Cheaper commodities lift Sensex by 336 pts

Stocks rose to the highest since June, led by banks and real estate companies as the five-week slump in commodity prices eased concern that the central bank will increase interest rates further to stem inflation.

State Bank of India (SBI), the nation’s biggest, climbed to the highest in more than two months. Indiabulls Real Estate, backed by billionaire Lakshmi Mittal, advanced the most in almost six weeks.
 

HIGHER, FASTER, STRONGER
Indices	Aug 11,2008	Net Chg*	% Chg*
Sensex	15503.92	336.1	2.22
Nikkei 225	13430.91	262.5	1.99
Taiwan Taiex	7325.62	116.58	1.62
Straits Times	2825.39	17.85	0.64
Kospi	1581.09	12.37	0.79
SET	702.93	12.23	1.77
Hang Seng	21859.34	-25.87	-0.12
Jakarta Composite	2133.92	-62.01	-2.82
Shanghai Composite	2470.07	-135.65	-5.21
* Over previous close A five-week slump in commodity prices eased concern over the central bank increasing rates further, boosting the market sentiment Global cues also played a dominant role in fuelling the Indian markets Stocks in Europe and Asia rose as investors rushed back to the stock market following a dip in oil prices, which eased fears of stringent anti-inflationary measures

The Bombay Stock Exchange’s Sensitive Index, or Sensex, rose 336.10 points, or 2.2 per cent, to close at 15,503.92, the highest since June 17. The S&P CNX Nifty Index on the National Stock Exchange gained 90.90, or 2 per cent, to 4,620.40.

“The overall sentiment has become positive with crude oil and other commodities prices coming down,” said Jayesh Shroff at SBI Asset Management Company.

Slowing global growth has dented commodity prices that rose to records this year. The UBS Bloomberg Constant Maturity Commodity Index of 26 prices, including crude oil, has tumbled 17 per cent from its July 2 peak. Oil prices in New York fell to a 14-week low at $115.20 on August 8, the lowest close since May 1. It fell further to $113.75 per bbl at the time of going to the Press.

Lower commodity prices may help curb inflation in India, which climbed to 12.01 per cent in the week ended July 26, the fastest since 1995. Accelerating inflation has forced the central bank to raise interest rates three times in two months.