Sensex in India Drifts Lower on Higher Oil; PFC $800 Million Offering

Devan Biswas
21 Mar, 2011
New York City

Stocks in Mumbai traded lower after crude oil prices gain stoked the worries of higher inflation and prompted analysts to talk of a market correction of further 5%. Mahindra & Mahindra completed the purchase of a stake in Korean engine maker. Power Finance Corp approved $800 million offering.

[R]4:10 PM Mumbai – Stocks in Mumbai traded sideways after crude oil prices gained and stoked the worries of higher inflation and prompted more analysts to talk of a market correction of further 5%. Mahindra & Mahindra completed the purchase of a stake in Korean engine maker. Power Finance Corp approved the offering to raise $800 million.[/R]

Stocks in Mumbai trading opened higher after the benchmark index dropped 1.6% in the last week. The market momentum quickly faded after crude oil increased in Asian trading.

The Sensex index closed down 39.76 or 0.2% to 17,839.24 and the Nifty index decreased 8.95 to 5,364.75.

Of the 30 stocks traded in the Sensex, 17 decreased and 13 increased.

The rupee closed at 46.31 to a dollar and the price of ten grams of gold increased 26 rupees to close at Rs 20,848.

Crude oil prices in Asian trading surged as high as $101.30 a barrel and in London traded as high as $116 a barrel. The rising crude prices are expected to stoke inflation that is already running at twice the target range set by the Reserve Bank of India.

Stock Movers

Madhucon Projects increased 4% to RS 90.40 after the highway builder won Rs 1,500 crore project form the National Highways Authority of India.

Power Finance Corp decined 4% to Rs 221.05 after the company board approve the sales of 17.2 crore equity shares that may raise as much as Rs 3,400 crore or $800 million. Government of India controls 89.8% stake in the company.

Tata Steel rose 1.5% to Rs 601.34 after the company completed the sale of hybrid security to raise Rs 1,500 crore. The security is a perpetual bond that is callable by the company at any time and has no termination date.

Of the stocks in the Sensex, Cipla declined 2%, Hindustan Lever fell 1.1% and Larsen & Toubro dropped 0.7%.

Cairn India increased 0.9% and Reliance Industries declined 0.2% after crude oil prices edged up in Asian markets after France and UK led a military attacks in Libya that killed as many as 100 civilians.

Jindal Steel and Power increased 2.3% to Rs 665 after the company is expected to ship its first iron ore shipment from a mine in Bolivia as early as May.

Software services exporters declined. Wipro fell 1.9%, Infosys dropped 1.1% and TCS fell 0.7%.

Maruti Suzuki declined 2.4% extending two-day decline to 6.5% on the worries that the company may struggle with parts supplies from Japan.

Mahindra & Mahindra increased 1.7% after it completed the majority stake purchase in South Korea based SsangYong Motor Company.

Tata Motors increase 0.5% and Hero Honda Motors declined 2.2%.

Cellular Operators Association of India said that nearly 5 million subscribers opted to change the service provider after the availability of number portability.

Reliance Communications lost 3.06 million subscribers and Vodafone Essar gained 1.9 million subscribers, Idea Cellular gained 1.5 million and Bharti Airtel added 1.4 million subscribers.