Sensex in India Drops 1.3%; India Needs to Explain Nuclear Treaty Details

Devan Biswas
15 Mar, 2011
New York City

Stocks in Mumbai plunged more 2.7% at the opening but recovered to close down 1.3% after a panic selling in Japan sparked a selloff in Asia. Indian government needs to shed more light on its recently signed treaty with nuclear power plant makers on the safeguard provisions and liability assignments.

[R]6:30 PM Mumbai – Stocks in Mumbai plunged more 2.7% at the opening but recovered to close down 1.3% after a panic selling in Japan sparked a selloff in Asia. Indian government needs to shed more light on its recently signed treaty with nuclear power plant makers on the safeguard provisions and liability assignments.[/R]

The benchmark Sensex index in Mumbai fell sharply after a slide in Asian markets on the panic selling in Japan. Crude oil declined about 2%.

The Sensex opened lower and quickly dropped 518.93 in the early trading and slowly recovered in the late afternoon. However, the index hovered near the day’s close after European markets opened down more than 3.5%.

Asian markets slumped after the Japanese benchmark index plunged more than 14% before recovering to a loss of 10.6% at close to a nearly two-year low as a third explosion at the nuclear power plant sparked worries of more radiation leaks.

Japanese authorities are still battling the threat of a possible radiation from the quake-stricken Fukushima No.1 nuclear plant after an explosion at reactor two, the third since Friday's 8.9-magnitude earthquake, occurred at around 6.14 a.m. local time on Tuesday.

Earlier Prime Minister Naoto Kan urged all Japanese living within a 30 kilometer radius of the plant to stay indoors. ""There is still a very high risk of more radiation coming out,"" Kan said.

The latest nuclear radiation leak also raised questions about India’s recent push to increase its reliance on atomic power plants. The deal signed between the Indian government and nuclear power plants maker lacks clear safeguards and recourse to affected people from an accident.

The treaty signed in a hurry by the Indian government without proper debate in Parliament may raise more questions in the following weeks as Japan struggles to cool reactors in earthquake stricken area.

India recently signed $9.3 billion deal with Areva of France and General Electric and Westinghouse are looking to build more nuclear power plants in India. Neither of these companies is prepared to accept liabilities when plants run into trouble that may endanger lives.

India has twenty nuclear plants in operation and Prime Minister Manmohan Singh’s Congress party has planned to add more than two dozens power plants and invest $150 billion in the next two decades.

The Fukushima Daiichi plant in Okuma, Japan was designed by General Electric 40-years ago and Chairman Jeffrey R. Immelt at a press conference in Mumbai on Monday while on a promotional tour deflected direct questions related to safety of the nuclear power technology and plants.

The memories of more than 18,000 deaths in a chemical leak at a Union Carbide plant in Bhopal are still fresh.

Indian people have not forgotten the former Union Carbide Chairman and Chief Executive Warren M. Anderson and his flagrant violation of Indian laws and evade and trials in India has not been forgotten. Anderson lives in a $10 million mansion in Long Island, New York.

Though Immelt is quick to press his case to sell nuclear technology to India but he is not willing to abide by the Indian environmental and long term liability clauses only raises flags for the common man.

Stock Movers

Reliance Industries increased 1.6% to Rs 1,034 and the latest nuclear fallout in Japan is expected to increase demand for liquefied natural gas.

Bharti Airtel declined 2.1% and the largest mobile telecom operator said it plans to launch its broadband TV for a monthly subscription of Rs 99.

Maruti Suzuki India declined 3.8% after investors worried that the largest automaker may suffer from the lack of auto parts availability from Japan.

Tata Motors declined 2.2% after the largest India-based truck maker reported global vehicles sales in February increased 14% from a year ago to 102,000.

HDFC Bank declined 0.7% and the bank lifted its base lending rate 50 basis points and prime lending rate 75 basis points.