Sensex seesaws, banks rise on rate cut hopes

Sensex seesaws, banks rise on rate cut hopes
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First Published: Wed, Nov 26 2008. 12 23 PM IST
Updated: Wed, Nov 26 2008. 12 23 PM IST
Mumbai: Indian shares flip-flopped on Wednesday as investors used a firm start to unwind their positions ahead of the expiry of monthly derivatives on Thursday, but financial issues were higher on hopes for a rate cut.
ICICI Bank, the country’s second-largest lender, was up 3.1% at Rs330, while smaller rival HDFC Bank rose 2.7% to Rs857.95.
Expectations for easier monetary policy gathered momentum after the authorities said this week their focus had shifted to bolster growth as inflation cooled.
Annual inflation in early November dropped to a 5-month low of 8.9% from a peak of 12.9% in early August as fuel and commodity prices slumped. The latest data is due on Thursday.
However, slowing economic growth and production cuts by companies following sluggish demand are expected to keep shares under pressure in the near term, traders said.
By 11.43am, the 30-share BSE index was up 0.28% at 8,719.84 points, after starting up 1.3% and then falling 0.4%.
Sixteen of its components were down, while in the broader market 1,312 losers outweighed 702 gainers on low volume of 86 million shares.
Traders said they expected the market to remain volatile with the outlook for companies weighed down by sluggish consumer spending and with no end in sight for foreign fund withdrawals that have reached $13.7 billion this year.
Even for banks, there are worries a sharp economic slowdown could trigger defaults by their customers, traders said.
Bellwether Infosys Technologies, India’s second-largest software services exporter, lost the most among index components shedding 1.8% to 1,Rs160.
Metal majors Tata Steel and Hindalco fell 2.1% and 2.5% respectively, with the outlook for commodity prices remaining depressed.
The 50-share NSE index was up 0.3% to 2,661.65 points.
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First Published: Wed, Nov 26 2008. 12 23 PM IST
More Topics: Stocks | Indian Markets | BSE | NSE | Sensex |