Indian Markets: Languishing in the Red

Markets closed well below the dotted line as selling pressure intensified in the final hours of trade. While selling pressure was witnessed across sectors, select auto, FMCG, software and pharma stocks found favour. As regards global markets, while the Asian indices closed in the red, the European markets are also trading in the negative currently.

The BSE Sensex closed 370 points lower, while the NSE Nifty closed lower by 100 points. The BSE Midcap and Smallcap indices closed in the red, each down 2%. The rupee was trading at 47.53 to the dollar.

Following its global peers, the Indian benchmark indices opened on a weak note and languished below the dotted line for a larger part of the trading session. While in the penultimate hour of trade, they managed to swing towards the dotted line led by intensified buying activity at lower levels, though the momentum was short-lived.

In the final trading hour, the markets racked up further losses to close deep into the red. The overall market breadth was negative with losers outnumbering gainers by a ratio of 3.3 to 1 on the NSE. While Jaiprakash Associates (up 4%) and Hindustan Unilever (up 3%) led the pack of gainers on the BSE Sensex today, Tata Steel (down 13%) and Tata Motors (down 11%) led the pack of losers.

As per a leading business daily, SBI has reduced its prime lending rate (PLR, the rate with which banks benchmark their loan prices) by 0.75% to 13%. SBI’s move is in response to the government’s request to PSU banks to reduce interest rates and lend to productive sectors at cheaper rates.

With the largest public sector bank (PSU) reducing PLR rate, other banks are likely to follow suit. It must also be noted that most banks reported stable NIMs during 1HFY09 on the back of relatively lower cost of funds. The stock (down 5%), along with its peer HDFC Bank (down 3%) and ICICI Bank (down 4%), closed weak. Oriental Bank of Commerce (up 3%) and Union Bank (up 1%) ended higher.

Great Offshore has completed the acquisition of Andhra Pradesh based companies KEI-RSOS Maritime and Rajmahendri Shipping and Oilfield Services for Rs 1.6 bn. The acquired companies’ competence lies in the field of maritime services. The now wholly owned subsidiaries of Great Offshore provide offshore support, single point mooring operations and port management services and have a strong presence on the East Coast of India.

The earnings accretive acquisition is in line with Great Offshore’s plan to ensure sustainable cash flows. The stock, along with its peer Aban Offshore, ended lower by 3%.

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2008 Nov 06 07:55 AM