Indian stock market regains, Asian shares up

by Sanjay Jha | November 2, 2008 at 10:11 pm

75 views | 0 Recommendations | add comment

Asian stocks struggle amid recession worries

Spurred with a fresh rate cut, India's stock index surged the most in four years, led by energy and financial companies. There was renewed interest in the market after Standard & Poor's said the nation's investment-grade credit rating is safe. The sentiments turned bullish after the Reserve Bank slashed CRR, the amount which banks have to park with it, by one per cent to 5.5 per cent, while the repo rate, at which the central bank lends to banks, was cut by 0.5 per cent to 7.5 per cent.

National Stock Exchange’s benchmark Nifty soared 137 points or 4.76 per cent to 3023. Bombay Stock Exchange’s 30-share Sensex gained 421 points or 4.3 per cent 10209 from Friday’s close.

“When markets open higher with a gap, index would have retraced 30 per cent from its low it touched on Saturday. It is natural to expect profit booking at higher levels. Sensex has resistance at 10250, which is 380 points higher from its Friday close. 10800 and 11800 are the two major hurdles on way up, while support comes in at 8900.

In a major move to inject an additional liquidity into the system, Reserve Bank of India on Saturday cut key deposit requirements for banks by 1 per cent and its short-term lending rate by 0.5 per cent, a decision that may help soften general interest rates.

Other Asian stock market shares rose as well on hopes of fresh stability in the markets but fears of recession loomed large, with South Korea unveiling a stimulus package to cushion the blow of the financial crisis.

The Seoul government, saying it expected a significant slowdown in exports, promised an extra 11 trillion won (US$8.5 billion) in spending next year as well as tax cuts of three trillion won to boost sagging domestic demand.

Meanwhile, Asian stocks edged up for a fifth straight day on Monday on hopes that policy efforts so far to dampen the impact of the financial crisis would ultimately take hold. Expectations of more interest rate cuts this week from Australia, Britain and the euro zone following last week's reductions from China, India, Japan and the United States among others has at the least slowed the panicked selling of risky assets that dominated most of October.

Hong Kong’s Hang Seng climbed 5.32 per cent, Singapore’s Straits Times soared 5.09 per cent and South Korea’s Kospi rose 2.91 per cent. Japanese markets are closed for the Culture Day holiday.