A rebound in index heavyweight Reliance Industries (RIL) helped the key benchmark indices bounce back in late trade in what was a choppy trading session. The recovery materialized in the last one hour of trade after the market had weakened in mid-afternoon trade. The BSE 30-share Sensex rose 20.31 points, recovering 233.24 points from the day`s low.
The market breadth, indicating the overall health of the market, was strong, as data showing further fall in inflation raised hopes of further cuts in interest rates by the central bank. Also aiding the late rebound was Commerce Minister Kamal Nath `s statement the government will consider another financial assistance package for the export sector next week. The package will target employment-oriented sectors, he said.
After initial gains triggered by upmove in bank shares, the market soon slipped into the red on concerns over the weakening global economy and uncertainty about the fate of the beleaguered US automakers. It cut losses later as stocks recovered in Japan. After moving into positive zone from negative zone in early afternoon trade, the market slipped into the red again later. The market extended losses in afternoon trade.
The market weakened further to register day`s low in mid-afternoon trade as European markets dropped in early trade and on lower US index futures. The market staged a comeback in late trade helped by recovery in index heavyweight Reliance Industries (RIL) in the last one hour of trade. The BSE Sensex swung 304.04 points between the day`s high and low.
Investors cashed in on gains after a recent strong rebound in prices. A fiscal stimulus package by the government and cut in interest rates by the Reserve Bank of India (RBI) helped the market stage a rebound this month. The BSE Sensex advanced 562.18 points or 6.18% to 9654.90 on 10 December 2008 from 9092.72 on 28 November 2008. Foreign institutional investors (FIIs) have turned buyers this month. FII inflow in December 2008 totaled Rs 727 crore (till 8 December 2008).
Falling inflation will provide further room for the RBI to cut rates further. Inflation based on the wholesale price index rose 8% in the year through 29 November 2008, lower than previous week`s annual rise of 8.4%, data released by the government today, 11 December 2008, showed. Lower rates may help revive the domestic economy, which has been witnessing a slowdown.
The Reserve Bank of India (RBI) D Subbarao on Wednesday, 10 December 2008, indicated that RBI`s forecast of a between 7.5% to 8% economic growth for the current fiscal year may be revised downwards. He also said that the fiscal year 2009-10 will be tougher.
Subbarao today said the RBI will continue to closely monitor the developments in the global and domestic financial markets and will take swift and effective action as and when needed. He said the central bank would endeavour to minimise the stress on various sectors of the economy which have been hurt by the global economic crisis.
India`s infrastructure sector output rose 3.4% in October 2008 from a year earlier, below a downwardly revised 4.8% annual growth in September 2008, data released by the government today, 11 December 2008, showed. The infrastructure sector accounts for 26.68% of India`s industrial output.
European stocks dropped on renewed concerns over the health of the global economy and on uncertainties surrounding Washington`s auto rescue plan. Key benchmark indices in UK, Germany and France were down by between 0.56% and 1.21%.
The House of Representatives on Wednesday approved a bailout legislation that would force US automakers to restructure or fail. However, prospects for passage of the legislation in the US Senate appears grim, reports suggest. Trading in US futures indicated the Dow could fall 23 points at the opening bell.
Recent economic data continues to highlight the extent of that global slowdown. China`s exports shrank unexpectedly in November 2008, while industrial output in several European economies sank, according to data on Wednesday, 10 December 2008.
The Asian Development Bank today, 11 December 2008, said growth in developing nations in the Asian region is seen slowing to an eight-year low of 5.8% in 2009, joining the chorus of increasingly pessimistic calls made from brokerages to international bodies.
The US recession will tighten its grip next year as unemployment rises and weak home and stock prices imperil consumers, finance firms and debt-laden businesses, a UCLA Anderson Forecast report released on Thursday, 11 December 2008 said. Additionally, a sustained retreat in prices for goods and services is a very real possibility that would further drag on the economy, according to the forecasting unit`s report.
Corporate news has added to worries about global growth. Major companies worldwide such as Rio Tinto are announcing steep job cuts as they seek ways to cope with a crisis of a magnitude not seen in decades.
Stocks moved into the green from red in Japan on hopes aggressive rate cuts and government actions around the world to revive economic growth could limit the depth of a global recession. The Nikkei 225 average was up 0.70%. South Korea`s KOSPI gained 0.75% after the central bank cut its key interest rate by an unprecedented 100 basis points to a record low 3%, double the reduction that analysts had forecast. Hong Kong`s Hang Seng index, too, reversed early losses and was up 0.23%. However, other Asian markets from China, Taiwan, and Singapore, were down by between 0.07% and 2.28%.
