Indian equities end higher on positive signals (Round-up)

October 14th, 2008 - 6:48 pm ICT by IANS  

Mumbai/New Delhi, Oct 14 (IANS) Indian equities ended on a positive note for the second straight day Tuesday, after the central bank decided to release Rs.200 billion ($4.18 billion) to help the mutual fund industry and Finance Minister P. Chidambaram hoped optimism will continue to prevail among investors.The 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE) ended the day at 11,483.40m points, with a gain of 174.31 points, or 1.54 percent over the previous close.

The barometer index had opened strong at 11,781.43 points and had moved up further to the day’s high of 11,870.22 points soon after - an intra-day gain of over 560 points.

Among the 13 sector-specific indices, only three ended in the negative territory - those for metals, public sector units and consumer durables. Likewise, 21 out of 30 scrips that go into the Sensex basket closed in the green.

Satyam Computer led the gainers, up 7.38 percent, followed by Infosys, up 5.87 percent, Jaiprakash Associates, up 5.20 percent, ICICI Bank, up 5.18 percent and Reliance Infrastructure, up 5.09 percent.

On the downswing, Reliance Communications led the losers, down 4.83 percent, followed by Hincalco, down 4.11 percent, Oil and Natural Gas Corp, down 3.81 percent and HDFC Bank, down 3.47 percent.

The markets sentiments were also boosted by the fact that Prime Minister Manmohan Singh called for a meeting here with Reserve Bank of India (RBI) governor D. Dubbarao to personally understand the steps being taken to cushion the impact of global financial crisis on India.

Early in the day, Chidambaram said it was brought to the government’s notice Monday that some mutual funds faced stress in liquidity in meeting redemption requirements in respect of debt instruments and money market instruments.

“Consequently, the government requested SEBI (Securities and Exchange Board of India) and RBI to meet and address the issue,” he said, adding that the meeting resulted in the central bank releasing another Rs.200 billion ($4.18 billion).

The central bank said it would conduct a special 14-day repo (repurchase of securities) at a coupon rate of nine percent for a notified amount of Rs.200 billion to enable banks meet the liquidity requirements of mutual funds.

The banking regulator had earlier reserved the right to conduct such auctions - where government securities are bought back to release cash into the financial system - depending on market conditions.

According to Chidambaram, who has been actively seeking to talk up the markets, the US and the European bourses closed on a strong note last night, while those in East Asian markets opened on a bright note Tuesday.

“It appears that the measures announced by various governments and central banks have not only infused greater liquidity into the markets but also helped restore confidence to a significant degree,” he said.

“I hope that the same sense of optimism and confidence will be visible in the Indian markets too.”

Chidambaram also said that Prime Minister Manmohan Singh would be meeting RBI Governor D. Subbarao later Tuesday to discuss, among other issues, liquidity for the Indian financial system.

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