Key benchmark indices pared gains after a firm start triggered by the latest US Federal Reserve measures to boost the flagging US financial system. Weak US economic data pulled the market off the higher level in a volatile early trading session.
The BSE 30-share Sensex was up 47.10 points, or 0.54%, shedding 85.76 points from the day's high. The market surged in early trade after the US Federal Reserve on Tuesday, 25 November 2008, outlined an $800 billion lending facility to support the market for consumer debt securities.
The US central bank will buy billions of dollars worth of debt and mortgage-backed securities to increase the flow of credit for mortgages, student loans, car loans and credit cards. However, the market soon pared gains as the data released Tuesday showed the US economy shrank more severely during the third quarter ended September 2008 than first estimated as consumers cut spending at the steepest rate in 28 years.
The Commerce Department said third-quarter gross domestic product shrank 0.5% on a sharp drop in consumer spending. That was a downward revision from the US government's first estimate that GDP had contracted 0.3% in the third quarter.
At 10:25 IST, the BSE 30-share Sensex was up 47.10 points, or 0.54%, to 8,742.36.
The Sensex opened 110.49 points higher at 8,806.02. At the day's high of 8,828.12, the Sensex gained 132.59 points in early trade. The Sensex rose points 23.40 at the day's low of 8,718.93 in early trade. The S&P CNX Nifty gained 11.35 points, or 0.43%, to 2,665.35 Volatility may rise ahead of the derivatives expiry for November 2008 series on Thursday, 27 November 2008. As per reports, rollover of Nifty positions from November 2008 to December 2008 series stood at 39% while marketwide rollover of positions was 45%, as on Tuesday, 25 November 2008.
The market breadth, indicating the overall health of the market, was negative on BSE with 621 shares declining as compared with 557 that rose. 46 shares remained unchanged. The total turnover on the BSE amounted to Rs 369 crore by 10:30 IST Among the 30-member Sensex pack, 25 advanced while the rest slipped.
Wipro (up 1.85% to Rs 233), Bharti Airtel (up 2.17% to Rs 640.05), and Grasim (up 1.19% to Rs 907.30), edged higher from the Sensex pack. Mahindra & Mahindra (down 2.65% to Rs 269.80), Jaiprakash Associates (down 2% to Rs 53.60), and Reliance Communications (down 1.51% to Rs 192.60), edged lower from the Sensex pack. India's largest copper maker by sales Sterlite Industries spurted 4.81% to Rs 214.50 and was the top gainer from the Sensex pack. As per recent reports the company is still eyeing Asarco, which operates three copper mines in Arizona, but an agreement could only be reached at a substantially reduced price. Sterlite originally offered $2.6 billion to buy Asarco but withdrew from the deal in October 2008 because of falling metals prices. However other metal shares slipped. Hindalco Industries (down 2.5% to Rs 50.05), and Tata Steel (down 2.16% to Rs 147.10), slipped.
Banking shares advanced on reports banks operating in India including foreign ones may soon be able to open new branches and set up automated teller machines (ATM) without a licence from the Reserve Bank of India (RBI). ICICI Bank (up 2.2% to Rs ), HDFC Bank (up 1.78% to Rs 850), and State Bank of India (up 0.50% to Rs 1077.50), gained. India's top mortgage lender by net profit Housing Development Finance Corporation (HDFC) rose 1.47% to Rs 1370 after Citigroup reportedly said it is not looking to liquidate its 11.74% stake in HDFC. India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) gained 1.05% to Rs 1084.50 on recent reports the company has raised around Rs 2,000 crore through five-year bonds at an annualised coupon of 11.45%. India's top pharma company by sales Ranbaxy Laboratories by sales lost 2.75% to Rs 198, extending yesterday's 4.60% fall on reports the company's subsidiary Ranbaxy Fine Chemical's (RFCL) plans to acquire the US-based speciality chemicals maker Mallinckrodt Baker is facing delays because of valuation problems. It was the top loser from the Sensex pack.
India's second largest software services exporter Infosys Technologies slipped 1.09% to Rs 1168 after its American depository receipt slumped 7.29% on Tuesday, 25 November 2008. Siemens tumbled 8.82% to Rs 244.40 as net profit fell 27.03% to Rs 225.19 crore in Q4 September 2008 over Q4 September 2007. The company announced the results after trading hours on Tuesday, 25 November 2008. Metal shares led rally in Asian stocks as the crumbled BHP and Rio deal was seen opening opportunities in other firms. Key benchmark indices in China, Hong Kong, Singapore, South Korea and Taiwan were down up by between 0.36% and 3.87%.
However, Japan's Nikkei slipped 0.72%. Miner BHP Billiton on Tuesday called off its bid to acquire rival Rio Tinto. The Dow and S&P 500 gained on Tuesday on optimism that the Federal Reserve's latest rescue package could revive the sagging housing market and free up consumer lending. But the Nasdaq slid as technology stocks fell on more immediate concerns that demand may be weakening after bellwether Cisco Systems said it will close most of its operations in the United States and Canada for five days in an effort to cut costs.
The Dow Jones industrial average gained 36.08 points, or 0.43%, to 8,479.47 and the S&P 500 gained 5.58 points, or 0.66%, to 857.39. Te Nasdaq Composite index slipped 7.29 points, or 0.50%, to 1,464.73 US light crude for January 2009 delivery was up 31 cents at $51.08 per barrel today, 25 November 2008 as latest data showed the US economy shrank at its fastest pace in seven years, highlighting slowing demand in the world's largest oil consumer.