session, ended the day down 80.05 points, or
1.09%, at 7270.89. US bank stocks rose after US officials unveiled
details of the Treasury's plan to convert stakes to common stock,
although the wider index remained anchored by a bleak housing
report from The National Association of Realtors.
At 10:24 IST, the BSE 30-share Sensex was down 75.55 points, or
0.89%, to 8,823.71. At the day's high of 8,905.56 Sensex gained 3
points in early trade. At the day's low of 8,820.89 the Sensex lost
81.67 points in early trade.
The S&P CNX Nifty was down 17.65 points, or 0.64%, to 2,744.85.
The market breadth, indicating the overall health of the market,
was weak on BSE with 687 shares advancing as compared with 820 that
declined. A total of 75 shares remained unchanged.
From the 30 share Sensex pack 20 stocks fell while rest rose. HDFC,
Bharat Heavy Electricals and Sterlite Industries fell by between
0.57% to 3.05%.
Wednesday, February 25, 2009
S&P cuts India outlook to negative, cites fiscal weakness
Standard & Poor's cut its outlook on India's long-term sovereign credit rating to negative from stable on Tuesday, citing an "unsustainable" deterioration in the country's fiscal position.
"The outlook revision reflects our view that India's fiscal position has deteriorated to a level that is unsustainable in the medium term," said S&P in the statement.
S&P will retain its BBB-minus long-term sovereign rating for India and its A-3 short-term rating.
S&P said it expects the general government deficit, which includes off-budget items such as oil and fertiliser bonds, to increase to 11.4 percent in the fiscal year ending in March, up from 5.7 percent in the previous fiscal year.
The ratings agency said it expects a fiscal deficit of 11.1 percent in the fiscal year ended in March 2010.
S&P cited debt relief for farmers and the first pay hike for government employees in 11 years, along with broader factors such as the weakening global economy, as reasons for the worsening finances in the country.
The ratings agency called India's weak fiscal position "the single-largest negative factor for the sovereign ratings."
Fitch last week also called the country's fiscal position its main concern for India. It currently has BBB-minus ratings, with a negative outlook on the local currency rating and a stable outlook on the foreign currency.
Moody's has an equivalent Baa3 rating with a stable outlook.
"The outlook revision reflects our view that India's fiscal position has deteriorated to a level that is unsustainable in the medium term," said S&P in the statement.
S&P will retain its BBB-minus long-term sovereign rating for India and its A-3 short-term rating.
S&P said it expects the general government deficit, which includes off-budget items such as oil and fertiliser bonds, to increase to 11.4 percent in the fiscal year ending in March, up from 5.7 percent in the previous fiscal year.
The ratings agency said it expects a fiscal deficit of 11.1 percent in the fiscal year ended in March 2010.
S&P cited debt relief for farmers and the first pay hike for government employees in 11 years, along with broader factors such as the weakening global economy, as reasons for the worsening finances in the country.
The ratings agency called India's weak fiscal position "the single-largest negative factor for the sovereign ratings."
Fitch last week also called the country's fiscal position its main concern for India. It currently has BBB-minus ratings, with a negative outlook on the local currency rating and a stable outlook on the foreign currency.
Moody's has an equivalent Baa3 rating with a stable outlook.
Citigroup may sell Japan investment bank - media
Citigroup Inc is considering selling its Japanese investment banking unit, Nikko Citigroup, in addition to the brokerage unit that has already been put up for sale, the Mainichi newspaper reported.
Earlier this month Citigroup formally began the process of selling the brokerage unit, Nikko Cordial Securities, as part of its efforts to shed non-core assets globally and survive the deepening financial crisis.
Citigroup, which originally did not plan to part with Nikko Citigroup, is considering selling it and Nikko Cordial as a set to maximise the sale price, the Mainichi reported on its website without citing sources.
A spokeswoman for Citigroup in Japan declined to comment.
Citigroup is concerned that selling Nikko Cordial on its own would lead to a drop in corporate value as it would not allow the buyer to fully benefit from cooperation between the brokerage and investment banking operations, the Mainichi said.
Japan's top three banks, Mitsubishi UFJ Financial Group, Mizuho Financial Group and Sumitomo Mitsui Financial Group have all shown interest in buying Nikko Cordial, sources have told Reuters.
The report comes as Citigroup talks with federal regulators on a plan for the government to increase its stake in the third-biggest U.S. bank in terms of assets, a person familiar with the matter has told Reuters.
Earlier this month Citigroup formally began the process of selling the brokerage unit, Nikko Cordial Securities, as part of its efforts to shed non-core assets globally and survive the deepening financial crisis.
Citigroup, which originally did not plan to part with Nikko Citigroup, is considering selling it and Nikko Cordial as a set to maximise the sale price, the Mainichi reported on its website without citing sources.
A spokeswoman for Citigroup in Japan declined to comment.
Citigroup is concerned that selling Nikko Cordial on its own would lead to a drop in corporate value as it would not allow the buyer to fully benefit from cooperation between the brokerage and investment banking operations, the Mainichi said.
Japan's top three banks, Mitsubishi UFJ Financial Group, Mizuho Financial Group and Sumitomo Mitsui Financial Group have all shown interest in buying Nikko Cordial, sources have told Reuters.
The report comes as Citigroup talks with federal regulators on a plan for the government to increase its stake in the third-biggest U.S. bank in terms of assets, a person familiar with the matter has told Reuters.
Oil jumps on stock market bounce, OPEC compliance
Oil prices rose 4 percent on Tuesday, tracking a bounce on Wall Street, after U.S. Federal Reserve Chairman Ben Bernanke said he was committed to protecting the troubled banking sector.
Figures showing higher-than-expected compliance by the Organization of Petroleum Exporting Countries to its agreed production cuts encouraged the gains, dealers said.
U.S. crude oil rose $1.52 to settle at $39.96 a barrel, while London Brent crude rose $1.51 to $42.50 a barrel.
The gains came as U.S. stocks jumped about 3 percent, bouncing off of 12-year lows hit Monday, after Bernanke told U.S. lawmakers that he was committed to ensuring the economic viability of banks.
Uncertainty about the future of the U.S. banking system has raised concerns that the economic crisis could worsen, darkening an already gloomy outlook for U.S. energy demand.
Buying in the oil markets was encouraged by figures showing stronger-than-expected OPEC compliance with its production cuts.
Energy consultant Petrologistics said this week that OPEC producers were likely to pump less oil in February than January and a Reuters calculation based on the figures showed the cartel's compliance to its supply cut agreements was 89 percent.
"The OPEC compliance was bigger than expected," said Oliver Jakob of Petromatrix.
OPEC members are scheduled to meet March 15 in Vienna and are expected to consider deepening their output cuts.
Oil prices have dropped nearly $110 a barrel from their peak in July as the economic crisis cuts into demand.
Traders were awaiting U.S. oil inventory data on Wednesday that was expected to show a 1-million-barrel increase in crude stocks last week, a Reuters poll of analysts showed.
Figures showing higher-than-expected compliance by the Organization of Petroleum Exporting Countries to its agreed production cuts encouraged the gains, dealers said.
U.S. crude oil rose $1.52 to settle at $39.96 a barrel, while London Brent crude rose $1.51 to $42.50 a barrel.
The gains came as U.S. stocks jumped about 3 percent, bouncing off of 12-year lows hit Monday, after Bernanke told U.S. lawmakers that he was committed to ensuring the economic viability of banks.
Uncertainty about the future of the U.S. banking system has raised concerns that the economic crisis could worsen, darkening an already gloomy outlook for U.S. energy demand.
Buying in the oil markets was encouraged by figures showing stronger-than-expected OPEC compliance with its production cuts.
Energy consultant Petrologistics said this week that OPEC producers were likely to pump less oil in February than January and a Reuters calculation based on the figures showed the cartel's compliance to its supply cut agreements was 89 percent.
"The OPEC compliance was bigger than expected," said Oliver Jakob of Petromatrix.
OPEC members are scheduled to meet March 15 in Vienna and are expected to consider deepening their output cuts.
Oil prices have dropped nearly $110 a barrel from their peak in July as the economic crisis cuts into demand.
Traders were awaiting U.S. oil inventory data on Wednesday that was expected to show a 1-million-barrel increase in crude stocks last week, a Reuters poll of analysts showed.
Gold prices near Rs 16,000; spurs scrap sale
India's gold prices hovered near the psychological Rs 16,000-mark, attracting more scrap sales on Tuesday as consumers chose to cash in on the rally in the yellow metal, while imports continued to slacken.
"There are sellers exchanging for marriage purpose," said Daman Prakash, director, Chennai-based wholesaler, MNC Bullion, adding, "People are seen exchanging their old gold for new designs."
"Around 40 people have lined up outside my shop to sell," said Jitendra Kantilal Jain, partner at Mumbai's Jugraj Kantilal and Co, which buys scrap gold. Kantilal said that he had already collected around 100 kg of gold in scrap last week.
The benchmark April gold contract was 0.37% lower at Rs 15,829 per 10 gm at 1.40 pm on profit-taking, after hitting a record high of Rs 16,040 last week. But a weaker rupee limited the downside. The rupee impacts gold prices as most of the metal is imported in India and paid for in US currency. However analysts are still bullish in the short-term on a contracting US economy and expectations of a weak rupee. "Consumers, who are interested in selling, may wait as prices are expected to harden further," Prakash added.
Domestic gold demand was slack as buyers were deterred from fresh purchases with prices near record levels, traders said. The inflow of scrap has curtailed demand for new imported gold bars, buyers said. "It's almost three months now and there have been no buyers," Prakash added. Traders said that local gold was available cheaper by 1.5% than bank gold, signifying profit-taking by traders on their old stock. "If gold crosses $1,000 (an ounce), then the discount may rise to 3.5%-4%."
