Sensex Drops 1.5% on Inflation; India and Indonesia Target $25 Billion Trade

Chandrasekhar Atreya
27 Jan, 2011
New York City

Stocks in Mumbai tumbled 1.5% after the release of the latest weekly wholesale data. India and Indonesia set a bilateral trade target of $25 billion by 2015. SpiceJet said third quarter net declined 13% to $21 million from a year ago.

[R]5:00 PM Mumbai, 8:30 AM New York – Stocks in Mumbai tumbled 1.5% after the release of the latest weekly wholesale data. India and Indonesia set a bilateral trade target of $25 billion by 2015. SpiceJet said third quarter net declined 13% to $21 million from a year ago.[/R]

The benchmark index in Mumbai ended down as traders settle forward trades and options expire. Sustained inflation in India and lower opening in Europe dampened the trading mood.

The Sensex Index in Mumbai dropped 1.49% or 282.98 to close at 18,686.47 while the CNX Nifty ended 1.44% down at 5,605.75.

The rupee closed at Rs 46.16 to a dollar in Mumbai today.

Food prices increased 15.57% at the end of the week ending in Jan 15. Food inflation hovered at 18% in December as vegetables and lentil price gain. The primary article inflation index from a year ago increased 17.26% in the week from 17.03% in the previous week.

India and Indonesia have agreed to begin negotiations for concluding a Comprehensive Economic Cooperation Agreement and set a bilateral trade target of $25 billion by 2015 from the $11 billion in trade in the last fiscal year.

Prime Minister Manmohan Singh and visiting Indonesian President Susilo Bambang Yudhoyono issued a joint statement in New Delhi after a meeting on Wednesday.

The wholesale price index increased 0.3% to 193.6 from 193.1 in the previous week. For the year to the week calculated on a point-to-point basis, inflation increased to 17.26% from 17.03% in the previous week.

Cairn India Ltd said today it is in discussions with the petroleum ministry to resolve all outstanding issues that are critical for operations at its properties and Rajasthan oil fields.

“We have full faith in the government approval procedure and are confident of moving forward in an amicable manner to enhance our contribution to the country’s energy needs,” Cairn India spokesperson said today.

SpiceJet said net profit for the third quarter ending in December declined 13% to Rs 94.4 crore from Rs 109 crore a year ago quarter. Sales in the quarter rose 27% to 820 crore from Rs 640 crore a year ago. the fifth quarter profit in a row was driven by the highest load factor of 87.8% from 80% a year ago quarter.

Higher food prices pose a major hurdle to global economic recovery and social stability but policy makers need to carefully regulate commodity markets to avoid some regression, a senior World Bank official said today.

Ngozi Okonjo-lweala, Managing Director at the Washington-based bank, said rising food prices are squeezing the poor and contributing to social instability. “Higher food prices and volatility are some of the biggest threats to the global economic recovery and social stability. You saw what happened in Algeria and other countries recently and there’s no doubt that higher food prices and a stress in living standards are taking a toll,” Okonjo-lweala, former Nigerian finance minister said.

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