Money on the markets

A maturing market amid the mayhem

Sensex loses ground; Satyam jumps on renewed hopes

March 9, 2009

The Sensex closed nearly 2 percent down on Monday as worries over the world economy hit investor sentiments.

The benchmark closed at 8160.4, dragged down by index heavyweights Reliance Industries (down 1.4 percent), ITC (down 4 percent) and Hindustan Unilever (down 3.3 percent).

Jaiprakash Associates and Ranbaxy were among the top Sensex losers, falling over 5 percent and 4 percent respectively.

The benchmark index extended losses after a weak opening in European markets. Japan’s Nikkei struck a 26-year low on the fate of U.S. banks and renewed crisis in the United States as the government stepped in with another round of relief measures for AIG and GM.INDIA

The banking sector felt most of the heat with its index slipping 2.78 percent. Karnataka Bank dropped 8.18 pct, SBI slipped 4.8 percent and ICICI Bank ended 2.3 percent lower.

Shares in Satyam Computer closed 15.8 percent higher after the company kicked off a bidding process to sell a majority stake in itself and two potential suitors quickly confirmed their acceptance.

Larsen & Toubro shed 3.1 percent to Rs 561.80 after the company said it will go ahead and submit an expression of interest for Satyam.

There are several factors affecting market sentiments. To begin with, there is continuous selling pressure from FIIs (net FII outflow for March has topped $600 million, while that for the year till date has crossed over $2.2 billion).

Another factor is the recent volatility in the rupee, which is raising the cost of servicing external debt.

Add to this the World Bank’s confirmation that developing countries will face a financing gap of $270-$700 billion to deal with the effect of the global crisis.

Do you think the weakness in global markets and the coming general election will keep investors from building large positions?


The economy has taken a turn for more worse than the government is making us to believe.The continous flight of foreign capital is an indication that investors think that the Indian economy will take a long time to revive.Some economists are hinting at sub 5% GDP growth in Fy 2010.Overall mood is gloomy.
India faces a peculiar situation as it has to make a choice of a new government in April-May 2009.Economy and national security are 2 major issues in electorates’ mind.The outcome of elections is predictable in sense that there is likely to be a “hung” parliament.
Clearly,the unpredictabilty about fortcoming elections results have started to show on mood of sensex.
During past elections,we use to talk about a pre-election rally in sensex.Is that theory still valid?If yes,we may be at a brink of one.

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