"No gold has been imported into India so far in February because prices are at record highs in rupee terms," the head of Bombay Bullion Association (BBA) said on Friday.
"There are sellers exchanging for marriage purpose," said Daman Prakash, director, Chennai-based wholesaler, MNC Bullion, adding, "People are seen exchanging their old gold for new designs."
"Around 40 people have lined up outside my shop to sell," said Jitendra Kantilal Jain, partner at Mumbai's Jugraj Kantilal and Co, which buys scrap gold. Kantilal said that he had already collected around 100 kg of gold in scrap last week.
The benchmark April gold contract was 0.37% lower at Rs 15,829 per 10 gm at 1.40 pm on profit-taking, after hitting a record high of Rs 16,040 last week. But a weaker rupee limited the downside. The rupee impacts gold prices as most of the metal is imported in India and paid for in US currency. However analysts are still bullish in the short-term on a contracting US economy and expectations of a weak rupee. "Consumers, who are interested in selling, may wait as prices are expected to harden further," Prakash added.
Domestic gold demand was slack as buyers were deterred from fresh purchases with prices near record levels, traders said. The inflow of scrap has curtailed demand for new imported gold bars, buyers said. "It's almost three months now and there have been no buyers," Prakash added. Traders said that local gold was available cheaper by 1.5% than bank gold, signifying profit-taking by traders on their old stock. "If gold crosses $1,000 (an ounce), then the discount may rise to 3.5%-4%."
"No gold has been imported into India so far in February because prices are at record highs in rupee terms," the head of Bombay Bullion Association (BBA) said on Friday.
SBI in talks to raise 20 bln rupees - sources
Bank of India is in talks with state-owned insurer Life Insurance Corp of India (LIC) to raise 20 billion rupees in ($401 million) in upper Tier 2 bonds, banking sources with direct knowledge of the deal said.
"There is a dialogue on with LIC currently. They are willing to invest at least 20 billion rupees. The final amount will depend on what they decide," one source at SBI, India's largest commercial bank, said on Tuesday.
The official could not be named because he was not authorised to speak to the media.
Another banking source said SBI Capital Markets was the arranger to the transaction.
Market sources said they expected SBI to raise up to 30 billion rupees through Tier 2 bonds by March 31, the end of 2008/09 financial year.
"These will be upper Tier 2 bonds with 15-year maturity and a call option at the end of the 10th year," the SBI said.
LIC officials were not available for comment
"There is a dialogue on with LIC currently. They are willing to invest at least 20 billion rupees. The final amount will depend on what they decide," one source at SBI, India's largest commercial bank, said on Tuesday.
The official could not be named because he was not authorised to speak to the media.
Another banking source said SBI Capital Markets was the arranger to the transaction.
Market sources said they expected SBI to raise up to 30 billion rupees through Tier 2 bonds by March 31, the end of 2008/09 financial year.
"These will be upper Tier 2 bonds with 15-year maturity and a call option at the end of the 10th year," the SBI said.
LIC officials were not available for comment
Nikkei rises 1.6 pct on yen, govt stock buy hopes
TOKYO, Feb 25 (Reuters) - Japan's Nikkei average gained 1.6 percent on Wednesday, after nearing a 26-year low the previous day, buoyed by exporters on a softer yen and after a media report that the Japanese government may buy stocks from the market.
The benchmark Nikkei .N225 added 115.35 points to 7,383.91, while the broader Topix rose 1 percent to 737.86.
On Tuesday, the Nikkei booked its lowest close since Oct. 27, after briefly touching 7,155.16 -- not far from a 26-year low just under 7,000. The Topix posted its lowest close since December 1983
The benchmark Nikkei .N225 added 115.35 points to 7,383.91, while the broader Topix rose 1 percent to 737.86.
On Tuesday, the Nikkei booked its lowest close since Oct. 27, after briefly touching 7,155.16 -- not far from a 26-year low just under 7,000. The Topix posted its lowest close since December 1983
Dollar rises above Y97 for first time in 3 months
The dollar rose above 97 yen for the first time in three months on Wednesday as speculators unwound long yen positions built up over the last few months.
The dollar rose as high as 97.20 yen on trading platform EBS, its highest since late November and up 0.6 percent on the day.
Traders said there were rumours of option barriers at 97 yen that could have helped push the dollar higher.
The dollar rose as high as 97.20 yen
Traders said there were rumours of option barriers at 97 yen that could have helped push the dollar higher.
Stocks up on Bernanke remarks
Federal Reserve Chairman Ben Bernanke gave Wall Street a double dose of reassurance. Now it's President Barack Obama's turn.
Bernanke told Congress on Tuesday the recession might end this year, and that regulators aren't planning to nationalize banks. The news alleviated some of investors' worries about the economy and the banking industry, and lifted the Dow Jones industrial average and Standard & Poor's 500 index off their lowest levels since 1997.
And investors are hopeful that Tuesday night, Obama will provide specifics about his plans to stabilize the financial system and further stimulate the economy. Anticipation of his remarks helped drive beaten-down financial shares up sharply.
"There's growing optimism that Obama can deliver the details that the market is so desperately looking for in his speech," said Ryan Larson, senior equity trader at Voyageur Asset Management. If it gets those details, Larson added, the market's upward momentum could continue.
Stocks remain on shaky ground, however. Bernanke may have helped stem the market's slide Tuesday, but the market also found stability from temporary technical factors: bargain-hunting, the unwinding of short bets, and selling exhaustion after six straight down days for the S&P 500.
And though it appears the government is trying to quash the notion of bank nationalization, the Obama administration still has not demonstrated how exactly it will repair the banking system. The nation's financial system remains "zombie-like," said Nick Kalivas, vice president of financial research at the brokerage MF Global.
"We had an up day today, but nothing has really changed on that front," Kalivas said. "If nothing is articulated on that tonight, we're moving to the downside again."
The continued focus on the stability of the financial system comes a day after the government moved closer to dramatically expanding its ownership stakes in the nation's banks, including Citigroup Inc. The Treasury Department, the Fed and other banking regulators said Monday they could convert the government's stock in the banks from preferred shares to common shares.
The Dow rose 236.16, or 3.3 percent, to 7,350.94. On Monday, the major indexes tumbled more than 3 percent, including the Dow, which fell 251 points and hit its lowest close since May 7, 1997.
Broader stock indicators also rebounded Tuesday. The S&P 500 index rose 29.81, or 4 percent, to 773.14. On Monday, it logged its lowest finish since April 11, 1997.
The Nasdaq composite index rose 54.11, or 3.9 percent, Tuesday to 1,441.83, while the Russell 2000 index of smaller companies rose 17.90, or 4.5 percent, to 412.48.
Advancing issues outnumbered decliners by about 6 to 1 on the New York Stock Exchange, where consolidated volume came to 7.09 billion shares, compared with Monday's 6.35 billion.
In his semiannual report to the Senate Banking Committee, Bernanke predicted the economy is likely to keep contracting in the first six months of 2009, but that "there is a reasonable prospect" the recession will end this year.
He warned that a recovery will require getting credit and financial markets to operate normally, and that the government must continue working with ailing banks to bring them back to profitability. To the market's relief, though, the Fed chief said formally nationalizing the banks "just isn't necessary."
Traders were encouraged that the S&P 500 index has so far managed to stayed above its Nov. 21 trading low of 741.02. Investors searching for a recovery look for signs that market can test its lows from the worst of the credit crisis and then bounce higher.
Still, many analysts expect the market to remain volatile for the foreseeable future.
Rich Hughes, co-president of Portfolio Management Consultants in Los Angeles, said the market's rallies are likely to be based on hope or on rebounds from selloffs. He contends Wall Street still hasn't seen the wrenching decline that is often needed to scare investors from the market and set the ground for a lasting recovery.
"The underlying fundamentals just aren't there to support anything that's sustainable right now," Hughes said. "We haven't seen the capitulation that you'd want to see before you'd get thoroughly enthused."
The market's slide has been tough on long-term investors. A person who in 1997 put $50,000 in a fund that tracks the S&P 500 would now only have about $46,256.
Bond prices fell Tuesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.80 percent from 2.76 percent late Monday. The yield on the three-month T-bill, considered one of the safest investments, was unchanged at 0.29 percent.
The dollar was mixed against other major currencies, while gold prices fell.
Light, sweet crude rose $1.52 to $39.96 per barrel on the New York Mercantile Exchange.
Home Depot posted a loss but the nation's largest home improvement retailer's results topped expectations when excluding costs for shutting four home-improvement brands. The stock rose $1.96, or 10.5 percent, to $20.67.
Target Corp. and Macy's Inc. said fiscal fourth-quarter earnings fell sharply as shoppers cut back on purchases. Office Depot Inc. posted a loss for the quarter. Target fell 60 cents to $27.83, while Macy's rose 89 cents, or 12 percent, to $8.29.
Two big drags on the Dow this year -- Citigroup and Bank of America Corp. -- regained ground Tuesday. Citigroup rose 46 cents, or 22 percent, to $2.60, and BofA rose 82 cents, or 21 percent, to $4.73.
Another bank in the Dow, JPMorgan Chase & Co., rose $1.51, or 7.74 percent, to $21.02 after announcing late Monday it would slash its quarterly dividend to 5 cents from 38 cents in a move to save $5 billion a year.
The only loser in the Dow Tuesday was Microsoft Corp., which dipped 4 cents to $17.17 after it reiterated its belief that the economic crisis will persist at least into the second half of 2009.
Stocks fell in Asia and Europe following Monday's drop on Wall Street. Japan's Nikkei stock average fell 1.5 percent, Britain's FTSE 100 fell 0.78 percent, Germany's DAX index fell 0.73 percent, and France's CAC-40 fell 0.73 percent.
