Rate cut, firm global markets lift Sensex by 248 points

Central bank’s repo rate cut provided a much needed respite rally to the investors which have seen a massive erosion in their wealth in the past few days. The volatility was high and the market breadth was weak, indicating a cautious undertone. The BSE Sensex rose 247.74 points or 2.48%. Firm Asian and European markets provided added support to domestic bourses.

Fall in interest rate boosts stocks as it results in lower borrowing costs for corporates. The Reserve Bank of India (RBI), today, cut the repo rate, by 100 basis points to 8% with immediate effect. Repo rate is the rate at which the RBI provides funds to banks against the collateral of government bonds for a day to three days.

Banking stocks and IT stocks rose. Satyam Computer Services and Wipro rose more than 8.5% each while Tata Consultancy Services rose more than 9%.

Asian and European stocks were firm as investors took comfort in global efforts to prop up the banking system, allowing for some bargain hunting. Trading in US index futures suggested the Dow would rise 141 points at the opening bell.

The BSE 30-share Sensex jumped 247.74 points or 2.48% to 10,223.09. The index surged 562.70 points at the day's high of 10,538.05 in afternoon trade soon after the announcement of the rate cut by the RBI at about 12:45 IST. The Sensex rose 47.93 points at day’s low of 10,023.28 in mid-afternoon trade.

The S&P CNX Nifty was up 48.45 points or 1.58% to 3,122.80.

BSE clocked a turnover of Rs 3,684 crore today as compared to a turnover of Rs 4,134.51 crore on 17 October 2008.

From a recent high of 11,483.40 on 14 October 2008, Sensex had tumbled 1508.05 points or 13.13% to 9975.35 on Friday, 17 October 2008. The barometer index is down 10,063.90 points or 49.6% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 10,983.68 points or 51.79% below its all-time high of 21,206.77 struck on 10 January 2008.

Nifty October 2008 futures were at 3141, at a premium of 18.20 points as compared to spot closing of 3122.80. NSE's futures & options (F&O) segment turnover was Rs 51,272.30 crore, which was higher than Rs 43,767.13 crore on Friday, 17 October 2008.

The BSE Mid-Cap index was down 1.09% at 3,506.35 and The BSE Small-Cap index was down 1.32% at 4,112.82. Both the indices underperformed the Sensex.

Only a few sectors outperfored the Sensex. BSE IT index (up 8.05% to 2,741.46), BSE Teck index (up 5.45% to 2,181), BSE Bankex (up 2.69% to 5,695.72) outperformed the Sensex.

BSE Realty index (down 3.73% to 2,430.61), BSE Power index (down 1.99% to 1,678.22), BSE Capital Goods index (down 0.98% to 7,170.50), BSE Auto index (down 0.87% to 3,072.52), BSE PSU index (down 0.4% to 5,241.63), BSE Consumer Durables index (was flat at 2,085.28), BSE Oil & Gas index (up 0.66% to 6,522.50), BSE Metal index (up 1.48% to 5,887.36), BSE HealthCare index (up 1.6 % to 3,260.49), BSE FMCG index (up 2.08% to 1,897.58) underperformed the Sensex.

The market breadth was negative. On BSE, 920 shares advanced as compared to 1643 that declined. 53 shares remained unchanged.

Battered Reliance Industries, India's largest private sector company by market capitalization and oil refiner Reliance Industries, rose 1.23% to Rs 1,321.25. The stock came off the day’s high of Rs 1,379.90. From a recent high of Rs 1619.70 on 14 October 2008, the stock plunged 19.41% to Rs 1,438 on 17 October 2008 on concerns of fall in refining margins.

India’s largest drug maker by sales Ranbaxy Laboratories rose 2.15% to Rs 261.70. Japan's Daiichi Sankyo has acquired 52.5% of Ranbaxy Laboratories making the Indian firm a subsidiary, the two companies said in a joint statement today. Daiichi Sankyo bought shares from Ranbaxy's founders and through an open offer from other shareholders. It also subscribed to shares and warrants worth $736 million, the statement said. Daiichi Sankyo had agreed in June 2008 to take over Ranbaxy in a deal worth up to $4.6 billion.

From the pack of 30 Sensex stocks, 20 rose. Bharti Airtel (up 4.62% to Rs 708.05), ITC (up 4.07% to Rs 165) and Jaiprakash Associates (up 1.42% to Rs 67.70) were among the top gainers from the Sensex pack.

Grasim Industries (down 7.96% to Rs 1,190.50), Reliance Communications (down 0.79% to Rs 232.10) and Tata Power Company (down 3.72% to Rs 720.40) were the losers from the Sensex pack.

India’s largest cement maker by sales ACC fell 6.13% to Rs 459.05 off day’s high of Rs 513. Reliance Infrastructure fell 1.87% to Rs 481.55 off day’s high of Rs 522.

Most lenders rose on hopes lower rates will boost lending. However, the prices were choppy. HDFC Bank, India’s second largest private sector bank by net profit, which last week reported strong Q2 results, rose 5.94% to Rs 1,084.85. The stock came off the day’s high of Rs 1,113. The bank's net profit rose 43.2% to Rs 527.98 crore on 62.8% growth in total income to Rs 4,634.32 crore in Q2 September 2008 over Q2 September 2007 on 16 October 2008.

ICICI Bank and State Bank of India rose between 1.43% to 4.95%. India’s largest home loan lender by operating revenue HDFC jumped 5.73%.

Canara Bank spurted 5.05%, as net profit jumped 31.84% to Rs 529.43 crore in Q2 September 2008 over Q2 September 2007.

