Tags:
Journalism of Courage
Indian markets underperformed other global markets in spite of the mega economic package announced by the government and the Reserve Bank of India. With the package falling short of market expectations, the BSE Sensex rose 197.42 points or 2.2 per cent to 9,162.62, shedding 269.49 points from the day8217;s high. In a role reversal, domestic institutions were heavy sellers even as foreign investors accumulated stocks.
Faring better than India, key benchmark indices in China, Hong Kong, Japan, South Korea and Taiwan were up by between 3.57 per cent and 8.66 per cent. With investors taking heart from a rescue plan for US automakers and hopes that the sharp drop in oil prices will ease some of the pain for households facing mounting layoffs, European indices also surged tracking gains in the US market on Friday. France, UK and Germany were up by between 4.41 per cent and 6.32 per cent when Indian markets closed.
Volatility was high with the Sensex swinging 336.41 points between the day8217;s high and low 8212; at one stage the Sensex was up 467 points, or 5.2 per cent. After an initial surge triggered by the fiscal stimulus package by the government and rate cut by the central bank, the market soon cut gains as the fiscal stimulus package fell short of market expectation.
Analysts feel that to make an impact on the economy, a much higher public investment is required. They expect the fiscal deficit to top 3 per cent of gross domestic product in 2008/09, compared to a budget estimate of 2.5 per cent for 2008/09. State and central government deficit is set to exceed 7 per cent of gross domestic product in 2008/2009.
REALTY SOARS: Real estate shares rallied after the RBI on Saturday announced several measures, including a refinance facility for the National Housing Bank and priority sector status for housing loans up to Rs 20 lakh, to facilitate credit flow into the cash-strapped real estate sector. DLF galloped 9.77 per cent and Unitech 6.33 per cent.
BANK SHARES SHINE: Banking shares vaulted on hopes rate cut will boost lending growth. ICICI Bank gained 3.19 per cent. HDFC Bank rose 1.22 per cent and State Bank of India advanced 2.15 per cent.
HFCs IN LIMELIGHT: Housing finance companies advanced after the RBI said the National Housing Bank NHB will be given liquidity support to the extent of Rs 4,000 crore to provide liquidity support to housing finance companies HFC. HDFC up 5 per cent, LIC Housing Finance up 4.58 per cent and Dewan Housing Finance up 10 per cent gained.
STEEL GAINS: Steel shares advanced after government abolished export duty on iron ore. Tata Steel up 6.26 per cent, Steel Authority of India up 2.94 per cent, and JSW Steel up 3.99 per cent jumped.
INFRA UP: Infrastructure shares rallied after the government announced a stimulus plan to shore up the sector. Reliance Infrastructure up 4.08 per cent, Jaiprakash Associates up 3.32 per cent and GMR Infrastructure up 4.39 per cent jumped.
