Post Market report on 29.07.2008

[K.Karthik Raja]

India Stocks Review: RBI's repo rate hike shocks, pulls mkt dn 4%
Tuesday, Jul 29
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Bombay Stock Exchange : National Stock Exchange
Sensex: 13791.54, dn 557.57 pts (3.9%) : Nifty: 4189.85, dn 142.25 pts
(3.3%)
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A higher-than-expected 50-basis-point hike in repo rate to 9% by
Reserve Bank of India at its quarterly review of the monetary policy
for 2008-09 (Apr-Mar), pulled share indices down around 4%.
The central bank also raised banks' cash reserve ratio by 25 bps
to 9% to bring down the "intolerable level of inflation".
The repo rate hike will be effective immediately, while the CRR
hike will take effect Aug 30.
The hikes are more than expected, so it has been like a double
whammy...but markets are likely to recover in the next two-three days.
Market was widely expecting a 25 bps hike in repo rate. Also
expected an increase in CRR by 25 bps as well.
Sensex ended at 13791.54, down 557.57 points, or 3.9%, from close
Monday. Intraday, it moved between 13727.14 and 14152.29.
Nifty ended at 4189.85, down 142.25 points or 3.3%, after moving
between 4159.15 and 4332.20.
Turnover on BSE and NSE combined was 172 bln rupees, compared with
157 bln rupees Monday.
CNX Mid-cap and S&P CNX 500 indices ended down 2.9% and 3.4%,
respectively.

LOSERS
Interest rate-sensitive shares took a beating, with the CNX Bank
Nifty tumbling over 8%.
HDFC Bank, down nearly 9% at 1,029 rupees, was the worst hit on
Nifty.
Auto and real estate shares also slid, with Maruti Suzuki India
and Unitech dropping 7% and 6%, respectively.
Shares of Ranbaxy Laboratories ended down 4% at 476 rupees after
reporting Apr-Jun profit after tax at 229 mln rupees due to a foreign
exchange loss of 1.9 bln rupees during the quarter.
GAIL (India) fell 2% in line with the broad market despite posting
better-than-expected net profit of 8.97 bln rupees in Apr-Jun.
Capital goods shares fell on concern inflation and high interest
rates could result in project delays. Larsen & Toubro and Siemens lost
6% each.
Shares of Oil & Natural Gas Corp ended nearly 3% lower on profit
sales after the company posted a 44% on year rise in Apr-Jun net
profit at 66.36 bln rupees.
Bharat Petroleum Corp ended down 5%, while Hindustan Petroleum
Corp tumbled 6% as both companies reported an Apr-Jun net loss.

GAINERS
Shares of Cairn India rose nearly 1% to 229 rupees ahead of the
company's Apr-Jun earnings, to be detailed later today.
Defensive buying lifted Sun Pharmaceutical Industries and
Hindustan Unilever up 1% and 3%, respectively.
National Aluminium Co ended up nearly 4% on bargain buying, while
Sterlite Industries gained 2% helped by news it is in talks with the
government to buy 49% residual stake in Bharat Aluminium Co.
NALCO, up at 444 rupees, was the top Nifty gainer.

KEY MARKET MOVES
* In the Nifty, seven rose and 43 fell.
* In the Sensex, four rose and 26 fell.
* On BSE, there were 963 advances and 1,672 declines.
* Bank Nifty: Down 8.4%; BSE Realty: Down 5.5%; BSE Capital Goods:
Down 4.9%
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Bombay Stock Exchange : National Stock Exchange
Sensex: 13791.54, dn 557.57 pts (3.9%) : Nifty: 4189.85, dn 142.25 pts
(3.3%)
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B.Karthick,
Research Analyst.