Sensex in India Drops 1.4%, Ruling Coaltion Loses Support

Devan Biswas
07 Mar, 2011
New York City

Mumbai stocks closed lower after oil hit another high and political concerns rose in New Delhi. Regional party DMK withdrew its support to the ruling coalition that may stymie government economic agenda. Rate sensitive stocks led the decliners.

[R]5: 30 PM Mumbai – Mumbai stocks closed lower after oil hit another high and political concerns rose in New Delhi. Regional party DMK withdrew its support to the ruling coalition that may stymie government economic agenda. Rate sensitive stocks led the decliners.[/R]

Stocks in Mumbai trading fell on the worries that the ruling political coalition may face difficulty after a small region party withdrew support in the central government. Also rising crude oil prices contributed to market jitters.

The Dravida Munnettra Kazhagam, the regional party with a strong hold in Tamil Nadu said Saturday it withdrew its support from the ruling national coalition after it was not able to agree with Congress party on seat sharing arrangement for the upcoming April 13 election in the state.

Crude oil price is up 50% in the last eight months and investors are factoring elevated prices at least till the end of June. Standoff between Libyan army and rebels has intensified and begun to affect retail petrol prices in Europe.

Retail petro price this weekend in Italy and the Netherlands shot up to 1.67 euros a liter petrol prices.

Nymex crude oil future price increased 162 cents to $106.06 a barrel in Singapore trading tracking the similar gains in New York.

The Sensex index declined 263.78 or 1.4% to 18,222.67 and the Nifty index declined 75.60 or 1.4% to 5,463.15. Trading volume on the BSE declined to Rs 2,433 crore or $542 million and 910 shares increased, 1,971 declined and 113 were unchanged.

Stock Movers

Auto stocks declined on the worries that the sharp increase in oil price and increase in interest rate will lower demand. Maruti Suzuki declined 3.7% to Rs 1,264.70 and Tata Motors fell 3.6% to Rs 1,127.25.

Banks closed lower. State Bank of India declined 2.9% to Rs 2,622.80 and HDFC Bank fell 1.9% to Rs 2,177.35.

Property developers also closed lower on the worries that interest rates may increase to stem the elevated inflation. DLF declined 1.9% to Rs 218.20.

Capital goods makers traded lower. Larsen & Toubro fell 2.7% to Rs 1,567.55 and Bharat Heavy Electricals declined 3.2% to Rs 2,018.05.