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Sensex loses ground as U.S. stimulus package disappoints

February 11, 2009

The BSE Sensex fell in early trade but pared losses to close 0.3 percent down on Wednesday as the much-awaited U.S. stimulus package failed to shore up investor sentiment globally.

Investors were disappointed with the $838 billion stimulus bill passed by the U.S. Senate on Tuesday and their reaction clearly showed greater concern about financial security.

According to SEBI, FIIs were net buyers and sellers today. Their net investment in equities was $103.2 million while their net sale in debt was $0.1 million.

On the economic front, Russia signed more than $700 million in deals to supply India’s nuclear reactors with fuel pellets.

In a step to increase liquidity among public sector banks, the government said it would infuse 38 billion rupees into three state-run banks by the end of March 2010.

Sectorally, the Metals index saw some major selling, ending 1.19 percent lower. Stocks like JSW Steel, Tata Steel, Jindal Steel and Bhushan Steel were down in the range of 1-4.06 percent.

Prominent among the Sensex losers were Ranbaxy and Grasim Industries which shed 5 and 4.07 percent respectively. Maruti Suzuki and ICICI Bank were on the positive side of the index, up 4 and 1.7 percent respectively.

The BSE Auto index, which survived the selling pressure, gained 0.8 percent. Escorts, Hero Honda and Maruti Suzuki were up in the range of 1-9.57 percent.

Inflation and industrial output data are due around noon on Thursday and should reinforce expectations for an economic stimulus.

The government has already announced two stimulus packages since December, which included a 4 percentage point cut in factory gate duties and 200 billion rupees of extra spending to aid the slowing economy.

One measure that can shore up the economy is extra spending in infrastructure and prevention of further job losses.

Do you think this will help bring back confidence in the market?

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