Post Market Commentry

The Key benchmark indices posted strong gains amid high volatility after the central bank cut repo rate. The BSE Sensex provisionally rose 312.26 points or 3.13%. 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. However, the market breadth was negative, indicating a cautious undertone. 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 251 points at the opening bell. As per the provisional figures, the BSE 30-share Sensex jumped 312.26 points or 3.13% to 10,287.61. 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. 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 65.70 points or 2.14% to 3,140.05 as per the provisional figures. 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. The BSE Mid-Cap index was down 1.06% at 3,507.13 and The BSE Small-Cap index was down 1.17% at 4,119.03. Both the indices underperformed the Sensex. The market breadth was negative. On BSE, 914 shares advanced as compared to 1637 that declined. 55 shares remained unchanged. India’s largest private sector company by market capitalization and oil refiner Reliance Industries rose 1.36% to Rs 1,323, 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. From the pack of 30 Sensex stocks, 21 rose. Bharti Airtel (up 5.61% to Rs 714.80), ITC (up 4.51% to Rs 165.70) and Ranbaxy Laboratories (up 4% to Rs 266.45) were among the top gainers from the Sensex pack. Grasim Industries (down 8% to Rs 1,189.95), Mahindra & Mahindra (down 5.67% to Rs 416) and Tata Power Company (down 3.23% to Rs 724) were the only losers from the Sensex pack. India’s largest cement maker by sales ACC fell 5.94% to Rs 460 off day’s high of Rs 513. India’s largest real estate player by market capitalization DLF declined 5.77% to Rs 274.50 off day’s high of Rs 305. Reliance Infrastructure fell 1.16% to Rs 485.05 off day’s high of Rs 522. Most lenders rose as 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 7.22% to Rs 1,098, 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 1.98% to 5.98%. India’s largest home loan lender by operating revenue HDFC jumped 5.73%. IT stocks gained on sharp spurt of American depository receipts (ADR) last week and on fall in rupee. The BSE IT index rose 7.58% and was the major gainer from the sectoral indices on BSE. 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 Akruti City moved up 1.13%, as net profit spurted 195.34% to Rs 192.24 crore in Q2 September 2008 over Q2 September 2007. Balaji Telefilms lost 8.15% after Hindi entertainment channel Star issued a notice for the termination of a long running television serial. Petronet LNG rose 0.91% 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 2.96% 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. European markets which opened after Indian market were firm. Key benchmark indices in UK, France and Germany were up by between 1.19% to 1.92%.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.