Sensex Drops 1.5% on Inflation Worries; Reliance Drops 3.7%

Devan Biswas
18 Mar, 2011
New York City

Stocks in Mumbai declined on the worries that another hike in retail petrol prices will stoke a new round of inflation. Political noise also notched up after a leaked U.S. diplomatic cable hinted that Congress Party offered bribes to win the nuclear treaty vote in Parliament.

[R]5:00 PM Mumbai – Stocks in Mumbai declined on the worries that another hike in retail petrol prices will stoke a new round of inflation. Political noise also notched up after a leaked U.S. diplomatic cable hinted that Congress Party offered bribes to win the nuclear treaty vote in Parliament.[/R]

Stocks in Mumbai fell on the rising political worries and growing concerns of higher inflation and political uncertainties.

The Sensex index declined 1.5% or 271.06 to 17,878.81 and the Nifty index fell to 72.95 5,373.70.

Of the 30 stocks in the index, 28 declined.

The rupee closed lower one cent at Rs 46.01 and the price of ten grams of gold increased Rs 133 to Rs 20,855.01.

Stocks opened lower and managed to rebound after one hour of trading but failed to hold on to the gains. The index edged lower in a steady selling that saw the benchmark Sensex close at the lows of the day.

Overseas investors continue to sell shares and sold a net of Rs 125 crore on March 16 and sold a total of Rs 7,170 crore for the year today.

Prime Minister Manmohan Singh told a conference earlier in the day that “no one from the Congress Party or the government indulged in any unlawful act during the trust vote.”

He was referring to a confidence vote in the Parliament in 2008 at the time of the nuclear treaty with the U.S.

The prime minister statement came after a leaked U.S. diplomatic cable available on the Wiki Leaks website suggested that four lawmakers from a regional party were offered nearly $10 million to win their support at the time of confidence vote in 2002.

Stock Movers

Reliance Industries declined 3.7% to Rs 993 after a petroleum industry publication Indiapetro noted on its website that production at its two gas fields in KG-D6 block may decline to 38 million cubic meters a day in the fiscal year beginning April 1, 2012 from the current 43 million cubic meters a day.

After the close the company filed a statement with the BSE and indicated that production estimates are only estimate and can change.

Reliance is looking to invest more capital to increase its production in the filed and has been struggling with deep drilling technology to unearth more natural gas at its prolific fields.

Oil marketing and refining companies closed lower after crude oil surged more than 3% to $101.40 a barrel.

Indian Oil Corporation fell 1.3% and Bharat Petroleum Corporation dropped 2.6% and Hindustan Petroleum Corp dropped 2.2%.

Rate sensitive stocks and banks declined in trading today after the central bank lifted rates for the eighth time.

Housing Development declined 2.6% to Rs 620.30 and State Bank of India fell 1% to Rs 2,590.25.

Mahindra & Mahindra declined 3.3% to Rs 632.95 and Hero Honda Motors closed lower 2.4% to Rs 1,474.15.

Real estate developer, DLF declined 0.9% to Rs 219.70 and Unitech dropped 0.8%.

Software services exporters declined tracking the fall in the rupee against the dollar. Infosys Technologies fell 1.6% to Rs 1,082.40.

Tata Steel gained 0.3% to Rs 596.30 and Tata Power gained 02% to close at Rs 1,232.