Post-Market Commentary .Wednesday, September 17, 2008

Sensex tanks 1682 points in seven trading sessions on US financial turmoil
Intense selling pressure in key index pivotals dragged the key benchmark indices lower in volatile trade. The BSE 30-share Sensex, extended losses for the seventh straight day today, 17 September 2008, declining 255.90 points. The S&P CNX Nifty settled just above the psychological 4,000 level.
ICICI Bank shed over 4.5% and Reliance Industries shed over 3%. Sterlite Industries tumbled a little under 9% and ITC lost over 5%. The market breadth was weak. All BSE sectoral indices ended in red.
The US Federal Reserve in a meeting on Tuesday, 16 September 2008 announced a $85 billion rescue plan to help American International Group in exchange for a 79.9% stake. The deal would avoid the biggest corporate bankruptcy ever and follows a government bailout of mortgage lenders Freddie Mac and Fannie Mae earlier this month
Meanwhile, the US Federal Reserve at its policy meet on Tuesday, 16 September 2008, kept its target for the federal funds rate at 2%. Fed said that the strains in financial markets have increased significantly and labour markets have weakened further. Economic growth appears to have slowed recently, partly reflecting a softening of household spending.
National Stock Exchange (NSE) on Tuesday, 16 September 2008, said there are no outstanding open positions/settlement obligations of Lehman Brothers Securities currently in the cash market segment and derivatives segment of NSE. Lehman Brothers Securities can operate only in the cash market segment on pre-funding of their trades, NSE said.
The Reserve Bank of India (RBI) on late Tuesday, 16 September 2008 stepped in with measures to support the rupee — which has been battered to almost 47 against the dollar — and supply cash in the money market. The move will increase dollar supply and lower banks’ borrowing cost in the overnight call money market. RBI has hiked the maximum interest that banks can pay on NRI deposits by 50 basis points for dollar as well as rupee deposits.
India's largest private sector bank in terms of net profit ICICI Bank plunged 4.75% to Rs 563.25, off day’s low of Rs 530. The sell-off was on reports the bank will have to take a hit of $28 million on account of the additional provisioning that ICICI Bank's UK subsidiary will have to make after Lehman Brothers Holdings, the fourth-largest investment bank filing for bankruptcy.
Meanwhile, the bank denied rumours of top management selling shares over the last few days.
Ranbaxy Laboratories, India’s top drug maker by sales slumped 4.41% to Rs 388. The stock tumbled on reports the US government has banned more than 30 generic drugs made by the company citing poor quality in two of its Indian factories. The stock was already on a sustained downtrend ever since the Japanese drug maker Daiichi Sankyo’s open offer to acquire an additional 20% stake at Rs 737 a share in the company ended on 4 September 2008.