Tuesday 11 March 2008

India Sensex Index Recovers After Early Drop; DLF, Larsen Gain

India's Sensitive Index rebounded from a decline, led by real estate companies, amid speculation the U.S. Federal Reserve will broaden measures to bolster the world's largest economy, including a rate cut.

DLF Ltd., the nation's biggest developer, rose the most in more than five months. Most Asian markets rallied from declines.

``It is a combination of Asian markets looking up and domestic buying coming in at lower levels,'' said R. Baskar Babu, head of equity broking at PINC Research Ltd.

The Bombay Stock Exchange's Sensitive Index, or Sensex, advanced 199.43, or 1.3 percent, to 16,123.15 after falling as much as 1.2 percent. The S&P CNX Nifty added 65.50 points, or 1.4 percent, to 4,865.90.

Small and mid-sized companies attracted more buyers on expectations of cheaper valuations.

The Bombay Stock Exchange's index for mid-cap companies gained for the first time in eight days, rising 224.92, or 3.3 percent, to 6,992.84, its biggest rise in a month. Similarly, the gauge for small companies advanced 310.37, or 3.8 percent, to 8,559.10 after falling 15 percent in the last seven sessions.

The Wall Street Journal reported that U.S. policy makers may lend directly to financial institutions other than banks. The Fed has lowered its key interest rate by 2.25 percentage points since Sept. 18 to 3 percent to stave off a recession in the U.S., the biggest market for Asian products and also India's largest trading partner.

DLF surged 68.75 rupees, or 10 percent, to 749.1, its steepest percentage gain since Oct. 3.

Larsen Gains

Larsen & Toubro Ltd. gained the most in almost a month after investors judged the six-day, 25 percent decline in the nation's largest construction company excessive. Larsen also informed the Bombay Stock Exchange it won a contract worth 747 million rupees from state-run Oil & Natural Gas Corp. The stock advanced 188.2 rupees, or 6.9 percent, to 2,917 rupees, the most since Feb. 14.

Larsen yesterday said one of its units may incur a loss of as much as 2 billion rupees ($49 million) from commodity trading. The stock fell 8.7 percent, its steepest drop since May 2004.

``The write-off on Larsen was very small and the company made no changes to its sales and profit forecast,'' said Deven Choksey, chief executive officer at K.R. Choksey Shares & Securities, who helps manage $550 million for wealthy individuals. ``The extent of the fall wasn't warranted.''

Kotak Mahindra Bank Ltd., the worst performer on the Bombay Stock Exchange's banking index this year, gained the most in seven weeks after it denied a newspaper report that the central bank was conducting a special audit of the company.

The shares lost more than half their value from a January peak as investors sold off financial stocks including Indiabulls Financial Services Ltd. on concerns that loan growth may slow.

Kotak advanced 58.55 rupees, or 9.5 percent, to 672.05, its biggest percentage gain since Jan. 23.

The following stocks were the most active on the Bombay Stock Exchange:

ACC Ltd. (ACC IN) advanced 43.50 rupees, or 5.7 percent, to 810.6 after India's biggest cement maker informed the Bombay Stock Exchange it sold a wholly-owned unit to HNG Group for 450 million rupees.

GAIL (India) Ltd. (GAIL IN) rose 26.70 rupees, or 6.8 percent, to 420.6 rupees, its biggest percentage increase in seven weeks after the country's biggest natural gas distributor said it plans to issue free shares and almost double spending on pipeline projects.