10:00AM New York, 7:30PM Mumbai –Ranbaxy controlling shareholder sells the stake to Daiichi Sankyo at 31% premium. RBI increases rate by 0.25% to 8%.

Indian market update

Indian markets bounced back on Wednesday supported by falling crude prices. In Mumbai, the 30-share Sensex rose 2% to 296.07 at 15,185.32. On the NSE, the CNX Nifty jumped 1.7% or 73.8 at 4,523.60.

Of the BSE stocks traded, 1,830 shares gained 809 declined and 77 shares remained unchanged. Among the 30 stocks from Sensex, 22 gained while 8 shares fell.

Ranbaxy controlling shareholder sells stake at 31% premium to Daiichi Sankyo

Ranbxy Laboratories based in India controlling shareholder Malvinder Singh and his family agreed to sell controlling interest in the generic pharmaceutical company to Daiichi Sankyo at a price of 737 rupees per share. The largest Japanese pharmaceutical company hopes to acquire more stock from the public investors and valued the company at $8.5 billion.

Daiichi accepts to acquire majority control in the generic pharmaceutical company at a price between $3.4 billion and $4.6 billion. Daiichi is expected to make an offer to acquire 20% additional stocks to meet the takeover rules in India.

This purchase price represents a premium of 53.5% to Ranbaxy’s average daily closing price on the National Stock Exchange for the three months ending on June 10, 2008 and 31.4% to such closing price on June 10, 2008.

Ranbaxy stock closed nearly unchanged at 561 rupees.

Trading statistics

Daily turnover on the BSE stood at 5,296 crore rupees and on the NSE the daily turnover was at 13,191 crore rupees.

Ranbaxy Laboratories was the most active stock on the BSE with the trading turnover of 684.05 crore rupees followed by Reliance Industries, Anu's Laboratories, Reliance Capital and IFCI.

IFCI clocked the highest volume of 2.67 crore shares on MSE followed by Ranbaxy Laboratories, Karuturi Global, Ispat Industries and Anu's Laboratories.

USB cuts Indian economic growth

UBS on Wednesday cut India's economic growth forecast for the current fiscal year to 7.7% from 8.2%, citing weakening investment and industrial output. The central bank expects the gross domestic product to grow between 8% and 8.5% in the current fiscal year, lower than last fiscal year's 9%.

Indian, the third largest economy in Asia has grown an average of 8.8% over the last five years. UBS expects wholesale price inflation to range between 9% and 9.5% over the next month. Annual inflation hit nearly 4-year high of 8.24% on May 24.

UBS also forecasts that the inflation will hover around 7% by the end of March 2009, higher than the central bank's forecast of 5.5%. Finance minister on Monday projected the economy will expand 8.5% despite rising energy costs, rising food prices and inflation.

Meanwhile the World Bank expects India's economic growth to moderate to 7% in the current fiscal year on tighter monetary policy and weak industrial production growth.

Gainers and losers

Reliance Industries rose 2.8% to 2,260 rupees. Housing Development & Infrastructure gained 4.5% to 576.85 rupees.