Data showing rise in infrastructure sector output, higher US index futures and recovery in Asian stocks, lifted the domestic bourses in afternoon trade after they fell in the early trade.
The BSE Sensex was up 120.84 points Most of the IT stocks came off the day’s lows as a weak rupee offset fall in American depository receipts overnight. PSU banks rose on cut in lending rates.
Data showing rise in infrastructure output offset concerns of economic slowdown triggered by productions cuts announced by commercial vehicle makers in the last two days and steel maker JSW Steel today and reduction in gross domestic product (GDP) forecast for 2009 by the International Monetary Fund. India's infrastructure sector output grew 5.1% in September 2008 from a year earlier, well above 2.3% annual growth in August 2008, government data released earlier in the day showed.
The International Monetary Fund, or IMF, on Thursday, 6 November 2008, predicted lower growth in India and economic contractions in the US, Japan and euro region next year, calling for further interest rate cuts and fiscal stimulus. Its estimate for India's growth in 2009 is now 6.3%, 0.6% lower than its earlier estimate of 6.9% made just a month ago. Its estimate for the country's growth in 2008 is down 0.1% to 7.8%.
Bargain hunting following a 25 basis points rate cut by the central bank in South Korea on Friday, 7 November 2008, a steep 1.5% cut in rate by the Bank of England on Thursday, 6 November 2008 and a 50 basis points cut in rate by the European Central Bank (ECB) on that day, triggered a recovery in Asian stocks from an intra-day fall.
South Korea's Kospi was up almost 4% boosted by the rate cut. Key benchmark indices in China, Singapore, Hong Kong, Taiwan, rose by between 1.54% to 2.93%. Japan's Nikkei average was down 3.55% with bargain hunting helping the benchmark pared losses that had taken it down over 6% earlier in the day. The rate cut in Europe were announced after Asian markets had closed on Thursday, 6 November 2008.
Trading in US index futures indicated the Dow will rise 110 points at the opening bell.
At 13:27 IST, the 30-share BSE Sensex was up 120.84 points or 1.26% at 9,856.87. The index fell 121 points at the day's low of 9,631.59 hit in early trade. The barometer index rose 154.35points at the day's high of 9,888.57 in afternoon trade.
The 50-unit S&P Nifty was up 53.15 points or 1.84% to 2,945.80.
The BSE Mid-cap index was down 0.02% to 3,317.76, while the BSE Small-cap index was up 0.04% to 3,881.84.
The market breadth turned positive from earlier weak breadth. On BSE, 1151 stocks declined while 1164 gained. 84 stocks remained unchanged.
India's largest private sector firm by market capitalisation and oil refiner Reliance Industries rose 3.28% to Rs 1,209.70 despite reports it may delay commercial operations of its Jamnagar refinery to early 2009 as it finishes the final testing of the facility.
Hindalco Industries (up 7.05% to Rs 60.75), ACC (up 2.66% to Rs 476), Jaiprakash Associates (up 1.73% to Rs 85.25) and were the major gainers from the Sensex pack.
Tata Steel (down 1.4% to Rs 183.65), DLF (down 0.9% to Rs 268.70), Bharat Heavy Electricals (down 0.04% to Rs 1,380), were the major losers from the Sensex pack.
Auto pivotals fell after commercial vehicle makers announced production cut amid falling demand for vehicles. Ashok Leyland, India's second-biggest commercial vehicle maker by sales, fell 6.86% after it is cutting production at its plants to three days a week until the end of 2008 because of falling demand for its vehicles.
But India's largest commercial vehicle maker by sales Tata Motors recovered from the day's low. The stock was down 0.72% to Rs 158, off the day's low of Rs 148. Its ADR lost 3.81% overnight after the company on 6 November 2008 had announced closing of the commercial vehicle plant at Jamshedpur owing to a demand slump.
The country's largest passenger car maker by sales Maruti Suzuki fell 0.2%. The company on 1 November 2008 said its sales in October 2008 dipped 7% at 64,490 units, against 69,415 units in the same month last year.