Bernanke told Congress on Tuesday the recession might end this year, and that regulators aren't planning to nationalize banks. The news alleviated some of investors' worries about the economy and the banking industry, and lifted the Dow Jones industrial average and Standard & Poor's 500 index off their lowest levels since 1997.
And investors are hopeful that Tuesday night, Obama will provide specifics about his plans to stabilize the financial system and further stimulate the economy. Anticipation of his remarks helped drive beaten-down financial shares up sharply.
"There's growing optimism that Obama can deliver the details that the market is so desperately looking for in his speech," said Ryan Larson, senior equity trader at Voyageur Asset Management. If it gets those details, Larson added, the market's upward momentum could continue.
Stocks remain on shaky ground, however. Bernanke may have helped stem the market's slide Tuesday, but the market also found stability from temporary technical factors: bargain-hunting, the unwinding of short bets, and selling exhaustion after six straight down days for the S&P 500.
And though it appears the government is trying to quash the notion of bank nationalization, the Obama administration still has not demonstrated how exactly it will repair the banking system. The nation's financial system remains "zombie-like," said Nick Kalivas, vice president of financial research at the brokerage MF Global.
"We had an up day today, but nothing has really changed on that front," Kalivas said. "If nothing is articulated on that tonight, we're moving to the downside again."
The continued focus on the stability of the financial system comes a day after the government moved closer to dramatically expanding its ownership stakes in the nation's banks, including Citigroup Inc. The Treasury Department, the Fed and other banking regulators said Monday they could convert the government's stock in the banks from preferred shares to common shares.
The Dow rose 236.16, or 3.3 percent, to 7,350.94. On Monday, the major indexes tumbled more than 3 percent, including the Dow, which fell 251 points and hit its lowest close since May 7, 1997.
Broader stock indicators also rebounded Tuesday. The S&P 500 index rose 29.81, or 4 percent, to 773.14. On Monday, it logged its lowest finish since April 11, 1997.
The Nasdaq composite index rose 54.11, or 3.9 percent, Tuesday to 1,441.83, while the Russell 2000 index of smaller companies rose 17.90, or 4.5 percent, to 412.48.
Advancing issues outnumbered decliners by about 6 to 1 on the New York Stock Exchange, where consolidated volume came to 7.09 billion shares, compared with Monday's 6.35 billion.
In his semiannual report to the Senate Banking Committee, Bernanke predicted the economy is likely to keep contracting in the first six months of 2009, but that "there is a reasonable prospect" the recession will end this year.
He warned that a recovery will require getting credit and financial markets to operate normally, and that the government must continue working with ailing banks to bring them back to profitability. To the market's relief, though, the Fed chief said formally nationalizing the banks "just isn't necessary."
Traders were encouraged that the S&P 500 index has so far managed to stayed above its Nov. 21 trading low of 741.02. Investors searching for a recovery look for signs that market can test its lows from the worst of the credit crisis and then bounce higher.
Still, many analysts expect the market to remain volatile for the foreseeable future.
Rich Hughes, co-president of Portfolio Management Consultants in Los Angeles, said the market's rallies are likely to be based on hope or on rebounds from selloffs. He contends Wall Street still hasn't seen the wrenching decline that is often needed to scare investors from the market and set the ground for a lasting recovery.
"The underlying fundamentals just aren't there to support anything that's sustainable right now," Hughes said. "We haven't seen the capitulation that you'd want to see before you'd get thoroughly enthused."
The market's slide has been tough on long-term investors. A person who in 1997 put $50,000 in a fund that tracks the S&P 500 would now only have about $46,256.
Bond prices fell Tuesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.80 percent from 2.76 percent late Monday. The yield on the three-month T-bill, considered one of the safest investments, was unchanged at 0.29 percent.
The dollar was mixed against other major currencies, while gold prices fell.
Light, sweet crude rose $1.52 to $39.96 per barrel on the New York Mercantile Exchange.
Home Depot posted a loss but the nation's largest home improvement retailer's results topped expectations when excluding costs for shutting four home-improvement brands. The stock rose $1.96, or 10.5 percent, to $20.67.
Target Corp. and Macy's Inc. said fiscal fourth-quarter earnings fell sharply as shoppers cut back on purchases. Office Depot Inc. posted a loss for the quarter. Target fell 60 cents to $27.83, while Macy's rose 89 cents, or 12 percent, to $8.29.
Two big drags on the Dow this year -- Citigroup and Bank of America Corp. -- regained ground Tuesday. Citigroup rose 46 cents, or 22 percent, to $2.60, and BofA rose 82 cents, or 21 percent, to $4.73.
Another bank in the Dow, JPMorgan Chase & Co., rose $1.51, or 7.74 percent, to $21.02 after announcing late Monday it would slash its quarterly dividend to 5 cents from 38 cents in a move to save $5 billion a year.
The only loser in the Dow Tuesday was Microsoft Corp., which dipped 4 cents to $17.17 after it reiterated its belief that the economic crisis will persist at least into the second half of 2009.
Stocks fell in Asia and Europe following Monday's drop on Wall Street. Japan's Nikkei stock average fell 1.5 percent, Britain's FTSE 100 fell 0.78 percent, Germany's DAX index fell 0.73 percent, and France's CAC-40 fell 0.73 percent.
Market cuts early losses as govt lowers indirect taxes
Key benchmark indices jumped to trade in green for a brief period
and provisionally settled with small losses after the Indian
government on cut excise duties further and lowered service tax
rates in a move to protect the economy from the impact of the
global economic crisis. The BSE 30-share Sensex was provisionally
down 14.49 points, or 0.16%, recovering close to 210 points from
the day's low.
A bout of volatility was witnessed in the later part of the trading
session. The market slipped in mid-afternoon trade after the global
rating agency Standard & Poor's revised the outlook on the
long-term sovereign credit rating on India to negative from stable.
Just before the news of S&P cutting the outlook which hit the
market in mid-afternoon trade, a solid recovery was witnessed on
the domestic bourses
The BSE Sensex plunged as much as 2.53% in early trade on setback
in Asian stocks. The sharp sharp slide took it to the lowest level
in more than 2-1/2 months. It wiped out almost the entire losses at
about 13:50 IST just before the news of the S&P cutting the
outlook.
Government' announcement of the reductions in indirect taxes hit
the market in late trade and took the Sensex in green. However, the
barometer index slipped into the red again later
Finance Minister Pranab Mukherjee in his reply to a debate on the
2009/10 interim budget cut excise duty across the board to 8% from
10 %, and reduced the service tax rate to 10% from 12% on all
taxable services. Mukherjee also said excise duty cuts of 4%
unveiled earlier as part of a government stimulus package would be
extended into the new fiscal year. He also reduced the excise duty
on bulk cement to 8% and extended the exemption on customs cut on
naphtha beyond 31 March 2009.
Higher US index futures also supported domestic bourses. Trading in
the US index futures showed Dow could rise 24 points at the opening
bell on Tuesday, 24 February 2009. But sustained selling by foreign
institutional investors kept market sentiment edgy.
Meanwhile, S&P said the revision in rating outlook of India was due
to deterioration of the fiscal positions of the government to level
that is unsustainable in the medium term. S&P expects government
deficit, including off-budget measures such as oil and fertilizer
bonds, to increase to 11.4% in the fiscal year ending 31 March,
2009, from 5.7% in the previous fiscal year.
Standard & Poor's has, nonetheless, affirmed its 'BBB-' long-term
and 'A-3' short-term sovereign credit ratings on India.
Volatility is likely to remain high in the near term ahead of the
expiry of futures & options contracts for February 2009 series on
Thursday, 26 February 2009. As per reports, rollover of Nifty
positions from February 2009 series to March 2009 series stood at
40% while marketwide rollover of positions was 29%, as on Friday,
20 February 2009.
Heavy sales by foreign funds this year has hit market sentiment.
Foreign funds were sellers through most of last week. FII outflow
in February 2009 totaled Rs 1,180.70 crore (till 19 February 2009).
FII outflow in calendar year 2009 totaled Rs 5,425.90 crore (till
19 February 2009).
European stocks slipped on Tuesday, echoing sharp losses on Wall
Street and in Asia as lingering fears over the stability of the
banking sector rattled investors. The key benchmark indices in
France, Germany and UK fell by between 1.15% to 2.6%.
Asian shares slumped on Tuesday, some to multiyear lows, after a
broad sell-off on Wall Street left the Dow Jones Industrial Average
at levels not seen since 1997. Key benchmark indices in China,
Singapore, Taiwan, South Korea, Hong Kong fell by between 1.06% to
4.56%.
Japan's Nikkei stock average fell 1.46% dragged lower by exporters
such as Canon Inc.
Led by industrials and materials stocks, the US market fell on
recessionary fears and heightened risk aversion, which also drove
investors to the dollar. The Dow Jones industrial average dropped
250.89 points, or 3.41%, to 7,114.78, its lowest close since 7 May
1997. The Standard & Poor`s 500 index fell 26.72 points, or 3.47%,
to 743.33, lowest finish since 11 April 1997. The technology-laden
Nasdaq Composite index lost 53.51 points, or 3.71%, to 1,387.72.
Although US financial stocks actually rose on hopes that the
government will move soon to secure its most troubled banks, the
wider issue of the fragility of the US banking system remains to
the fore.
As per the provisional figures, the BSE 30-share Sensex was down
14.49 points, or 0.16%, to 8,828.72. At the day's high of 8,856.52
Sensex gained 13.31 points in late trade. At the day's low of
8,619.22, the Sensex lost 223.99 points in early trade and was the
lowest level for the Sensex since 3 December 2008.
The S&P CNX Nifty was down 5.10 points, or 0.19%, to 2,731.10.
The market breadth, indicating the overall health of the market,
was weak on BSE with 1,626 shares declining as compared with 818
that advanced. A total of 66 shares remained unchanged.
