Indian markets upbeat as inflation dips
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Indian markets upbeat as inflation dips

Saturday, 18 September 2004, 07:00 Hrs
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MUMBAI: A bull run on Indian bourses took a key stock market index above the crucial 5,500-point mark to a four-month high during the week ended Friday, with sentiments buoyed by a sharp fall in the annual inflation rate.

Expectations of good corporate results for the second quarter ending Sep 30 also added to the upbeat mood. Sustained buying interest from speculators and institutional investors was witnessed across sectors.

"There are some positive signals in the economy - exports are surging ahead, the inflation rate has come down from a four-year high, industrial production is up and the corporate sector appears to be faring well," said an equity analyst.

"All this is fuelling sustained buying interest for long-term investments. But for some unexpected shocks or some short term corrections, the mood should remain upbeat during the next couple of weeks," the analyst added.

The inflation rate, as measured by the official wholesale price index, fell to 7.81 percent for week ended Sep 4 from a four-year high of 8.33 percent for the week before on the back of fiscal measures unveiled by the government.

The market sentiment was also helped by a statement by Finance Minister Friday that there was no need to panic because of a rise in inflation as the government was watching the situation.

"The situation requires to be carefully watched. We have adequate stocks of all essential commodities. There are no supply side constraints," he told a news conference after a meeting of Cabinet Committee on Prices.

"The government will take measures on fiscal as well as monetary sides to moderate the inflation as well as inflationary pressure. There is absolutely no reason for any of the prices to go up," the finance minister added.

During the week under review, the markets opened on a positive note Monday, with the sensitive index (Sensex) of the Bombay Stock Exchange (BSE) ending the day on a positive note for the seventh successive session.

The mood was similar Tuesday when equities made more gains, but profit taking the next day led to a minor drop in the Sensex, only to bounce back with gains of 1.06 percent and 1.52 percent respectively during the next two sessions.

In the process, the barometer index breeched the psychological barrier of 5,500 points to close Friday at a 19-week high of 5,561.15 points.

Taking into account the closing level of 5,370.05 points Sep 10, the Sensex has gained 191.10 points or 3.56 during the week under review.

A major development during the week was a 50 basis point cut in cash reserve ratio announced by the Reserve Bank of India to curb inflation, which is expected to freeze out 80 billion from the banking system.

Stocks that were in limelight during the week included Bharat Petroleum, which gained 9.2 percent at 372, Steel Authority of India, which rose 8.7 percent at 43 and Indian Hotels, which was up 8.1 percent at 425.

Key losers included Maruti Udyog, which lost 8.8 percent at 358, and Punjab National Bank that shed 1.4 percent at 272.

Pharma counters were also in favour. Ranbaxy Laboratories said that it had received approval for selling one more drug in the US market and Cipla reported that its profits were up 25 percent in the first two months of the quarter ending Sep 30.

Steel stocks also made a comeback during the week on the back of some positive developments for the sector including expectations of good results and growing demand for the commodity.




Source: IANS
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