Sensex Fell 2.5%

123jump.com Staff
20 Feb, 2008
New York City

A steep rise in oil above $100 a barrel sparked fears of rising inflation dragging stocks lower. Sensex fell 2.5% and Nifty declined 2.4%. Gold rose to a record high on the back of oil price increase. Tata Consultancy signed a multi-year multi-million dollar contract with Chrysler. Infosy and TCS advanced on the news. Shriram EPC and Bang Overseas IPO closed below their offer prices in volatile trading.

[R]10:00AM New York, 7:30PM Mumbai – Sensex fell 2.5% as investors worried that rising international oil prices will lift inflation.[/R]

Market Sentiment

The 30-share Sensex on Wednesday plunged 2.5% or 458.06 at 17,617.60 on aggressive selling by funds following weakening global trends.

The National Stock Exchange CNX Nifty Index was down 2.4% or 126.35 at 5,154.45 after touching a low of 5,116.30 and a high of 5267.15 points.

Of the Sensex stocks, 26 shares declined while the remainder advanced. On the BSE 1,917 shares declined, 825 gained, and 54 shares remained unchanged.

As most stocks tumbled, IT sector, led by Infosys Technologies, bucked the trend by gaining fresh ground on reports that the government may consider new tax incentives for exporters.

Banks fell earlier in the day on reports that the Reserve Bank of India has rejected proposals of few banks to increase their capital market exposure beyond the regulatory cap of 40% of net worth due to excessive market volatility.

Turnover

Daily turnover on the BSE amounted to 4,791 crore rupees while on the National Stock Market stood at 12,184 crore rupees. Shriram EPC, OnMobile Global, Reliance Natural Resources and Reliance Capital were also among active stocks.


New Issues

New issue Bang Overseas was the most active stock on the BSE recording a turnover of 326.50 crore rupees. The apparel maker Bang Overseas priced 3.5 million shares at 207 rupees and traded down to close at 171 rupees. The stock traded as high as 260 rupees and as low as 167 rupees with a trading volume of 17 million shares.

Wind turbine maker Shriram EPC priced its 5 million share offering at 300 rupees and closed at 293.60 rupees. The stock traded as high as 374 rupees and as low as 281 rupees during the day with a turnover of 1 crore shares (10 million). Kotak Mahindra and ICICI securities were the lead managers of the issue.

Economic News

Crude oil slipped on Wednesday surging nearly 5% to a record above $100.10 a barrel a day ago on the worries that OPEC may not increase its production on the weak winter season demand and request from Iran to limit the production.

Gainers and Decliners

Bajaj Auto added 1% to 2,345 rupees and led the gainers in the Sensex index.

Bajaj on Tuesday said the Bombay High Court has sanctioned an arrangement between the company, Bajaj Holdings & Investment and Bajaj Finserv and their respective shareholders and creditors.

Maruti Suzuki India lost 5.2% to 765 rupees on 3.53 lakh shares. It led the advancers in the Sensex index. Tata Motors slipped 4.2% to 707 rupees and Mahindra and Mahindra was down 3.9% to 632 rupees.

HDFC Bank was down 1.8% to 1,540 rupees, State Bank of India shed 2.9% to 2198 rupees and ICICI Bank declined 4.1% to 1,167.5 rupees.

Bharat Heavy Electricals fell 4.7% to 2,119.9 rupees, Tata Steel rose 4.8% to 773.85 rupees and DLF lost 3.5% to 813.2 rupees.

Tata Consultancy Services gained 0.8% to 882 rupees and Infosys Technologies climbed 0.6% to 1,566 rupees. Satyam Computers shed 0.1% to 421.25 rupees.

Tata Consultancy Services said it has signed a multi-year contract with Chrysler LLC to provide a comprehensive portfolio of information technology services.


Oil marketing companies fell as crude oil prices rallied. Hindustan Petroleum Corporation was down 4.9% to 296.2 rupees, Bharat Petroleum Corporation slid 5% to 429 rupees.

Indian Oil Corporation shed 4% to 534 rupees on the worries of higher losses from the sale of petrol and diesel on rising international prices.

Unitech was down 4.1% to 381.05 rupees, DLF lost 3.5% to 813.20 rupees and Parsvnath Developers slid 2.6% to 275.1 rupees.

Reliance Update

Reliance Industries slipped 2.8% to 2,482 rupees and Reliance Power was down 0.8% to 410 rupees.