Governments worldwide are looking to spend their way out of sharply slowing economic growth via various stimulus measures, while expectations are rising they will also step in to help sectors and companies in trouble. US President-elect Barack Obama announced large infrastructure investment plans last weekend.
The Swiss National Bank today slashed interest rates by 50 basis points, in a bid to save Switzerland`s economy from a deeper recession.
The BSE 30-share Sensex rose 20.31 points, or 0.21%, to 9,675.21, as per provisional closing. At the day`s high of 9,746.01, the Sensex gained 91.11 points in early trade. The Sensex lost 212.93 points at the day`s low of 9,441.97 in mid-afternoon trade.
The S&P CNX Nifty gained 3.75 points, or 0.13%, to 2,932 as per provisional closing
A fiscaltimulus package by the government and cut in interest rates by the Reserve Bank of India (RBI) helped the market stage a rebound this month. The BSE Sensex advanced 562.18 points or 6.18% to 9654.90 on 10 December 2008 from 9092.72 on 28 November 2008. Foreign institutional investors (FIIs) have turned buyers this month. FII inflow in December 2008 totaled Rs 727 crore (till 8 December 2008)
The market breadth, indicating the overall health of the market, was strong on BSE with 1576 shares advancing as compared with 914 that declined. 92 shares remained unchanged.
The total turnover on the BSE amounted to Rs 4626 crore as compared to Rs 3362 crore by 14:30 IST
Among the 30-member Sensex pack, 20 declined while the rest advanced. Hindalco (down 4.01% to Rs 51.50), Grasim (down 2.05% to Rs 1076), and Hindustan Unilever (down 1.88% to Rs 240.50), edged lower from the Sensex pack.
Bharti Airtel (up 1.48% to Rs 746.65), and State Bank of India (up 0.91% to Rs 1200), edged higher from the Sensex pack.
India`s largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) advanced 5.04% to Rs 1289, rebounding sharply from low of Rs 1192.05 hit in mid-afternoon trade, following reports the government has withdrawn an affidavit filed in the Bombay High Court wherein it had asserted that RIL cannot sell its Krishna-Godavari basin gas to anyone without its approval to the pricing formula. In its affidavit filed last month, the government had also said that RIL could not sell KG basin gas at a price less than $4.20 per million British Thermal Units.
The withdrawal came following insistence by Reliance Natural Resources (RNRL) counsel Ram Jethmalani to cross-examine the government on the issue. RNRL galloped 31.92% to Rs 57.45 on massive volumes of 3.32 crore shares
India`s top dam builder by sales Jaiprakash Associates galloped 10.96% to Rs 83 on high volumes of 1.63 crore shares on momentum buying after its contract in derivative segment saw a build up of 10 lakh shares in open interest with the total reaching to 1.37 crore shares on Wednesday, 10 December 2008. It was the top gainer from the Sensex pack.
India`s top copper producer by sales Sterlite Industries (India) jumped 9.52% to Rs 298 boosted by a 12.2% surge in ADR on Wednesday, 10 December 2008.
India`s second largest cellular services provider by sales Reliance Communications jumped 5.52% to Rs 240.85 on reports that strategic investors, including telecom groups from the US and Europe, are in talks with the company to acquire around 20-26% stake
India`s top private sector bank by net profit ICICI Bank gained 2.29% to Rs 409.10 as its American depository receipt (ADR) jumped 8.68%.
Outsourcing focused IT pivotals slumped on fears a weak global economy would cut the amount firms spent on technology. India`s largest IT exporter by sales Tata Consultancy Services lost 6.55% to Rs 506 and was the top loser from the Sensex pack
India`s third largest IT exporter by sales Satyam Computer Services plunged 5.58% to Rs 223.10 despite its ADR gaining 0.49%
India`s second largest IT exporter by sales Infosys slipped 3.32% to Rs 1135 even as its ADR rose 0.56% on Wednesday, 10 December 2008. India`s fourth largest IT exporter by sales Wipro slipped 4.76% to Rs 249.20 even as its ADR gained 1.71%.
A firm rupee also weighed on IT shares. The rupee was trading firm at 48.50/52 per dollar, compared with Wednesday`s close of 49.03/04. A stronger rupee affects operating margins of IT firms negatively as they earn most of their revenues from exports.
Select shares retraced sharply from the day`s high. DLF (down 2.91% to Rs 255, after hitting a day`s high of Rs 270), Tata Steel (down 0.51% to Rs 216.30, off day`s high of Rs 225.90), and ONGC (down 1.91% to Rs 664, easing from early high of Rs 684), slipped.