The BSE clocked a turnover of Rs 2,448 crore, lower than Rs
2,615.54 crore on Friday, 20 February 2009.
From the 30 share Sensex pack 17 stocks fell while rest gained.
India's largest private sector company by market capitalization and
oil refiner Reliance Industries (RIL) fell 0.02% to Rs 1,253.30 on
fears a worsening global economy will hit demand for
petrochemicals. Nevertheless, the stock came off the day's low of
Rs 1,201.10.
India's largest oil exploration firm by revenue ONGC rose 1.17% to
Rs 680.60 off day's low of Rs 656.25 on reports the company has
discovered oil in the hydrocarbon rich Krishna Godavari basin.
Auto stocks were mixed after the government cut excise duty
further. India's largest tractor maker by sales Mahindra & Mahindra
rose 4.92%. India's largest car maker by sales Maruti Suzuki India
rose 1.39%. But Tata Motors and Hero Honda Motor fell by between
1.23% to 2.02%.
Cement makers turned positive after the government cut excise duty
on bulk cement to 8% from 10%. ACC, Ultratech Cement, Grasim
Industries, Ambuja Cement rose by between 0.91% to 3.01%.
Banking stocks cut intraday losses on hopes the central bank would
cut rates to support faltering growth as inflation fell to its
lowest in more than 13 months in early February, dropping below 4%.
Bank stocks had slumped earlier in the day on fears of rising
defaults in a weakening economy and on overnight fall in American
Depository Receipts (ADRs). India's second largest private sector
bank by net profit HDFC Bank lost 1.16% to Rs 856.90, off the day's
low of Rs 835.10. Its ADR fell 4.31% on Monday, 23 February 2009.
India's largest private sector bank by net profit ICICI Bank
slipped 0.13% to Rs 335.50, off day's low of Rs 318.35. Life
Insurance Corporation of India has hiked its stake in ICICI Bank by
2.04% to 9.38%
India's largest bank in terms of assets and branch network State
Bank of India fell 1.75% to Rs 1,028.25, off the day's low of Rs
1,015.05. State Bank of India (SBI) on Friday, 20 February 2009,
capped interest rates on new auto loans at 10% for a year, sharply
down from the current 11.50%. Early this month, in a similar move,
SBI cut its home loan rate to 8% for a year. SBI will freeze
interest rates on new car loans taken between 23 February 2009 and
31 May 2009 for one year.
PSU bank stocks, Indian Overseas Bank, Union Bank of India, Bank of
Baroda, Bank of India fell by between 2.54% to 6.27%.
There are expectations that the Reserve Bank of India (RBI) will
cut interest rates further to support faltering growth. A sharp
fall in inflation has provided room for the central bank to cut
rates. The global financial sector crisis and recession in key
global economies have pushed economic growth in India down to a
six-year low. The Central Statistical Organisation (CSO) has pegged
India's projected GDP growth for the year ending March 2009 at
7.1%, the slowest in six years and below the previous year's 9%
rise.
Despite a steep cut in policy rates in India since October 2008,
there has not been a commensurate reduction in lending rates by
banks as fears of rising bad loans have made banks cautious in
increasing advances.
Metal stocks fell on worries a weakening domestic and global
economy will hit demand for metals. Tata Steel, Hindalco
Industries, Sterlite Indusries, Steel Authority of India fell by
between 0.64% to 4.46%.
IT pivotals recovered as lower rupee offset fears a weak global
economy would cut the amount firms spent on technology. India's
third largest software services exporter, Wipro slipped 1.44% to Rs
212.20 off the day's low of Rs 208.50. Its ADR fell 2.92% on
Monday, 23 February 2009. India's second largest software services
exporter Infosys Technologies rose 0.48% to Rs 1,184.10 off the
day's low of Rs 1,146.40. Its ADR fell 1.99% on Monday. India's
largest software services exporter by sales TCS slipped 1.57% to Rs
466.50 off the day's low of Rs 460.90.
The rupee fell on Tuesday as sharp falls in the global stock
markets raised concerns of more capital outflows from local shares.
The partially convertible rupee was at 49.89 per dollar weaker
compared to a closing of 49.72/74 per dollar on Friday. A weak
rupee boosts revenues of IT firms in rupee terms as IT companies
earn a lion's share of revenue from exports.
India's largest electric equipment maker by sales Bharat Heavy
Electricals was down 0.27% to Rs 1361.20, having recovered from the
session's low of Rs 1335, on bagging an order worth Rs 3150 crore.
and provisionally settled with small losses after the Indian
government on cut excise duties further and lowered service tax
rates in a move to protect the economy from the impact of the
global economic crisis. The BSE 30-share Sensex was provisionally
down 14.49 points, or 0.16%, recovering close to 210 points from
the day's low.
A bout of volatility was witnessed in the later part of the trading
session. The market slipped in mid-afternoon trade after the global
rating agency Standard & Poor's revised the outlook on the
long-term sovereign credit rating on India to negative from stable.
Just before the news of S&P cutting the outlook which hit the
market in mid-afternoon trade, a solid recovery was witnessed on
the domestic bourses
The BSE Sensex plunged as much as 2.53% in early trade on setback
in Asian stocks. The sharp sharp slide took it to the lowest level
in more than 2-1/2 months. It wiped out almost the entire losses at
about 13:50 IST just before the news of the S&P cutting the
outlook.
Government' announcement of the reductions in indirect taxes hit
the market in late trade and took the Sensex in green. However, the
barometer index slipped into the red again later
Finance Minister Pranab Mukherjee in his reply to a debate on the
2009/10 interim budget cut excise duty across the board to 8% from
10 %, and reduced the service tax rate to 10% from 12% on all
taxable services. Mukherjee also said excise duty cuts of 4%
unveiled earlier as part of a government stimulus package would be
extended into the new fiscal year. He also reduced the excise duty
on bulk cement to 8% and extended the exemption on customs cut on
naphtha beyond 31 March 2009.
Higher US index futures also supported domestic bourses. Trading in
the US index futures showed Dow could rise 24 points at the opening
bell on Tuesday, 24 February 2009. But sustained selling by foreign
institutional investors kept market sentiment edgy.
Meanwhile, S&P said the revision in rating outlook of India was due
to deterioration of the fiscal positions of the government to level
that is unsustainable in the medium term. S&P expects government
deficit, including off-budget measures such as oil and fertilizer
bonds, to increase to 11.4% in the fiscal year ending 31 March,
2009, from 5.7% in the previous fiscal year.
Standard & Poor's has, nonetheless, affirmed its 'BBB-' long-term
and 'A-3' short-term sovereign credit ratings on India.
Volatility is likely to remain high in the near term ahead of the
expiry of futures & options contracts for February 2009 series on
Thursday, 26 February 2009. As per reports, rollover of Nifty
positions from February 2009 series to March 2009 series stood at
40% while marketwide rollover of positions was 29%, as on Friday,
20 February 2009.
Heavy sales by foreign funds this year has hit market sentiment.
Foreign funds were sellers through most of last week. FII outflow
in February 2009 totaled Rs 1,180.70 crore (till 19 February 2009).
FII outflow in calendar year 2009 totaled Rs 5,425.90 crore (till
19 February 2009).
European stocks slipped on Tuesday, echoing sharp losses on Wall
Street and in Asia as lingering fears over the stability of the
banking sector rattled investors. The key benchmark indices in
France, Germany and UK fell by between 1.15% to 2.6%.
Asian shares slumped on Tuesday, some to multiyear lows, after a
broad sell-off on Wall Street left the Dow Jones Industrial Average
at levels not seen since 1997. Key benchmark indices in China,
Singapore, Taiwan, South Korea, Hong Kong fell by between 1.06% to
4.56%.
Japan's Nikkei stock average fell 1.46% dragged lower by exporters
such as Canon Inc.
Led by industrials and materials stocks, the US market fell on
recessionary fears and heightened risk aversion, which also drove
investors to the dollar. The Dow Jones industrial average dropped
250.89 points, or 3.41%, to 7,114.78, its lowest close since 7 May
1997. The Standard & Poor`s 500 index fell 26.72 points, or 3.47%,
to 743.33, lowest finish since 11 April 1997. The technology-laden
Nasdaq Composite index lost 53.51 points, or 3.71%, to 1,387.72.
Although US financial stocks actually rose on hopes that the
government will move soon to secure its most troubled banks, the
wider issue of the fragility of the US banking system remains to
the fore.
As per the provisional figures, the BSE 30-share Sensex was down
14.49 points, or 0.16%, to 8,828.72. At the day's high of 8,856.52
Sensex gained 13.31 points in late trade. At the day's low of
8,619.22, the Sensex lost 223.99 points in early trade and was the
lowest level for the Sensex since 3 December 2008.
The S&P CNX Nifty was down 5.10 points, or 0.19%, to 2,731.10.
The market breadth, indicating the overall health of the market,
was weak on BSE with 1,626 shares declining as compared with 818
that advanced. A total of 66 shares remained unchanged.
The BSE clocked a turnover of Rs 2,448 crore, lower than Rs
2,615.54 crore on Friday, 20 February 2009.
From the 30 share Sensex pack 17 stocks fell while rest gained.
India's largest private sector company by market capitalization and
oil refiner Reliance Industries (RIL) fell 0.02% to Rs 1,253.30 on
fears a worsening global economy will hit demand for
petrochemicals. Nevertheless, the stock came off the day's low of
Rs 1,201.10.
India's largest oil exploration firm by revenue ONGC rose 1.17% to
Rs 680.60 off day's low of Rs 656.25 on reports the company has
discovered oil in the hydrocarbon rich Krishna Godavari basin.
