Stock markets keep up the Mumbai spirit, but rupee takes a beating

Written by Markets Bureau | Mumbai | Updated: Nov 29 2008, 08:28am hrs
Despite coming off the worst terrorist attack on the country, the stock markets remained steady, though the rupee slipped 64 points to 50.12 to a dollar. The stock markets were helped by the upside in Asian markets, led by the leading Japanese index, which recorded a 1.7% rise. Brokers had used the unexpected day-off to create alternative trading arrangements, which stood up when the markets opened on Friday. The alternatives were necessary as the month-end settlement of trades, postponed from Thursday, were scheduled for the day.

In choppy trade, the 30-share Sensex of BSE added up 66 points or 0.73%, to close the day at 9,092.72 points. The broader S&P CNX Nifty of the National Stock Exchange (NSE) rose by 2.85 points or 0.10% and closed the day at 2,755.10 points.

On Thursday, brokerage offices that were located in the range of the Trident-Oberoi complex scurried to the NSE to seek permission to use their branch offices and even the contingency facility extended by the NSE.

Usually, for proprietary trading, brokers need to get written permission from the exchanges to operate from branch offices. NSE also has a contingency facility, under which, a trading connection and a desk are made available at the exchange to complete trades. According to market sources, around 30 brokers had made such requests.

Mutual funds located in the vicinity, like Fidelity, Quantum and ABN Amro, worked on thin staff or out of other locations. Most fund managers are now looking at creating a more robust disaster recovery system which allows technology to create mirror servers and duplicate trade data and records at another location. Moreover, most funds were seen closing out unfinished trades and getting ready for the next week. Hence, daily volumes on the NSE were at Rs 9,753.7 crore, lower than the average of Rs 11,000 crore.

The markets had actually opened weak but gained strength on some short-covering at the lower end, better-than-expected economic growth data and some buying support on the key stocks. Expectations of a further rate cut by the central bank and strong cues from the Asian markets lifted the market sentiments.

Deven Choksey, MD of KR Choksey Securities, said, Markets ending on the positive note after such a tragic event in the city was due to the short-covering and rollovers on the last day of monthly derivatives contract. We assume that, volatility will prevail in the markets in the coming days.

The India VIX or the volatility index that measures the expectation of volatality in markets, which had improved to below 60% since November 24, has started inching up again and was at 57% on Friday, indicating that stable situations have not yet been reached. As was expected, shares of Indian Hotels, to which the Taj Mahal Hotel belongs, plunged by over 14%, while Oberoi group flagship EIH Ltd dipped 10% due to the terror attacks.

On the BSE, sectoral indices IT and Teck were the top performers. Dealers say technology stocks rose after Indias economy grew at a faster-than-expected pace. It stood at 7.6 % for the second quarter. Realty and Metal were the worst performing sectors of the day in the BSE Sectoral indices.

Though the markets closed the day with gains, the breadth of the market remained negative. Out of 2,093 stocks traded on BSE, only 915 stocks advanced, as 1,114 stocks declined, while 64 stocks remained unchanged. In the Sensex, 16 stocks ended in the green and 14 ended in the red.