Indian equities slip after two days of gains (Roundup)October 15th, 2008 - 5:49 pm ICT by IANS
Mumbai/New Delhi, Oct 15 (IANS) After two days of impressive gains, Indian equities ended lower Wednesday on cues from other bourses, even as investors’ mood was dampened by the way the central bank’s proposal to help mutual funds found few takers.The sensitive index (Sensex) of the Bombay Stock Exchange (BSE) opened weak at 11,245.27 points, against the previous close at 11,483.40 points. At close, the index fell to 10,809.12 points, with a loss of 674.28 points or 5.87 percent.
All the 30 shares that make up the bellwether Sensex ended with losses, led by Jaiprakash Associates, down 14.47 percent, followed by Reliance Communications (-12.24 percent) and Reliance Infrastructure (-12.11 percent).
So was the case with the 13 sector-specific indices and the index for small-cap and mid-cap stocks. Consumer goods were the worst hit, with its index down 8.8 percent, followed by a 8.79-percent dip for consumer durables.
The broader 50-share S&P CNX Nifty index of the National Stock Exchange (NSE) was also down 5.12 percent, with analysts attributing the fall to the mood across the globe and limited impact of central bank’s latest move to infuse liquidity.
The Reserve Bank of India (RBI) had said Tuesday it will conduct a special 14-day repo (repurchase of securities) auction at nine percent for Rs.200 billion ($4.18 billion) to enable banks meet the liquidity requirements of mutual funds.
But with bids coming for just Rs.35 billion each, the central bank Wednesday said it was extending the auction till such time the entire Rs.200 billion was not fully subscribed.
Even Finance Minister P. Chidambaram’s pep talk early Wednesday did not help in shaking the depressed market mood, which was concerned over what experts in the US said was a sure case of recession in the world’s largest economy.
The finance minister said that Reserve Bank of India Governor D. Subbarao, with whom he and Prime Minister Manmohan Singh reviewed the liquidation conditions in the Indian economy Tuesday evening, was expected to announce more measures in the coming days.
He said it was agreed at the meeting that credit to borrowers must be ensured at least to the extent of sanctioned amounts.
“The prime minister reviewed the financial situation, with particular reference to the liquidity position. The developments in, and measures taken by, other countries were also reviewed.”
It was noted at Tuesday’s meeting, also attended by Planning Commission Deputy Chairman Montek Singh Ahluwalia, that inter-bank lending remained a constraint.
“It is also important to enhance the credit limits where borrowers require more credit,” he said, adding banks were able to access only Rs.35 billion from the special window of Rs.200 billion opened by RBI for liquidity to mutual funds.