Key benchmark indices extended gains to surge to day's high in mid-afternoon trade on fresh buying in index pivotals after the Railway Minister Lalu Prasad Yadav said Indian Railways will invest Rs 2.3 lakh crore in the year ending March 2010. The BSE 30-share Sensex was up 219.24 points, or 2.33%, to 9,687.45. Expectations of further rate cuts by the central bank and hopes of stimulus package for the economy in the interim general budget on Monday, 16 February 2009 kept the markets buoyant. Strong global cues bolstered the sentiment further.
Lalu Prasad presented the interim railway budget 2009- 10 in the parliament today. Indian Railways generated a cash surplus of Rs 90,000 crore in the last five years. The Railway Minister announced fare cut in AC and mail express trains by 2% while keeping freight rates unchanged.
The railways posted a 13.17% increase in its total earning in April-January 2009 at Rs 64,876.34 crore, compared to Rs 57,327 crore in the corresponding period last year. While its freight revenue during this period jumped by 13.64% to Rs 44,016.26 crore, passenger revenue went up by 11.82% to Rs 18,042.82 crore.
Meanwhile, there are expectations of a government stimulus for the economy in the interim general budget. The stock market expects the acting Finance Minister Pranab Mukherjee to offer tax sops and sector-specific stimulus package to revive growth. The government has so far announced two stimulus packages including tax cuts and the capital injections for banks.
The Reserve Bank of India (RBI) announced on Thursday, 12 February 2009, it will continue to closely monitor the developments in the global and domestic financial markets and will take swift and effective action, as appropriate. Marketmen expect the RBI to cut policy rates further after the interim general budget
European markets surged in early trade led by financials after news of a US plan to subsidise mortgage payments for troubled homeowners. Key benchmark indices in UK, Germany and France were up by between 1.84% and 2.41%.
Asia-Pacific stocks surged on hopes that government efforts worldwide, including talks of a US subsidy for mortgage payments, would soften the blow of the global downturn. Key benchmark indices in Japan, Hong Kong, South Korea, Singapore, Taiwan and China rose by between 1.07% and 3.22%.
The All Ordinaries index in Australia surged 1.1% on approval of a A$42 billion ($27.4 billion) economic stimulus package.
US stocks rebounded nearly 3% from day's low in last one hour of trade to end mixed on Thursday, 12 February 2009, on reports the Obama administration was working on a new program to subsidize mortgage payments for troubled homeowners.
The Dow Jones Industrial Average fell 6.77 points, or 0.09% at 7,932.76. However the Standard & Poor's 500 Index rose 1.45 points, or 0.17% at 835.19 and the Nasdaq Composite index gained 11.21 points, or 0.73% to 1,541.71.
According to reports, the housing plan will use government money to help reduce interest rates for struggling borrowers, while asking lawmakers to approve more ways to modify mortgages. US Treasury Secretary Timothy Geithner intends to announce the plan in coming days.
Meanwhile, US retail sales rose 1% in January 2009, for the first time in 7 months, beating economist's expectation of a decline. Another data showed, US Initial Jobless claims for the week ending 7 February 2009 fell 8,000 at 623,000, though they still remain near 26-year high.
At 14:25 IST, the BSE 30-share Sensex was up 219.24 points, or 2.33%, to 9,687.45. The Sensex opened points 74.77 higher at 9,540.60, also its day's low. At the day's high of 9,690.80, the Sensex gained 224.87 points in mid-afternoon trade.
The S&P; CNX Nifty advanced 70.20 points, or 2.43%, to 2,963.25
The market breadth, indicating the overall health of the market, was strong on BSE with 1552 shares advancing as compared with 809 that declined. A total of 95 shares remained unchanged.
BSE clocked a turnover of Rs 2228 crore by 14:25 IST as compared to Rs 1585 crore by 13:25 IST
Among the 30-member Sensex pack, 28 advanced while only 2 of them slipped. India's largest pharma firm by market capitalisation Sun Pharma slipped 1.65% to Rs 1086.20 on profit booking. The stock rose 5.44% to Rs 1105.55 in one week to 12 February 2009
Tata Steel (up 4.99%), Bhel (up 5.16%), and Reliance Communications (up 3.54%), edged higher from the Sensex pack.
India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) jumped 3.55% to Rs 1399.20 on reports the company is lining up further $6 billion to develop nine satellite discoveries in the Krishna Godavari (KG) basin.
India's largest oil exploration firm by sales Oil & Natural Gas Corporation (ONGC) rose 2.40% to Rs 710.90 on reports the company may offer a 15-20% stake in its planned petrochemical project in western India to GAIL (India).
Auto stocks gained on hopes the government may announce some tax sops to the automobile sector in the forthcoming interim budget on Monday, 16 February 2009.
India's top tractor maker by sales Mahindra & Mahindra jumped 6.17% to Rs 318.35 and was the top gainer from the Sensex pack.
Tata Motors (up 1.07%), Ashok Leyland (up 0.93%), TVS Motor Company (up 1.31%), Hero Honda Motor (up 1.42%), Maruti Suzuki (up 2.75%), gained.
While an across-the-board 4% cut in excise in December 2008 makes any drastic concessions difficult, excise duty on big cars with engine capacities of 1200 cubic centimeter (cc) or more in petrol is likely to get reduced to 16% from the existing 20%.
Engineering, construction and power sector-related shares rose on hopes the government would step up spending on infrastructure projects. Punj Lloyd (up 1.74%), GVK Power & Infrastructure (up 2.82%), GMR Infrastructure (up 2.44%), Larsen & Toubro (up 3.09%), Jaiprakash Associates (up 4.52%), Reliance Infrastructure (up 2.23%) and IVRCL Infrastructures & Projects (up 4.41%), soared.
Reports suggest the annual plan outlay for the power sector may go up by 29% at Rs 52,100 crore, while spending on road projects can rise 14% in the interim budget for 2009-2010.
Sugar shares surged after global ratings firm Fitch said yesterday evening said the sugar prices may extend gains because of a supply deficit. Bajaj Hindustan (up 5.48%), Balrampur Chini Mills (up 5.49%), and Shree Renuka Sugars (up 7.50%), advanced.
Production in the world's second-biggest producer India, may drop to between 17 million tonnes and 18 million tonnes in the year to 30 September 2009 from 26.3 million toness a year earlier, just short of meeting domestic demand, Fitch report said.
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