10:00AM New York, 7:30 PM Mumbai – Global recession fears, rising current account deficit and falling rupee unnerves investors. Sensex falls 3% and down 50% from the peak in January.]
Market Sentiment
In Mumbai, the BSE 30-share Sensex declined 3.14% or 366.88 to 11,328.36, and the CNX Nifty dipped 2.03% or 73.25 to 3,533.35. Of the stocks traded on the BSE 441 rose, 2,165 declined, and 46 were unchanged.
For the year the Sensex index is down 50% from the high in January and for the year has declined 44%.
Weak Rupee
Rupee fell to another low on the worries that foreign investors will repatriate funds and sell more stocks. In the interbank dealing on various platforms, rupee dropped as low 48.77 before recovering to a close of 48.00 against a dollar, a decline of 0.2%. The rupee keeps inching to the record low of 49.07 in June 2002 and is likely to surpass and trade as low as 49.50 by the end of the fiscal year. According to 123jump.com estimate, the oil import bill is likely to reach $104 billion and trade deficit of $115 billion and foreign investors are likely to withdraw more than $11 billion in the current calendar year.
Trading Statistics
Daily turnover on the BSE stood at 5,085 crore rupees from 4,741.54 rupees yesterday.
Ranbaxy Laboratories advanced 9% to 279.25 rupees on reports the US Department of Justice has withdrawn a motion against the drug maker for allegedly bringing adulterated and misbranded medications into the United States.
U.S. Loan Losses to Rise $1.4 trillion
The International Monetary Fund reported on its Web site yesterday in the Global Financial Stability Report (GFSR) that there was need for coherent and decisive interventions to stem the current deleveraging from being ""disorderly and costly to the real economy"".
According to GFSR, the losses on the U.S. mortgage securities are expected to increase to $1.4 trillion from an earlier estimate in April of $945 billion.
The report prescribes a three-part approach to stave off disorderly deleveraging through the government purchase of illiquid and impaired assets from lenders, injecting capital into viable institutions that are struggling and rescuing dysfunctional funding markets.
The Fund projects that financial institutions need to raise $675 billion, but however noted that the interbank lending has seized.
The GFSR estimates that credit growth in the United States, the euro area, and the United Kingdom will ease to near zero over the next year before regaining in 2010.
Jaime Caruana, Director of IMF''s Monetary and Capital Markets Department said, ""A comprehensive approach, if consistent among countries, should be sufficient to restore confidence and proper functioning of markets and avert a more protracted downturn in the global economy.""
European Central Banks Slash Rates
The Bank of England reported on its Web site that the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, Sveriges Riksbank, and the Swiss National Bank will reduce its key interest rates.
The Bank of England Monetary Policy Committee today elected to slash its bank rate on commercial bank reserves to 4.5%.
Gainers & Losers |