Most realty stocks fell even as cut in lending rates will spur demand for residential properties. From the 14 real estate stocks in BSE Realty index, four rose, while the rest declined. Unitech fell 5.66%. Indiabulls Real Estate rose 7.5%. India’s largest real estate player by market capitalization DLF declined 5.77% to Rs 274.50 off day’s high of Rs 305. DLF, Indiabulls Real Estate and Unitech have a weightage of 42.53% 22.09% and 11.03%, respectively, in the BSE Realty index.

Rate sensitive auto stocks were mixed even as lower rates may spur sales which are largely driven through finance. Mahindra & Mahindra, and Hero Honda Motor fell by between 0.7% to 3.36%. Tata Motors and Maruti Suzuki India rose by between 0.84% to 5.39%.

IT stocks gained on sharp spurt of American depository receipts (ADR) last week and on fall in rupee. India’s fourth largest IT exporter by sales Wipro rose 8.95% to Rs 280.65 off day’s high of Rs 289. Wipro ADR jumped 25% to end at $8.3 on Friday 17 October 2008 over the previous week's close of $6.63.

India’s third largest IT exporter by sales Satyam Computer Services rose 8.67% to Rs 289. Its ADR jumped 16% to end at $14.39 in the week ended 17 October 2008. The company raised its earnings guidance in rupee terms at the time of announcing Q2 September 2008 results on Friday, 17 October 2008.

India’s second largest IT exporter by sales Infosys rose 7.19% to Rs 1297.80. Infosys ADR gained 8% to end at $25.96 in the week ended 17 October 2008. India’s largest IT services provider by sales Tata Consultancy Services jumped 9.47%.

The rupee depreciated marginally 0.31% against the dollar to 48.83 as compared to that of the previous working day`s 48.68. A weak rupee results in higher revenues for IT companies as they earn most of their revenues in dollar terms

PSU OMC stocks rose despite rise in crude oil prices from the lower levels. BPCL, HPCL and Indian Oil Corporation rose between 0.4% to 1.7%. State-run oil marketing firms suffer revenue loss on domestic sale of petrol, diesel, LPG and kerosene at a controlled price.

US crude rose $2 to $71.85 a barrel, on Friday, 17 October 2008 spurred by a broader rise across financial markets and expectations Organisation of Petroleum Exporting Countries (OPEC) could cut output at an emergency meeting next week.

Cement stocks fell on weak results reported by Ultra Tech Cement which lost 1.1%. The company's net profit fell 2.04% to Rs 368.15 crore in Q2 September 2008 over Q2 September 2007. India’s largest cement maker by sales ACC fell 6.13% to Rs 459.05, off the day’s high of Rs 513. Grasim Industries & Birla Corporation fell by between 1.85% to 7.96%.

Shree Renuka Sugars tumbled 7.76%, after the company acquired a majority stake in a sugar firm based in Karnataka.

Cadila Healthcare rose 0.67% on receiving US Food & Drug Administration approval for a new drug.

Apollo Hospitals Enterprise fell 2.04% following the decision to consider sub-division of equity shares.

Raymond rose 0.21% after a block deal was struck in the counter at Rs 109, at a premium of 13.95% over the previous day's closing price.

United Phosphorus slumped 7.47% on reports of plans to buy stake in an Israel agrochemicals based company for around $1.1 billion.

Godawari Power & Ispat fell 4% after the company decided to consider buyback of equity shares.

Moser Baer India surged 2,25%, on reports the company plans invest over $800 million in various businesses in the next 18 months.

Akruti City moved up 1.17%, as net profit spurted 195.34% to Rs 192.24 crore in Q2 September 2008 over Q2 September 2007.

Balaji Telefilms lost 11.15% after Hindi entertainment channel Star issued a notice for the termination of a long running television serial.

Petronet LNG rose 1.03% even as net profit fell 10.51% to Rs 103.36 crore on 0.6% decline in total income to Rs 1,672.69 crore in Q2 September 2008 over Q2 September 2007.

Indian Hotels Company fell 2.25% as net profit fell 4.84% to Rs 50.66 crore on 8.95% rise in total income to Rs 399.44 crore in Q2 September 2008 over Q2 September 2007.

Reliance Natural Resources clocked the highest volume of 1.17 crore shares on BSE. Reliance Petroleum (94.12 lakh shares), Chambal Fertilisers and Chemicals (82.39 lakh shares), Cals Refineries (63.36 lakh shares) and Housing Development & Infrastructure (61.01 lakh shares) were the other volume toppers in that order.

Reliance Capital clocked the highest turnover of Rs 290.34 crore on BSE. Reliance Industries (Rs 274.98 crore), State Bank of India (Rs 183.72 crore), Axis Bank (Rs 175.52 crore) and ICICI Bank (Rs 137.28 crore) were the other turnover toppers in that order.

European markets which opened after Indian market were firm. Key benchmark indices in UK, France and Germany were up by between 0.92% to 1.64%.

Asian markets which opened before Indian market, rallied, with valuations growing attractive, and after governments around the world rushed out further steps to to stabilize the financial markets and revive the banking industry, which has been badly damaged by a crisis of confidence. Key benchmark indices in South Korea, China, Taiwan, Hong Kong, Japan and Singapore were up by between 1.93% to 4.78%.

Oil prices rose. US crude rose $2 to $71.85 a barrel, on Friday, 17 October 2008 spurred by a broader rise across financial markets and expectations Organisation of Petroleum Exporting Countries (OPEC) could cut output at an emergency meeting next week.