Sensex Drops 1.1%; State Bank of India Net Plunges 99%

Devan Biswas
17 May, 2011
New York City

Stocks in Mumbai declined after State Bank of India earnings plunged on a sharp rise in non-performing loans. The Sensex index dropped 1.1%. ONGC and other government controlled oil marketing companies declined after the government lowered subsidies to energy companies.

[R]4:10 PM Mumbai – Stocks in Mumbai declined after State Bank of India earnings plunged on a sharp rise in non-performing loans. The Sensex index dropped 1.1%. ONGC and other government controlled oil marketing companies declined after the government lowered subsidies to energy companies.[/R]

Stocks in Mumbai trading dropped sharply on the persistent inflation worries and the largest bank State Bank of India reported weaker than expected results and a sharp rise in bad loans provisions.

The Sensex index declined 1.1% or 207.68 to 18,137.35 and the Nifty index dropped 1.1% or 60.05 to 5,438.95.

Of the 30 stocks in the benchmark index, 19 declined and 11 rose. Of the stocks traded on the Bombay Stock Exchange, 1,744 declined, 1,098 increased and 111 increased.

Rupee extended its losses for the third day in a row and touched a two month low. Rupee fell 30 paisa to Rs 45.40 against one dollar.

Corporate profits in the latest quarter have been ahead of expectations. Sales at 1,999 companies in the quarter rose 22.4% to Rs 634,120 crore and net income increased 13.3% to Rs 58,842 crore according to the data from Capitalmarket.com.

Stock Movers

State Bank of India dropped 8% to Rs 2,404.40 after it reported fourth quarter net plunged 98% to Rs 20.88 crore and sales increased 18% to Rs 26,536.84 crore. Non-performing loans increased 49% to 3,262.91 core and tax provision was increased to Rs 1,901.85 crore from 977.88 crore in the quarter a year ago.

Separately, ICICI Bank declined 1.6% after the bank increased its lending rate 50 basis points to 9.25% and announced an increase of the same amount for its prime lending rate.

Reliance Industries fell 2.6% to Rs 919.90 after the company is in negotiations with fertilizer companies to set price for natural gas produced from its fields in Madhya Pradesh. Ministry of oil is increasingly playing a key role in setting prices for natural gas.

ONGC dropped 6% and Oil India declined 4.6% after the government increased companies share of upstream subsidy to 38.5% that may total as much as Rs 30,000 crore for the industry.

Tata Steel declined 0.4% and the company submitted its plan to build new airport at Jamshedpur.

ITC increased 1% after it reported stronger than expected fourth quarter earnings.

Steel Authority of India declined 4.7% to Rs 145 on the reports that the company is expected to launch its secondary offering by June 14.