Friday, 21 November 2008

BSE Sensex snaps 7-day slide, rises 5.5 pct

MUMBAI (Reuters) – The BSE Sensex snapped a seven-day slide and climbed 5.5 percent on Friday, after large domestic funds bought in late trade triggering short covering ahead of the weekend.

Expectations the Reserve Bank will cut interest rates to support slowing growth underpinned the market that had tumbled a fifth over the previous seven days.

Traders said the fund buying came in during the last 90 minutes after the main index slipped into negative. Index heavyweight Reliance Industries Ltd, financials and outsourcers led the bounce.

"People have been expecting a rate cut in the next couple of days and that is visible in the gains made by SBI and HDFC. If it doesn't come, there may be renewed selling in banking stocks," said Neeraj Dewan, director at Quantum Securities.

State Bank of India, the country's largest lender, rose 8.3 percent to 1,183.15 rupees, while rival ICICI Bank gained 4.7 percent to 335.55 rupees. Mortgage lender Housing Development Finance Corp rose 8.5 percent to 1,399.30 rupees.

The bank sector index rose 4.6 percent.

The Reserve Bank has cut its main lending rate by 150 basis points to 7.5 percent and banks' cash reserve requirement by 350 basis points to 5.5 percent in the past two months and the authorities have said more steps were on the anvil.

The 30-share BSE index rose 5.49 percent, or 464.20 points, to 8,915.21, its first gain in eight sessions.

It lost 5 percent over the week, falling for a second week in a row, and is down 56 percent this year.

All but three of the index components were higher, but in the broader market losers edged out gainers 1,299 to 1,185. Volume was a moderate 276 million shares after being light in the past

two days.

The 50-share NSE index gained 5.5 percent to 2,693.45.

The outlook for the market remains downbeat with the global economic gloom and a slowing domestic growth hastening foreign fund withdrawals from emerging markets such as India, traders


Foreigners have pulled out a net $13.45 billion from Indian shares this year, with the outflow so far in November at $624.9 million.

Export-led software firms gained on hopes a sliding rupee would help their earnings. The rupee hit a record low of 50.60 per dollar on Thursday, losing more than a fifth this year.

Tata Consultancy Services rose 7.9 percent to 506.55 rupees, Infosys Technologies gained 5.1 percent to 1,184.75 and Wipro was up 4.6 percent to 229.80 rupees.

European and Asian shares rebounded from lows on hopes central banks from across the world would cut interest rates further to cushion the deepening economic gloom. [ID:nLL345383]

Energy giant Reliance Industries, which has the heaviest weight in the BSE index, rose 6.5 percent to 1,127.35 rupees on the fund buying after it had fallen 7.8 percent over the past four trading sessions.


* Ansal Properties & Infrastructure fell 3.4 percent to 30.10 rupees after Fitch Ratings downgraded the firm's long-term rating and revised outlook to negative from stable. The

stock earlier hit a multi-year low of 29 rupees.

* Truck and bus maker Eicher Motors Ltd rose 2.74 percent to 221.55 rupees after its board approved a buyback of 1.4 million shares at up to 691.68 rupees a share, more than three times its currently traded price.


* Unitech on 20.5 million shares

* GVK Power & Infrastructure on 17.1 million shares

* Suzlon Energy on 15.2 million shares

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