Thursday, February 19, 2009

Sensex snaps 3 days losing streak - Infosys gains

Thu, Feb 19 04:55 PM

The BSE Sensex snapped a three-day slide and eked out a modest rise on Thursday, helped by hopes for an interest rate cut but a gloomy outlook for the domestic and world economy kept investors from building large positions.

Outsourcers such as Infosys Technologies, which get more than half their revenue from exports, led the gains following a more than 2 percent fall in the rupee's value against the dollar this week.

The main BSE stock index closed 0.3 percent, or 27.45 points, higher at 9,042.63, after falling 6.4 percent over the previous three days. It initially rose 1.1 percent but ran out steam.

"Current valuations have discounted almost all negatives," said Deven Choksey, CEO and managing director of K.R. Choksey. But a small rise triggers selling, underscoring the market's soft underbelly.

Bellwether Infosys, India's No. 2 software exporter, rose 2.5 percent to 1,208.20 rupees and smaller rival Wipro climbed 5.4 percent to 220.35 rupees as a stronger dollar was seen boosting their revenue in rupees.

The rupee has fallen 2.2 percent this week to around 49.75 rupees against the dollar.

Financial stocks ended mixed after an early rise petered out as concerns about rising pressure on the net interest margin of banks remained.

Top lender State Bank of India dropped 1.1 percent to 1,059.55 rupees and rival ICICI Bank fell 2.1 percent to 361.50 rupees.

The sector index initially rose 1.9 percent but ended down 0.6 percent, taking losses over four days to 11.4 percent.

But mortgage lender Housing Development Finance Corp gained 2.1 percent to 1,392.65 rupees and HDFC Bank firmed 0.9 percent to 884.80 rupees.

Traders said a drop in annual inflation, below 4 percent for the first time since 2007, failed to excite the market although it bolstered prospects for a rate cut.

"Inflation numbers are in line with expectations and there is no surprise left there as it is expected to fall further due to a high base effect," said D.K. Joshi, principal economist at rating agency at CRISIL.

Inflation was at 3.92 percent in the 12 months to Feb. 7, the lowest since Dec. 29, 2007 and slightly below 4.01 percent forecast in a Reuters poll.

The Reserve Bank of India governor said on Wed nesday there was room to cut interest rates but the question was when and whether it should do so, and by how much.

Eighteen of the BSE index's 30 components rose, but in the broader market losers led gainers in the ratio of 1.2:1 on relatively moderate volume of 215 million shares.

The 50-share NSE Nifty index closed 0.48 percent up at 2,789.35.

MAIN TOP 3 BY VOLUME

* Wire & Wireless India on 21.2 million shares

* Cals Refineries on 9.9 million shares

* Spice Communications on 8.6 million shares

STOCKS THAT MOVED

* Wind-turbine maker Suzlon Energy rose 3 percent to 42.90 rupees after its unit REpower Systems signed a contract to supply 250 offshore wind energy units.

* Low-cost carrier SpiceJet Ltd gained 2.4 percent to 15.14 rupees, after a senior official said after market hours on Wednesday the airline would look at buying opportunities.

* Gayatri Projects rose 10 percent to 74.30 rupees after the construction company said its joint venture had received orders worth 21.3 billion rupees.

Source : Reuters