Auto stocks were mixed after the government cut excise duty
further. India's largest tractor maker by sales Mahindra & Mahindra
rose 4.92%. India's largest car maker by sales Maruti Suzuki India
rose 1.39%. But Tata Motors and Hero Honda Motor fell by between
1.23% to 2.02%.
Cement makers turned positive after the government cut excise duty
on bulk cement to 8% from 10%. ACC, Ultratech Cement, Grasim
Industries, Ambuja Cement rose by between 0.91% to 3.01%.
Banking stocks cut intraday losses on hopes the central bank would
cut rates to support faltering growth as inflation fell to its
lowest in more than 13 months in early February, dropping below 4%.
Bank stocks had slumped earlier in the day on fears of rising
defaults in a weakening economy and on overnight fall in American
Depository Receipts (ADRs). India's second largest private sector
bank by net profit HDFC Bank lost 1.16% to Rs 856.90, off the day's
low of Rs 835.10. Its ADR fell 4.31% on Monday, 23 February 2009.
India's largest private sector bank by net profit ICICI Bank
slipped 0.13% to Rs 335.50, off day's low of Rs 318.35. Life
Insurance Corporation of India has hiked its stake in ICICI Bank by
2.04% to 9.38%
India's largest bank in terms of assets and branch network State
Bank of India fell 1.75% to Rs 1,028.25, off the day's low of Rs
1,015.05. State Bank of India (SBI) on Friday, 20 February 2009,
capped interest rates on new auto loans at 10% for a year, sharply
down from the current 11.50%. Early this month, in a similar move,
SBI cut its home loan rate to 8% for a year. SBI will freeze
interest rates on new car loans taken between 23 February 2009 and
31 May 2009 for one year.
PSU bank stocks, Indian Overseas Bank, Union Bank of India, Bank of
Baroda, Bank of India fell by between 2.54% to 6.27%.
There are expectations that the Reserve Bank of India (RBI) will
cut interest rates further to support faltering growth. A sharp
fall in inflation has provided room for the central bank to cut
rates. The global financial sector crisis and recession in key
global economies have pushed economic growth in India down to a
six-year low. The Central Statistical Organisation (CSO) has pegged
India's projected GDP growth for the year ending March 2009 at
7.1%, the slowest in six years and below the previous year's 9%
rise.
Despite a steep cut in policy rates in India since October 2008,
there has not been a commensurate reduction in lending rates by
banks as fears of rising bad loans have made banks cautious in
increasing advances.
Metal stocks fell on worries a weakening domestic and global
economy will hit demand for metals. Tata Steel, Hindalco
Industries, Sterlite Indusries, Steel Authority of India fell by
between 0.64% to 4.46%.
IT pivotals recovered as lower rupee offset fears a weak global
economy would cut the amount firms spent on technology. India's
third largest software services exporter, Wipro slipped 1.44% to Rs
212.20 off the day's low of Rs 208.50. Its ADR fell 2.92% on
Monday, 23 February 2009. India's second largest software services
exporter Infosys Technologies rose 0.48% to Rs 1,184.10 off the
day's low of Rs 1,146.40. Its ADR fell 1.99% on Monday. India's
largest software services exporter by sales TCS slipped 1.57% to Rs
466.50 off the day's low of Rs 460.90.
The rupee fell on Tuesday as sharp falls in the global stock
markets raised concerns of more capital outflows from local shares.
The partially convertible rupee was at 49.89 per dollar weaker
compared to a closing of 49.72/74 per dollar on Friday. A weak
rupee boosts revenues of IT firms in rupee terms as IT companies
earn a lion's share of revenue from exports.
India's largest electric equipment maker by sales Bharat Heavy
Electricals was down 0.27% to Rs 1361.20, having recovered from the
session's low of Rs 1335, on bagging an order worth Rs 3150 crore.
Monday, February 23, 2009
Sensex falls below 9,000 on weak global stocks
Weak global markets pulled the domestic bourses lower with the
barometer index BSE Sensex falling below the psychologically
important 9,000 level. Nevertheless, a late recovery helped cut the
market cut steep intraday losses. The Sensex lost 199.42 points, or
2.21% at 8,843.21, off 80.13 points from the day's low.
Weak European bourses, lower US index futures and sustained selling
pressure by foreign institutional investors (FIIs), whose outflow
in calendar year 2009 has totaled Rs 5094.30 crore (till 18
February 2009), weighed on the sentiment. According to provisional
data on NSE, FIIs were net sellers worth Rs 363.48 crore while
mutual funds bought shares worth Rs 108.44 crore on Thursday, 19
February 2009.
The market opened on a weak note on weak global markets. An
intermittent recovery from lower level was witnessed during the
day. The recovery from lower level in early afternoon trade was
triggered by Finance Minister Pranab Mukherjee's comments that the
government will provide additional resources to stimulate demand
and provide more help to key sectors such as housing,
infrastructure and real estate. However, the intraday recovery
proved short-lived as the market came off the higher level later.
A sell-off gripped the market in mid-afternoon trade as European
markets, which opened after Indian markets, declined sharply in
early trade. At the day's low of 8763.08, the Sensex shed 3.09% in
mid-afternoon trade. After the sharp slide, the market immediately
witnessed a rebound from lower level as the finance minister's
statement raised hopes for more measures from the government for
the economy. Rate cut hopes also aided the intraday rebound in late
trade.
The government has so far announced two stimulus packages including
tax cuts and the capital injections for banks to shield the
domestic economy from the impact of the global financial sector
crisis and recession in key global economies.
Meanwhile Commerce minister Kamal Nath is likely to announce an
export booster package later this month which would address some of
the crucial concerns of the exporters. The sops under consideration
include simplification of rules for service tax refund, extension
of time given to exporters to meet export obligation and an
increase in rates of input duty reimbursement schemes like drawback
and DEPB for some sectors.
Global cues were weak. Trading in US index futures showed the Dow
could fall 130 points at the opening bell on Friday, 20 February
2009. European shares fell sharply on Friday, 20 February 2009,
with banks the worst performers, as investors continued to fret
about the outlook for the global economy. Key benchmark indices in
UK, Germany and France were down by between 2.38% and 3.08%.
Asian markets declined today, 20 February 2009, after Wall Street
tumbled to six-year low on Thursday, 19 February 2009, as a gloomy
US unemployment data reinforced fears the world's largest economy
is in a severe slump. Key benchmark indices in Hong Kong, Japan,
Singapore, South Korea and Taiwan were down by between 2.03% and
3.72%. However, China's Shanghai Composite rose 1.54%.
US markets tumbled on Thursday, 19 February 2009 on mounting
concerns about the fate of major banks and signs that the recession
is deepening, pushing the Dow to its lowest level in more than six
years. The Dow Jones industrial average lost 89.68 points, or
1.19%, at 7,465.95. The Standard & Poor's 500 Index fell 9.48
points, or 1.2%, at 778.94. The Nasdaq Composite index shed 25.15
points, or 1.71%, at 1,442.82.
US government data showed a record number of continuing
unemployment claims, at nearly 5 million, and a surprisingly sharp
drop in manufacturing in the mid-Atlantic states.
The BSE 30-share Sensex lost down 199.42 points or 2.21% at
8,843.21. The Sensex opened 98.85 points lower at 8,943.78, also
its day's high. At the day's low of 8,763.08, the Sensex lost
279.55 points in mid-afternoon trade.
The S&P CNX Nifty lost 52.90 points or 1.9% to 2736.45. Nifty
February 2009 futures were at 2722, a discount of 14.45 points as
compared to the spot closing.
The barometer index BSE Sensex is down 804.10 points or 8.33% in
calendar 2009 from its close of 9,647.31 on 31 December 2008. The
Sensex currently trades at a PE multiple of 10.19 based on
projected earnings per share (EPS) of about Rs 867 for the
30-Sensex firms in the year ending March 2010.
The market breadth, indicating the overall health of the market,
was weak on BSE with 1631 shares declining as compared with 793
that advanced. A total of 88 shares remained unchanged.
BSE clocked a turnover of Rs 2591 crore, lower than Rs 2,428.97
crore on Thursday, 19 February 2009. Turnover in NSE's futures &
options jumped to Rs 43149.65 crore compared with Rs 30637.67 crore
on Thursday, 19 February 2009.
All the sectoral indices on BSE were in the red. The BSE Power
index (down 1.41%), the BSE Auto index (down 1.11%), the BSE PSU
index (down 1.56%), BSE Consumer Durables index (down 1.09%), BSE
Realty index (down 1.93%), the BSE Capital Goods index (down
1.95%), and the FMCG index (down 0.28%), BSE Healthcare index (down
1.12%), BSE Oil & Gas index (down 2.17%), outperfomed the Sensex.
The BSE TECk index fell 2.21%, in line with Sensex's fall.
The BSE IT index (down 2.69%), BSE Bankex (down 3.49%), and BSE
Metal index (down 2.67%), underperformed the Sensex.
Among the 30-share Sensex pack 26 declined while only 4 of them
managed gains. DLF (up 0.74%), ACC (up 0.66%), and Maruti Suzuki
India (up 0.55%), gained from the Sensex pack.
Banking stocks were hard hit as fears of rising defaults in a
weakening economy and overnight fall in American Depository
Receipts (ADRs), offset hopes of rate cuts from the Reserve Bank of
India (RBI). India's largest private sector bank by net profit
ICICI Bank plunged 7.03% to Rs 336.10 on a 1.36% fall in its ADR on
Thursday, 19 February 2009. It was the top loser from the Sensex
pack.
India's second largest private sector bank by net profit HDFC Bank
lost 2.12% to Rs 866.10 as its ADR fell 0.26% on Thursday, 19
February 2009. After market hours on 19 February 2009, the bank on
a private placement basis issued unsecured, non-convertible,
redeemable subordinated bonds in the nature of debentures towards
tier - II capital as with upper tier - II bonds for an amount
aggregating Rs 200 crore and lower tier - II bonds for an amount
aggregating Rs 150 crore.