Shares of the two-wheeler makers were mixed. India’s largest motorbike maker by sales Hero Honda Motor rose 1.18%, and TVS Motor Company fell 2.28%. India’s largest scooter maker by sales Bajaj Auto was up 0.24%. Last month, reports quoted a senior executive in Bajaj Auto, India's second biggest motorcycle maker by sales, as saying that it could cut production in November 2008 after the festive season.
Meanwhile, the Petroleum Secretary, R S Pandey on Thursday (6 November 2008) said the government was not considering any fuel price cut at the moment as public sector oil marketing companies are still incurring revenue loss on sale of various petroleum products.
Power stocks gained. NTPC, Reliance Infrastructure, Reliance Power, Power Grid Corporation of India rose by between 3.25% to 5.5%. While,Tata Power Company fell 1.06%.
Capital goods stocks rose. Larsen & Toubro and Bharat Heavy Electricals jumped by between 0.13% to 1.38%. India’s largest wind turbine maker by sales Suzlon Energy spurted 14.14% to Rs 69.90 gaining for the fifth consecutive session. The stock has risen 57.07% from the recent low of Rs 44.50 on 31 October 2008.
Most of the IT stocks came off the lower levels as a weak rupee offset slide in weak American depository receipts overnight caused by worries the US outsourcing business will be curtailed and the direct impact will be on IT sector after Barack Obama won the US presidential election early this week. India's third largest IT exporter by sales Satyam Computer Services rose 0.43% to Rs 270.50, off the day’s low of Rs 263. Its American depository receipt (ADR) fell 7.19% overnight.
India's second largest IT exporter by sales Infosys rose 0.4% to Rs 1253, off the day’s low of Rs 1205.25 even as ADR fell 10.47%. India's fourth largest IT exporter by sales Wipro rose 2.73% to Rs 260 even as ADR slipped 8.56%. The stock had slipped 6.31% in previous trading session. India's largest IT exporter by sales Tata Consultancy Services rose 2.57% to Rs 512.50 off day’s low of Rs 485.10. The stock had slipped 1.08% in previous trading session.
Obama has strong reservations on outsourcing from the US. He had made many statements during his election speeches that he would discourage outsourcing from the US when he comes into power.
Meanwhile, the Indian rupee weakened on Friday as expectations of further foreign investor outflows from the stock market weighed on sentiment. Consequently, the partially convertible rupee was at 47.73/74 per dollar, just 0.1 percent weaker than 47.66/69 at close on Thursday.
PSU banks rose after top state-owned banks on Thursday, 6 November 2008, cut their prime lending rates (PLR). Bank of Baroda, Allahabad Bank, Central Bank of India, Oriental Bank of Commerce and Corporation Bank rose by between 1.61% to 2.2%. All of them reduced lending rates by 75 bps to 13.25% with effect from 10 November 2008.
India's largest commercial bank State Bank of India (SBI) rose 0.14%t o Rs 1217.15 on a decision to cut the PLR by 75 basis points (bps) with effect from 10 November 2008 and deposit rates by 25 to 50 bps across all maturities effective 1 December 2008.
India's largest private sector bank by net profit ICICI Bank fell 2.57% as American depository receipt (ADR) lost 2.68% overnight. ICICI Bank's chief executive K.V. Kamath said on 3 November 2008, the bank will review interest rates in the next few days.
India's second largest private sector bank by net profit HDFC Bank rose 1.1% to Rs 1072.20 off day’s low of Rs 1,032 even as ADR slumped 4.81% on Thursday.
India's largest home loan lender by operating income HDFC jumped 1.16%. HDFC is yet to revise its rates, since the firm's borrowing costs have not come down.
The Reserve Bank of India (RBI) on Saturday, 1 November 2008, unexpectedly cut its main short-term lending rate viz. the repo rate to ease a growing cash squeeze, spur faltering economic growth and fend off damage from the global financial crisis.
Meanwhile, Inflation based on the wholesale price index rose 10.72% in the year through 25 October 2008, higher than previous week’s 10.68% rise.
India's second largest telecom services provider by sales Reliance Communication rose 2.22% on bargain hunting after a steep slide in the past two trading sessions.