Sensex in India Drops 1.8% to Plunge 12% in 2011

Marcus Jacob
01 Feb, 2011
New York City

Stocks in Mumbai continued to correct as inflation worries and rising crude oil prices lead foreign investors to sell. The latest private survey of manufacturing indicated that manufacturing expanded for the twenty second month in a row but at a slower pace in January. December exports rose 36.4%.

[R]5:30 PM Mumbai – Stocks in Mumbai continued to correct as inflation worries and rising crude oil prices lead foreign investors to sell. The latest private survey of manufacturing indicated that manufacturing expanded for the twenty second month in a row but at a slower pace in January. December exports rose 36.4% and imports increased 11.1%.[/R]

Stocks in Mumbai trading fell sharply on the first day of February after dropping more than 10% in January, worst monthly decline in more than two years. A private survey indicated manufacturing expanded at a faster pace than estimated in January.

Sensex index fell 1.8% or 305.54 to 18,022.22. The index fell to its lowest since August as inflation worries and rising crude oil prices dampen the sentiment.

Foreign investors were net sellers and sold $1.2 billion of shares in the year to Jan 28.

Sensex has declined 12% in the year after rising 17% in 2010 as the Reserve Bank of India increase rates for the seventh time in a year and wholesale inflation hovers near five-year high and good prices rise more than 17% in the last year.

December exports increased 36.4% to $22.5 billion and rose 32.1% in rupees. Exports in the nine months to December rose 29.5% in the dollars and 23.4% in rupees. Imports in the month rose 11.1% to $25.13 billion and in the nine months increased 19.1% from a year ago period.

The HSBC Markit Purchasing Managers’ Index increased in January to 56.8 from 56.7 in December. The index above 50 indicates expansion, and the latest index is the 22nd monthly expansion in a row. The manufacturing output has increased every month since April 2009.

The newly appointed ONGC Chairman A.K. Hazarika said that the company will begin the sale of its secondary public offering on March 15 and raise as much as $3 billion. The government of India is expected to divest 5% of its stake in the offering.

Stock Movers

Reliance Industries declined 2.6% to Rs 895.65 after the Economic Times reported that the state auditor may question the company’s capital expenditure plan to explore for more oil and natural gas on the east coast of India.

Infosys declined 1% to Rs 3,086.20, Tata Consultancy fell 0.6% to Rs 1,150.35 and Wipro dropped 2.2% to Rs 428.95.

Radico Khaitan, the second largest liquor maker rose 1.1% to Rs 135.95 after it said fiscal third quarter net nearly doubled to Rs 20.5 crore form Rs 11.5 crore on sales increase of 16% to Rs 363 crore from Rs 316 crore.