India's largest bank in terms of assets and branch network State
Bank of India shed 0.73% to Rs 1051.80
India's largest dedicated housing finance company by total income
Housing Development Finance Corporation dropped 2.35% to Rs 1359.90
as the company expects 2009/10 loan growth at about 20%, slightly
lower than the previous year's rise, as property demand falls.
Inflation rose at the lowest level in 13-months at 3.92% in the
year through 7 February 2009, much lower than previous week's
annual rise of 4.39%, data released by the government on Thursday,
19 February 2009, showed. Falling inflation provides room for the
Reserve Bank of India (RBI) to cut interest rates further to shield
the domestic economy from the global financial sector crisis and
recession in key global economies.
Only on Wednesday, 18 February 2009, the Reserve Bank of India
Governor D Subbarao said that there is room to cut interest rates
further. The statement comes at a time when the market is expecting
further action from the central bank.
Market men see a bigger role for RBI to shield the domestic economy
from the global financial sector crisis and recession in key global
economies in the coming months as election code will be in force by
the end of the month which means that there cannon be any policy
action from the government.
India's largest private sector company by market capitalization and
oil refiner Reliance Industries (RIL) shed 2.99% to Rs 1255 on
fears a worsening global economy will hit demand for
petrochemicals. Nevertheless the stock recovered from day's low of
Rs 1241.30.
India's second largest cellular services provider by sales Reliance
Communications (RCom) slumped 4.36% to Rs 155.60 on reports the
government on Thursday, 19 February 2009 reportedly informed the
Parliament that it will do a special audit on the books of RCom and
its subsidiaries over allegations that the telecommunications
company had diverted revenues earned from its mobile services to a
subsidiary to bring down the total amount it had to pay to the
government as licence fee and spectrum charge.
India's largest private sector power generation firm by sales
Reliance Infrastructure slipped 3.04% to Rs 493.05. The finance
ministry late evening on 18 February 2009 reportedly told
Parliament that companies Reliance Infrastructure and Reliance
Petroleum were being investigated for alleged violation of norms
governing insider trading and overseas borrowings, respectively.
Reliance Petroleum fell 2.01% to Rs 78.10
IT shares declined after research firm Gartner warned of an
unprecedented deceleration in IT spending across markets and
geographic regions in 2009, after its annual global survey of Chief
information officer (CIOs).
India's third largest software services exporter, Wipro slipped
2.16% to Rs 215.60 despite a 1.12% rise in ADR on Thursday, 19
February 2009. India's second largest software services exporter
Infosys Technologies lost 2.33% to Rs 1180 as its ADR fell 1.71% on
Thursday, 19 February 2009. India's largest software services
exporter by sales TCS slipped 3.01% to Rs 475 and India's fifth
largest IT exporter by sales HCL Technologies declined 5.08% to Rs
103.60.
Shares of computer hardware firms HCL Infosystems (down 2.50%),
Moser Baer India (down 5.08%), CMC (down 1.07%), Tata Elxsi (down
1.85%), declined.
Overall, the total IT market globally is expected to grow by only
0.5% in 2009, the Gartner report added.
Educomp Solutions tumbled 11.86% to Rs 1776.60 on reports the
market regulator Securities & Exchange Board of India (Sebi) is
probing the dealings in the shares of education software firm on
bourses.
IT shares fell despite a weak rupee. Indian rupee slipped today on
concerns of capital outflows following decline in global markets.
The partially convertible rupee was at 49.86/88 per dollar against
previous close of 49.62. A weaker rupee boosts operating margins of
IT firms which earn a lion's share of revenue from exports.
Rate sensitive real estate shares rebounded in late trade on hopes
lower rates will spur housing demand. India's largest realty
developer by market capitalisation DLF rose 0.74% to Rs 157.50, off
day's low of Rs 147.50. Foreign brokerage Goldman Sachs in its
recent research report lowered DLF's 12-month target price to Rs
124 post weak Q3 December 2008 results.
Unitech (down 1.40% to Rs 28.20, from day's low of Rs 27.60), HDIL
(down 2.15% to Rs 77.60 after touching day's low of Rs76.50), and
Indiabulls Real Estate (down 3.97% to Rs 93.20 after hitting day's
low of Rs 92.50), fell.
India's largest engineering and construction firm by sales Larsen &
Toubro fell 2.47% to Rs 624.80 after its chief A M Naik said it
will decide on Satyam deal after evaluating the Company Law Board's
order on the bidding process for the fraud-hit IT firm. L&T is the
single largest shareholder in Satyam with a 12% stake.
India's largest power equipment maker by sales Bharat Heavy
Electrical (Bhel) fell 0.58% to Rs 1374.25, off sharply from day's
low of Rs 1347.10. The early fall came on reports quoting Chairman
K. Ravi Kumar said the company expects profit growth to slow to 10%
in the year ending March 2009 on higher raw material costs and
wages, compared with 18% in March 2008.
ABB rose 1.82% to Rs 400.35 after the company reported higher than
expected net profit in the year ended December 2008. ABB's net
profit rose 11.3% to Rs 547.41 crore on a 16.1% increase in total
income to Rs 6967.45 crore in the year ended December 2008 over
December 2007. The company has recommended a dividend of Rs 2.20
per share of face value Rs 2 each for the year ended on December
2008.
Metal stocks fell on worries a weakening domestic and global
economy will hit demand for metals. India's largest copper maker by
sales Sterlite Industries India (down 3.02% to Rs 248.75), Sail
(down 2.50%), Sesa Goa (down 6.22%), Nalco (down 2.02%), declined.
India's largest private sector steel maker by sales Tata Steel
dropped 2.44%
India's largest private sector aluminium maker by sales Hindalco
Industries fell 1.50% to Rs 39.50. As per recent reports, the
company plans to raise Rs 25000 crore by pledging assets and future
earnings of its units.
Auto stocks fell on profit booking after a recent rise. The BSE
Auto index was down 1.11% to 2,544.47 today, 20 February 2009. The
BSE Auto index rose 2.15% in one month to 19 February 2009.
Tata Motors (down 0.45%), Mahindra & Mahindra (down 3.62%), Hero
Honda Motors (down 1.81%) declined. However Bajaj Auto (up 0.76%)
and Maruti Suzuki India (up 0.55%), rebounded from day's low.
FMCG shares were mixed, outperforming the Sensex, on defensive
buying. Hindustan Unilever (down 0.22%), Britannia Industries (down
0.28%), ITC (down 0.03%), United Spirits (down 1.38%), and Nestle
India (down 0.26%), declined. Some FMCG shares Dabur India (up
0.11%), Tata Tea (up 4.36%) and Marico Industries (up 0.60%) rose
Educomp Solutions was the top traded counter on BSE with turnover
of Rs 293.70 crore followed by Reliance Industries (Rs 170.30
crore), United Spirits (Rs 153.30 crore), ICICI Bank (Rs 127 crore)
and State Bank of India (Rs 92 crore).
Satyam Computer Services topped volumes chart on BSE clocking
volumes of 1.44 crore shares followed by Firstsource Solutions
(80.20 lakh shares), Wire & Wireless India (76.67 lakh shares),
Unitech (74.40 lakh shares) and Spice Communications (65.67 lakh
shares).
Great Eastern Shipping Company climbed 2.56% to Rs 172.05 as Baltic
Exchange's chief sea freight index Baltic Dry Index which tracks
rates to ship dry commodities, hit a four-month high on Thursday,
19 February 2009.
barometer index BSE Sensex falling below the psychologically
important 9,000 level. Nevertheless, a late recovery helped cut the
market cut steep intraday losses. The Sensex lost 199.42 points, or
2.21% at 8,843.21, off 80.13 points from the day's low.
Weak European bourses, lower US index futures and sustained selling
pressure by foreign institutional investors (FIIs), whose outflow
in calendar year 2009 has totaled Rs 5094.30 crore (till 18
February 2009), weighed on the sentiment. According to provisional
data on NSE, FIIs were net sellers worth Rs 363.48 crore while
mutual funds bought shares worth Rs 108.44 crore on Thursday, 19
February 2009.
The market opened on a weak note on weak global markets. An
intermittent recovery from lower level was witnessed during the
day. The recovery from lower level in early afternoon trade was
triggered by Finance Minister Pranab Mukherjee's comments that the
government will provide additional resources to stimulate demand
and provide more help to key sectors such as housing,
infrastructure and real estate. However, the intraday recovery
proved short-lived as the market came off the higher level later.
A sell-off gripped the market in mid-afternoon trade as European
markets, which opened after Indian markets, declined sharply in
early trade. At the day's low of 8763.08, the Sensex shed 3.09% in
mid-afternoon trade. After the sharp slide, the market immediately
witnessed a rebound from lower level as the finance minister's
statement raised hopes for more measures from the government for
the economy. Rate cut hopes also aided the intraday rebound in late
trade.
The government has so far announced two stimulus packages including
tax cuts and the capital injections for banks to shield the
domestic economy from the impact of the global financial sector
crisis and recession in key global economies.
Meanwhile Commerce minister Kamal Nath is likely to announce an
export booster package later this month which would address some of
the crucial concerns of the exporters. The sops under consideration
include simplification of rules for service tax refund, extension
of time given to exporters to meet export obligation and an
increase in rates of input duty reimbursement schemes like drawback
and DEPB for some sectors.
Global cues were weak. Trading in US index futures showed the Dow
could fall 130 points at the opening bell on Friday, 20 February
2009. European shares fell sharply on Friday, 20 February 2009,
with banks the worst performers, as investors continued to fret
about the outlook for the global economy. Key benchmark indices in
UK, Germany and France were down by between 2.38% and 3.08%.
