Sensex sheds 102 points, closes at 17,125

The Sensex closed at 17,125—102 points down from the previous day’s close—while the Nifty declined 36 points, ending the day at 5,112.

During the day, auto stocks surged on the back of robust sales figures for November 2009. Bajaj Auto rose 2% on reports that the company’s total vehicle sales rose 73% to 2.76 lakh units in November 2009 over November 2008.

Motorcycle sales jumped 84% to 2.42 lakh units. The company has also launched a 135-cc Pulsar, pushing the Pulsar brand into the mass segment. Bajaj expects to sell a minimum of 30,000 units per month of the new Pulsar model. The automaker had recently refreshed the entire Pulsar lineup and expects total Pulsar sales to cross 80,000 units per month.

Maruti Suzuki India rose 3% after Japan’s Suzuki Motor said that it will sell a 19.9% stake to Volkswagen (VW) for $2.50 billion and use half of the proceeds to buy shares in the German automaker, as the two firms form a formidable force in the auto industry. Suzuki has a 54.2% stake in Maruti Suzuki India. Maruti’s total vehicle sales rose 66.60% to 87,807 units in November 2009 over November 2008. Domestic sales shot up 60.10% to 76,359 units, while exports surged 128.60% to 11,448 units in November 2009 over November 2008.

Hero Honda Motors was up 2% on reports that the company’s total vehicle sales jumped 32% to 3.81 lakh units in November 2009 over November 2008.

Mahindra & Mahindra will reportedly launch its first truck under a joint venture (JV) with Navistar, North America’s largest commercial truck maker, next month. The stock remained flat.

Reliance Industries Ltd (RIL) fell 1% after the company said it has no plans to buy any debt of LyondellBasell.

ICICI Bank has launched a home-loan scheme under which 8.25% interest rate will be fixed for the first two years. The floating rates will apply after two years and these rates will be applicable to loans sanctioned between December 2009 and January 2010. The stock declined 2%.

Kotak Mahindra Bank also announced its new home loan scheme. It has 8.49% fixed rate on home loans for 30 months from the date of the payout of the loan. The stock fell 2%.

After trading hours, there were news reports that Punjab National Bank had sold 26% stake in PNB Housing Finance to Destimoney for Rs79 crore. As per reports, Destimoney will hold total 49% stake in PNB Housing Finance and is expected to buy additional 23% stake via convertible bonds. The stock remained flat.

Infomedia 18 gained 3% on reports that the company has approved a 3:2 rights issue at Rs33.50 per share which will open on December 29, 2009 and close on January 15, 2010.

As per media reports, Standard Chartered Bank has extended a $1 billion (Rs4,600 crore) line of credit to Essar Oil to part-finance its acquisition of Royal Dutch Shell’s refinery assets in Europe. The stock ended flat.  

The initial public offer (IPO) of JSW Energy was subscribed 1.65 times on the last day of issue today, 9 December 2009, whereas the IPO of Godrej Properties was subscribed 1.23 times on the first day of the issue. The price band is fixed at Rs490-Rs530 per share which will close on 11 December 2009.

According to finance minister Pranab Mukherjee, the government does not need to borrow more than planned to fund its additional proposed expenditure. The government said on Tuesday that it would seek Parliamentary approval to spend an extra Rs25,725 crore ($5.5 billion) for the fiscal year to end-March 2010. The gross additional expenditure would be Rs30,943 crore, of which Rs5,217 crore would be met through savings, the government said. The government will spend an extra Rs3,000 crore on fertiliser subsidies and Rs3,460 crore on food subsidies. The government would also spend Rs800 crore on an equity infusion in State-run carrier Air India.

Sridhar Sivaram, ED, Morgan Stanley said that there could be a correction in January if interest rates actually go up. However, if growth continues, markets could continue to move up, he said.

Meanwhile, the Reserve Bank of India (RBI) may reportedly ask banks to impose a ceiling on their investments in mutual funds and also prescribe norms for such investments, as it attempts to tighten rising exposure and rein in deployment of banking funds indirectly in sectors or companies to which banks could not lend directly due to exposure limits.

According to data from the Society of Indian Automobile Manufacturers, car sales in India rose an annual 61% to 1,33,687 units in November 2009 over November 2008.

Sales were boosted by improved consumer sentiment, easier availability of loans and a low sales base a year earlier, an industry body said. Sales of trucks and buses, a gauge of economic activity, doubled to 40,847 units in November from 20,631 a year earlier, data showed.

During the day, Asia’s key benchmark indices in China, Hong Kong, Japan, Singapore and Indonesia fell by between 0.21%-1.73%, and indices in South Korea and Taiwan rose by between 0.37%-0.39%.

China’s Industrial Bank Co. said its shareholders had approved its plan to raise CNY18 billion in a rights issue to boost the lender’s capital adequacy ratio and support rapid lending growth over the next few years. China is experiencing a clear V-shaped economic recovery, said Zhu Min, vice-governor of the People’s Bank of China.

