Indian equities rule strong on positive signals (Lead)October 14th, 2008 - 3:14 pm ICT by IANS
Mumbai/New Delhi Oct 14 (IANS) After opening strong, Indian shares continued to trade in the green Monday, as 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.Some two hours before the closing bell, the 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE) was ruling with a gain of 317.92 points, or 2.81 percent over the previous close.
The barometer index had opened strong at 11,781.43 points and had moved up further to 11,870.22 points soon after.
All the 13 sector-specific indices were also in the green. As many as 26 out of 30 scrips that go into the Sensex basket were in the positive territory, save four led by Mahindra and Mahindra.
The situation was no different at the National Stock Exchange (NSE), where the broader S&P CNX Nifty was ruling at 3,557.50 points with a gain of 1.91 percent.
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.
Tags: bombay stock exchange, green monday, indian shares, liquidity requirements, mahindra and mahindra, money market instruments, national stock exchange, p chidambaram, securities and exchange board of india, sensitive index