Asian markets declined today, 20 February 2009, after Wall Street
tumbled to six-year low on Thursday, 19 February 2009, as a gloomy
US unemployment data reinforced fears the world's largest economy
is in a severe slump. Key benchmark indices in Hong Kong, Japan,
Singapore, South Korea and Taiwan were down by between 2.03% and
3.72%. However, China's Shanghai Composite rose 1.54%.
US markets tumbled on Thursday, 19 February 2009 on mounting
concerns about the fate of major banks and signs that the recession
is deepening, pushing the Dow to its lowest level in more than six
years. The Dow Jones industrial average lost 89.68 points, or
1.19%, at 7,465.95. The Standard & Poor's 500 Index fell 9.48
points, or 1.2%, at 778.94. The Nasdaq Composite index shed 25.15
points, or 1.71%, at 1,442.82.
US government data showed a record number of continuing
unemployment claims, at nearly 5 million, and a surprisingly sharp
drop in manufacturing in the mid-Atlantic states.
The BSE 30-share Sensex lost down 199.42 points or 2.21% at
8,843.21. The Sensex opened 98.85 points lower at 8,943.78, also
its day's high. At the day's low of 8,763.08, the Sensex lost
279.55 points in mid-afternoon trade.
The S&P CNX Nifty lost 52.90 points or 1.9% to 2736.45. Nifty
February 2009 futures were at 2722, a discount of 14.45 points as
compared to the spot closing.
The barometer index BSE Sensex is down 804.10 points or 8.33% in
calendar 2009 from its close of 9,647.31 on 31 December 2008. The
Sensex currently trades at a PE multiple of 10.19 based on
projected earnings per share (EPS) of about Rs 867 for the
30-Sensex firms in the year ending March 2010.
The market breadth, indicating the overall health of the market,
was weak on BSE with 1631 shares declining as compared with 793
that advanced. A total of 88 shares remained unchanged.
BSE clocked a turnover of Rs 2591 crore, lower than Rs 2,428.97
crore on Thursday, 19 February 2009. Turnover in NSE's futures &
options jumped to Rs 43149.65 crore compared with Rs 30637.67 crore
on Thursday, 19 February 2009.
All the sectoral indices on BSE were in the red. The BSE Power
index (down 1.41%), the BSE Auto index (down 1.11%), the BSE PSU
index (down 1.56%), BSE Consumer Durables index (down 1.09%), BSE
Realty index (down 1.93%), the BSE Capital Goods index (down
1.95%), and the FMCG index (down 0.28%), BSE Healthcare index (down
1.12%), BSE Oil & Gas index (down 2.17%), outperfomed the Sensex.
The BSE TECk index fell 2.21%, in line with Sensex's fall.
The BSE IT index (down 2.69%), BSE Bankex (down 3.49%), and BSE
Metal index (down 2.67%), underperformed the Sensex.
Among the 30-share Sensex pack 26 declined while only 4 of them
managed gains. DLF (up 0.74%), ACC (up 0.66%), and Maruti Suzuki
India (up 0.55%), gained from the Sensex pack.
Banking stocks were hard hit as fears of rising defaults in a
weakening economy and overnight fall in American Depository
Receipts (ADRs), offset hopes of rate cuts from the Reserve Bank of
India (RBI). India's largest private sector bank by net profit
ICICI Bank plunged 7.03% to Rs 336.10 on a 1.36% fall in its ADR on
Thursday, 19 February 2009. It was the top loser from the Sensex
pack.
India's second largest private sector bank by net profit HDFC Bank
lost 2.12% to Rs 866.10 as its ADR fell 0.26% on Thursday, 19
February 2009. After market hours on 19 February 2009, the bank on
a private placement basis issued unsecured, non-convertible,
redeemable subordinated bonds in the nature of debentures towards
tier - II capital as with upper tier - II bonds for an amount
aggregating Rs 200 crore and lower tier - II bonds for an amount
aggregating Rs 150 crore.
India's largest bank in terms of assets and branch network State
Bank of India shed 0.73% to Rs 1051.80
India's largest dedicated housing finance company by total income
Housing Development Finance Corporation dropped 2.35% to Rs 1359.90
as the company expects 2009/10 loan growth at about 20%, slightly
lower than the previous year's rise, as property demand falls.
Inflation rose at the lowest level in 13-months at 3.92% in the
year through 7 February 2009, much lower than previous week's
annual rise of 4.39%, data released by the government on Thursday,
19 February 2009, showed. Falling inflation provides room for the
Reserve Bank of India (RBI) to cut interest rates further to shield
the domestic economy from the global financial sector crisis and
recession in key global economies.
Only on Wednesday, 18 February 2009, the Reserve Bank of India
Governor D Subbarao said that there is room to cut interest rates
further. The statement comes at a time when the market is expecting
further action from the central bank.
Market men see a bigger role for RBI to shield the domestic economy
from the global financial sector crisis and recession in key global
economies in the coming months as election code will be in force by
the end of the month which means that there cannon be any policy
action from the government.
India's largest private sector company by market capitalization and
oil refiner Reliance Industries (RIL) shed 2.99% to Rs 1255 on
fears a worsening global economy will hit demand for
petrochemicals. Nevertheless the stock recovered from day's low of
Rs 1241.30.
India's second largest cellular services provider by sales Reliance
Communications (RCom) slumped 4.36% to Rs 155.60 on reports the
government on Thursday, 19 February 2009 reportedly informed the
Parliament that it will do a special audit on the books of RCom and
its subsidiaries over allegations that the telecommunications
company had diverted revenues earned from its mobile services to a
subsidiary to bring down the total amount it had to pay to the
government as licence fee and spectrum charge.
India's largest private sector power generation firm by sales
Reliance Infrastructure slipped 3.04% to Rs 493.05. The finance
ministry late evening on 18 February 2009 reportedly told
Parliament that companies Reliance Infrastructure and Reliance
Petroleum were being investigated for alleged violation of norms
governing insider trading and overseas borrowings, respectively.
Reliance Petroleum fell 2.01% to Rs 78.10
IT shares declined after research firm Gartner warned of an
unprecedented deceleration in IT spending across markets and
geographic regions in 2009, after its annual global survey of Chief
information officer (CIOs).
India's third largest software services exporter, Wipro slipped
2.16% to Rs 215.60 despite a 1.12% rise in ADR on Thursday, 19
February 2009. India's second largest software services exporter
Infosys Technologies lost 2.33% to Rs 1180 as its ADR fell 1.71% on
Thursday, 19 February 2009. India's largest software services
exporter by sales TCS slipped 3.01% to Rs 475 and India's fifth
largest IT exporter by sales HCL Technologies declined 5.08% to Rs
103.60.
Shares of computer hardware firms HCL Infosystems (down 2.50%),
Moser Baer India (down 5.08%), CMC (down 1.07%), Tata Elxsi (down
1.85%), declined.
Overall, the total IT market globally is expected to grow by only
0.5% in 2009, the Gartner report added.
Educomp Solutions tumbled 11.86% to Rs 1776.60 on reports the
market regulator Securities & Exchange Board of India (Sebi) is
probing the dealings in the shares of education software firm on
bourses.
IT shares fell despite a weak rupee. Indian rupee slipped today on
concerns of capital outflows following decline in global markets.
The partially convertible rupee was at 49.86/88 per dollar against
previous close of 49.62. A weaker rupee boosts operating margins of
IT firms which earn a lion's share of revenue from exports.
Rate sensitive real estate shares rebounded in late trade on hopes
lower rates will spur housing demand. India's largest realty
developer by market capitalisation DLF rose 0.74% to Rs 157.50, off
day's low of Rs 147.50. Foreign brokerage Goldman Sachs in its
recent research report lowered DLF's 12-month target price to Rs
124 post weak Q3 December 2008 results.
Unitech (down 1.40% to Rs 28.20, from day's low of Rs 27.60), HDIL
(down 2.15% to Rs 77.60 after touching day's low of Rs76.50), and
Indiabulls Real Estate (down 3.97% to Rs 93.20 after hitting day's
low of Rs 92.50), fell.
India's largest engineering and construction firm by sales Larsen &
Toubro fell 2.47% to Rs 624.80 after its chief A M Naik said it
will decide on Satyam deal after evaluating the Company Law Board's
order on the bidding process for the fraud-hit IT firm. L&T is the
single largest shareholder in Satyam with a 12% stake.
India's largest power equipment maker by sales Bharat Heavy
Electrical (Bhel) fell 0.58% to Rs 1374.25, off sharply from day's
low of Rs 1347.10. The early fall came on reports quoting Chairman
K. Ravi Kumar said the company expects profit growth to slow to 10%
in the year ending March 2009 on higher raw material costs and
wages, compared with 18% in March 2008.
ABB rose 1.82% to Rs 400.35 after the company reported higher than
expected net profit in the year ended December 2008. ABB's net
profit rose 11.3% to Rs 547.41 crore on a 16.1% increase in total
income to Rs 6967.45 crore in the year ended December 2008 over
December 2007. The company has recommended a dividend of Rs 2.20
per share of face value Rs 2 each for the year ended on December
2008.
Metal stocks fell on worries a weakening domestic and global
economy will hit demand for metals. India's largest copper maker by
sales Sterlite Industries India (down 3.02% to Rs 248.75), Sail
(down 2.50%), Sesa Goa (down 6.22%), Nalco (down 2.02%), declined.
India's largest private sector steel maker by sales Tata Steel
dropped 2.44%
India's largest private sector aluminium maker by sales Hindalco
Industries fell 1.50% to Rs 39.50. As per recent reports, the
company plans to raise Rs 25000 crore by pledging assets and future
earnings of its units.