As per reports, Fitch Ratings Inc. cut Greece’s rating to BBB+ with a negative outlook. Meanwhile, Moody’s Investors Service downgraded the credit worthiness of a number of Dubai government-controlled companies and said further downgrades were possible. Japan’s gross domestic product rose at an annual 1.3% in the September quarter, slower than the 4.8% reported in preliminary figures last month, the Japanese Cabinet office said.

As per media reports, UK banks HSBC Holdings, Standard Chartered, Lloyds Banking Group and Royal Bank of Scotland have agreed to reschedule Dubai World’s debt. According to Dubai’s Al Bayan newspaper, the four banks have asked for more information from Dubai World about interest on the planned delayed payments and will hold a meeting later this month as they await a response. Reports further said that Dubai World is seeking to restructure around $26 billion of debt.

On Tuesday, 8 December 2009, the Dow Jones Industrial Average was down 104 points while the S&P 500 was down 11 points and the Nasdaq Composite was down 17 points.

In premarket trading, the Dow was trading 26 points higher.

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    Tighter visa norms for UK-bound Indian IT workers

    From next year, workers in the IT category will need to have one year’s experience with their employer instead of six months at present, before they can be transferred to the UK

    Britain has tightened immigration rules from January 2010 for Indian information technology (IT) professionals seeking to move to the UK under inter-company transfers, reports PTI.

    From next year, workers in this category will need to have one year’s experience with their employer instead of six months at present, before they can be transferred to the UK, official sources said.

    The immigration category will be closed as a route to permanent settlement in the UK. This means that IT professionals who come to the UK under inter-company transfer will not be allowed to settle here permanently even after the mandatory stay of five years.

    Immigration officials also denied reports that the Tier 2 (intra-company transfer) category of the points-based system was providing a loophole for Indian IT companies to bring foreign workers into the UK.

    Under an intra-company transfer, an employer can fill vacancies in its UK operations by bringing across some of its existing staff based at overseas locations.

    It has been claimed that this enables jobs in IT and other sectors to be taken by migrants who are paid less than resident workers.

    The British Home Office, however, said that this was not true. "Workers coming to the UK in the Tier 2 (intra-company transfer) category must be paid the going rate,” it said.

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    Investor Interest   Exclusive
    Global oil rig utilisation rates at a high

    The utilisation rate for land oil rigs has been constantly rising. Analysts believe that the utilisation rate for offshore rigs has also started to improve

    The operational utilisation rate of oil rigs worldwide has been constantly rising. Though this rise is mainly driven by an increase in the utilisation of land rigs, 284 offshore rigs were operational in November—the second highest monthly rate in 2009—as per data with Baker Hughes, a consulting services group which services the worldwide oil and natural gas industry. The entity says that the number of rigs operating internationally has been on a constant rise over the past six months.

    “The utilisation (rate) for offshore rigs has started to improve. For example, Aban Offshore had eight rigs idle a few months back, but in August 2009 it received contracts for five rigs. Only three rigs remain idle presently,” said Kejal Mehta, analyst, Prabhudas Lilladher Pvt Ltd.

    As per data from Baker Hughes, international rig counts have gone up to 1,025 in November 2009 from a low of 986 in April 2009. The rig count for 2009 was highest at 1,044 in January 2009. This total international rig count is mainly driven by utilisation of land rigs. In June 2009, 698 land rigs were operational, while 741 land rigs were operational in November 2009. In November 2009, 284 offshore rigs were operational. In February 2009, 286 offshore oil rigs were operational. The international rig count is inclusive of the total number of rigs in Europe, the Middle East, Africa, Latin America and the Asia-Pacific region.

    Baker Hughes data on worldwide figures for rig counts indicates that total rig counts have increased to 2,409 in November 2009 from 1,987 in June 2009. The positive trend is visible in the number of operational rigs over the past six months. In July 2009, 2,080 oil rigs were operational, the figure went up to 2,105 rigs in August 2009, and touched 2,203 rigs for the month of September and October 2009. This data includes figures for both land and offshore rigs.

    The offshore rig utilisation rate was on a decline from July 2008 (312 offshore rigs operational), which dropped to an all-time low of 261 operational rigs in August 2009. “The utilisation rate had dropped significantly for offshore rigs in the jack-up segment, which has been picking up recently. The utilisation rate for these rigs is expected to improve,” added another analyst who did not wished to be named.

    Though the demand for oil rigs is expected to go up, analysts do not envisage a rise in the day rates for offshore drilling. “We expect the demand for offshore rigs to pick up, but a hike in day rates is not expected. A lot of new rigs will be coming up, so capacity utilisation will not touch 90%-95%. This (high rate of) capacity utilisation is required for a hike in day rates,” added the analyst.

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