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Sensex snaps 2-day fall; expiry watched

February 25, 2009

After gaining nearly 2 percent during trade, the benchmark index pared gains and closed just 80.5 points higher at 8902, as cuts in factory gate duty and service tax triggered short covering ahead of the expiry of monthly derivatives contracts.
MARKETS SOUTHASIA STOCKS
The day belonged to auto and metal stocks, which appeared attractive on expectation the duty cuts on Tuesday will boost sales.

The BSE Auto Index closed 3 percent higher and the BSE Metal Index ended 1.2 percent up. Apollo Tyres, Tata Motors (trucks) and Ashok Leyland have slashed prices after yesterday’s announcement.

Banking stocks were firm on renewed hopes of an interest rate cut by the Reserve Bank soon. ICICI Bank, Karnataka Bank and Yes Bank were up in the range 1-2.68 percent.

Fraud-hit Satyam Computer Services rose nearly 3 percent to close at 45.05 rupees. SEBI has eased the norms for preferential allotment of shares by some companies, a move that should help Satyam find a strategic investor.

In the U.S., Federal Reserve Chairman Ben Bernanke on Tuesday said nationalization of big U.S. banks not at hand, bringing cheer to the market.

The slashing of factory gate duties and service tax appears to have driven the market up, but do you think the Sensex will be able to sustain the uptrend throughout the week, or will we see some volatility till the expiry of monthly derivatives?

Comments

Sensex may have another day or two of sunshine.But the government’s expected announcement of 3Q 2009 GDP figures may have an effect of a shocker.
Across most of industrial sectors,production logs have been depressing.The last forecast of 7.1%(Fy 2009) GDP growth appears to be an over estimation.
Let me not sound a prophet of doom but surely am worried as corrective course is a distant horizon.
Can we term yesterday’s announcement of a reduction in excise or service tax as being a third stimulus?Some newspapers did describe it as such.Frankly all this is not going to revive the economy.
Most likely markets will show a volatility once 3Q GDP truth is unravelled.

Posted by A.Kapoor | Report as abusive
 

It is indeed puzzling that the banks are still lending at rates like 9-10+ when the RBI itself has bought it down to 5.5%. It is indeed puzzling why no one is talking about this fact.

Excuses like they will loose customers are indeed lame. They are making money off this difference of 4-5& and accounting for that in the higher deposit rates. Shame on these banks, particularly the private enterprises, both foreign and domestic.

Why is the government keeping quiet here. Well, I am assuming they do not want to disturb the lobbies which during the election year.

I really hope the RBI will do something about this.

Posted by Jacob | Report as abusive
 

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