Auto stocks fell on profit booking after a recent rise. The BSE
Auto index was down 1.11% to 2,544.47 today, 20 February 2009. The
BSE Auto index rose 2.15% in one month to 19 February 2009.
Tata Motors (down 0.45%), Mahindra & Mahindra (down 3.62%), Hero
Honda Motors (down 1.81%) declined. However Bajaj Auto (up 0.76%)
and Maruti Suzuki India (up 0.55%), rebounded from day's low.
FMCG shares were mixed, outperforming the Sensex, on defensive
buying. Hindustan Unilever (down 0.22%), Britannia Industries (down
0.28%), ITC (down 0.03%), United Spirits (down 1.38%), and Nestle
India (down 0.26%), declined. Some FMCG shares Dabur India (up
0.11%), Tata Tea (up 4.36%) and Marico Industries (up 0.60%) rose
Educomp Solutions was the top traded counter on BSE with turnover
of Rs 293.70 crore followed by Reliance Industries (Rs 170.30
crore), United Spirits (Rs 153.30 crore), ICICI Bank (Rs 127 crore)
and State Bank of India (Rs 92 crore).
Satyam Computer Services topped volumes chart on BSE clocking
volumes of 1.44 crore shares followed by Firstsource Solutions
(80.20 lakh shares), Wire & Wireless India (76.67 lakh shares),
Unitech (74.40 lakh shares) and Spice Communications (65.67 lakh
shares).
Great Eastern Shipping Company climbed 2.56% to Rs 172.05 as Baltic
Exchange's chief sea freight index Baltic Dry Index which tracks
rates to ship dry commodities, hit a four-month high on Thursday,
19 February 2009.
Wednesday, January 7, 2009
Sebi horrified by Satyam revelations; studying actions
Terming disclosures of financial wrong-doings at Satyam as an event of “horrifying magnitude,” market regulator Sebi on Wednesday said it would take all steps under the law for which it has started discussions with government and bourses.
“We are in touch with Ministry of Corporate Affairs... we are also in discussion with them as to what steps need to be taken from the perspective of power they have under the law and SEBI has under the law,” Sebi Chairman C B Bhave said.
SEBI was also forwarded the letter written by Satyam’s chairman Ramalinga Raju on his stepping down with the confession that the profits in the company were inflated over the years, leading to wide gap between real and imaginary assets.
Bhave said the development would have serious implications for the market. Jurisdictions in this case lies with various authorities and accordingly, “we are in touch with Ministry of Corporate Affairs for coordinated action”.
He also emhpasised on the need to go beyond the letter and “decide the course of action.”
Bewildered by the disclosures made by Raju in his letter to Sebi and the Board, which was also sent to stock exchange authorities, Bhave said it was “most surprising” that cash balance that was non-existent got certified. The case also raises the issue of “authenticity of accounts” that have been audited.
“Our main effort is to see that whatever facts are available with any regulatory agency, those are put out and investors know the truth... I am sure we will have to learn few lessons from this as we get through the facts,” he said.
“We are also in touch with stock exchanges to see what will be the appropriate action,” he said.
Asked about the action that the company, also listed in New York Stock Exchange, could face in the US, Bhave said: “This is probably not the time when SEC would be available. My guess is that Satyam will have to make similar disclosures there as well. I am not entirely familiar with their law with regard to areas as to what actions they would be taking.”
Commenting on the unfolding development that began with the fiasco of the USD 1.6 billion dollar acquisition of two Maytas firms promoted by Raju’s family, he said: “This is an event of horrifying magnitude and it’s first of its kind.”
On whether Sebi would be making a special request to the Satyam Board that is to meet on 10 January, he said all these things are being considered and it is being made sure that the Ministry of Corporate Affairs and Sebi act in coordination on this matter.
“We are in touch with Ministry of Corporate Affairs... we are also in discussion with them as to what steps need to be taken from the perspective of power they have under the law and SEBI has under the law,” Sebi Chairman C B Bhave said.
SEBI was also forwarded the letter written by Satyam’s chairman Ramalinga Raju on his stepping down with the confession that the profits in the company were inflated over the years, leading to wide gap between real and imaginary assets.
Bhave said the development would have serious implications for the market. Jurisdictions in this case lies with various authorities and accordingly, “we are in touch with Ministry of Corporate Affairs for coordinated action”.
He also emhpasised on the need to go beyond the letter and “decide the course of action.”
Bewildered by the disclosures made by Raju in his letter to Sebi and the Board, which was also sent to stock exchange authorities, Bhave said it was “most surprising” that cash balance that was non-existent got certified. The case also raises the issue of “authenticity of accounts” that have been audited.
“Our main effort is to see that whatever facts are available with any regulatory agency, those are put out and investors know the truth... I am sure we will have to learn few lessons from this as we get through the facts,” he said.
“We are also in touch with stock exchanges to see what will be the appropriate action,” he said.
Asked about the action that the company, also listed in New York Stock Exchange, could face in the US, Bhave said: “This is probably not the time when SEC would be available. My guess is that Satyam will have to make similar disclosures there as well. I am not entirely familiar with their law with regard to areas as to what actions they would be taking.”
Commenting on the unfolding development that began with the fiasco of the USD 1.6 billion dollar acquisition of two Maytas firms promoted by Raju’s family, he said: “This is an event of horrifying magnitude and it’s first of its kind.”
On whether Sebi would be making a special request to the Satyam Board that is to meet on 10 January, he said all these things are being considered and it is being made sure that the Ministry of Corporate Affairs and Sebi act in coordination on this matter.
Satyam chief Raju resigns, says profits inflated
The chairman of embattled Satyam Computer Services resigned on Wednesday and said the company’s profits had been inflated over the last several years, sending the stock down 60%.
The shocking revelation comes after India’s fourth-largest outsourcer’s botched attempt last month to buy two construction firms in which the company’s founders held stakes and key customer World Bank dropping its ties with the outsourcing company.
“The gap in the balance sheet has arisen purely on account of inflated profits over a period of last several years,” Satyam Chairman Ramalinga Raju said in a statement to stock exchanges on Wednesday.
Satyam’s woes make it one of India’s most high-profile company scandals in recent years. The comments from Satyam sent Indian equity markets in a tailspin, with Bombay’s main benchmark index falling 3.9%.
Raju has written: “It is with deep regret and tremendous burden that I am carrying on my conscience, that I would like to bring the following facts to your notice: The Balance Sheet carries as of 30 September, 2008, a) Inflated (non-existent) cash and bank balances of Rs 5,040 crore (as against Rs 5,361 crore reflected in the books); b) An accrued interest of Rs 376 crore, which is non-existent.
Satyam, which specialises in business software and back-office services for clients such as General Electric, and Nestle, was due to hold a board meeting on 10 January to consider a buyback following a rash of broker downgrades even after the acquisitions were called off.
“I think there is no future for this stock. This case for India is similar to what happened to Enron in the US,” said Jigar Shah, senior vice-president at Kim Eng Securities.
“It will not stop at Satyam. Many more companies will come into scrutiny like that. There is a strong possibility investments in India will be affected,” he said.
Raju has admitted that the Maytas acquisition deal was the promoters’ last attempt to fill the gaps on company’s balance sheets.
“I sincerely apologise to all Satyamites and stakeholders, who have made Satyam a special organisation, for the current situation,” B Ramalinga Raju said in a notice sent to the stock exchanges.
“I am now prepared to subject myself to the laws of the land and face consequences thereof,” Raju said.
He will continue in the position till the company’s board is expanded, according to a statement sent to BSE. Meanwhile, Ram Myanpati will act as interim CEO.
Also while Raju recommended DSP Merrill Lynch be entrusted the task of “quickly exploring some merger opportunities,” the company informed the stock exchanges that the investment banker has terminated its engagement with Satyam
The shocking revelation comes after India’s fourth-largest outsourcer’s botched attempt last month to buy two construction firms in which the company’s founders held stakes and key customer World Bank dropping its ties with the outsourcing company.
“The gap in the balance sheet has arisen purely on account of inflated profits over a period of last several years,” Satyam Chairman Ramalinga Raju said in a statement to stock exchanges on Wednesday.
Satyam’s woes make it one of India’s most high-profile company scandals in recent years. The comments from Satyam sent Indian equity markets in a tailspin, with Bombay’s main benchmark index falling 3.9%.
Raju has written: “It is with deep regret and tremendous burden that I am carrying on my conscience, that I would like to bring the following facts to your notice: The Balance Sheet carries as of 30 September, 2008, a) Inflated (non-existent) cash and bank balances of Rs 5,040 crore (as against Rs 5,361 crore reflected in the books); b) An accrued interest of Rs 376 crore, which is non-existent.
Satyam, which specialises in business software and back-office services for clients such as General Electric, and Nestle, was due to hold a board meeting on 10 January to consider a buyback following a rash of broker downgrades even after the acquisitions were called off.
“I think there is no future for this stock. This case for India is similar to what happened to Enron in the US,” said Jigar Shah, senior vice-president at Kim Eng Securities.
“It will not stop at Satyam. Many more companies will come into scrutiny like that. There is a strong possibility investments in India will be affected,” he said.
Raju has admitted that the Maytas acquisition deal was the promoters’ last attempt to fill the gaps on company’s balance sheets.
“I sincerely apologise to all Satyamites and stakeholders, who have made Satyam a special organisation, for the current situation,” B Ramalinga Raju said in a notice sent to the stock exchanges.
“I am now prepared to subject myself to the laws of the land and face consequences thereof,” Raju said.
He will continue in the position till the company’s board is expanded, according to a statement sent to BSE. Meanwhile, Ram Myanpati will act as interim CEO.
Also while Raju recommended DSP Merrill Lynch be entrusted the task of “quickly exploring some merger opportunities,” the company informed the stock exchanges that the investment banker has terminated its engagement with Satyam
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