Tuesday, March 4, 2008

Indian Stocks Drop on Deepening Concern over US Recession

by Phillip Horton

The sensitive index of India dropped to its highest in three weeks today over the strengthening fears that the credit losses in the United States will grow and lead it to a recession. The US’ economy is not only the biggest economy in the world but also the greatest trading partner of India. India’s second biggest software services company, Infosys Technologies Ltd. registered the greatest drop in a month. It’s other bigger competitor company Tata Consultancy Services Ltd. (TCS) declined to its lowest in over a month.

The software industry of India receives over half of its software sales from the US. When the Indian finance minister, P. Chidambaram was asked about this drop in the market he said that India is far less disassociated from the US than it is usually thought. The standard BSE index of India dropped by 558.99, or 3.2%, to 17,019.73 by afternoon in Mumbai. This decline in the market was the highest since February 11. The S and P CNX Nifty index declined by 162.40, or 3.1%, to 5,061.10. Stocks in the US dropped on February 29 restricting the market’s 4th monthly decline following the National Association of Purchasing Management-Chicago announcement that its business indicator shrunk as there occurred weakening in employment and production. Infosys registered a drop of 53.3 rupees, or 3.5%, to 1,493.55, which was its highest drop since February 6. The shares of TCS slid by 25.35 rupees, or 2.9%, to 848.95, which is the lowest it recorded since January 24.

India’s biggest cigarette manufacturer, ITC dropped by 7.15 rupees that is 3.5% to 195 which was the highest drop since February 11 following UBS Securities Asia Ltd, bringing down its suggestion on the stock to neutral from buy when the government hiked the excise duty on tobacco. India’s biggest firm by market worth Reliance Industries Ltd. declined by 79.35 rupees, or 3.2%, to 2,378.90 and this was the lowest drop for the company since February 12. The drop for the company came following ABN Amro Bank NV’s Indian division announced that Reliance was costly and it set a share price forecast of about 1,850 rupees. An analyst with ABN Amro Bank NV’s India branch, Avadhoot Sabnis, expressed that the fresh evidence of a slowdown in the growth of global GDP strengthens the bank’s views that margins will drop down in the fiscal years to March 2009 and March 2010. The analyst further added that margins in petrochemicals will witness a strong drop because of new supply from the second half of the current year.

India’s biggest car manufacturer company Maruti Suzuki India Ltd climbed by 31.35 rupees that is 3.6%, to 898.55, its greatest since February 1. The New Delhi situated Maruti car maker drove some automobile manufacturer firms higher following the budget for the fiscal year beginning from 1st April reduced the excise duty on small cars to 12% from its earlier 16%. The budget likewise also cut down the income tax rates for taxpayers.

 

 

 

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