Inflation at 7%, Sensex Down 3%

123jump.com Staff
04 Apr, 2008
New York City

Inflation in March surged to a 4-year high on rising food and energy prices. Investors sold bank stocks and dragged market averages lower and worried that RBI many be forced to act and reduce liquidity in the system. Sensex fell 3.1% or 489 to 15,343.HDFC, ICICI and State Bank of India led the decliners in the Sensex index.

[R]10:00AM New York, 7:30PM Mumbai – Surging inflation driven by rising food and energy price put investors on defensive. RBI may intervene and curb lending.[/R]

Market Sentiment

Stocks in India fell sharply after annualized inflation surged in March to 7%. BSE Sensex index declining 3.1% or 489.43. At close, Sensex ended at 15,343.12 levels with only two of the 30 members gaining. CNX Nifty Index declined 2.6% or 124.6 to close at 4,647.

Banking stocks were battered after investors worried that the Reserve Bank of India may have to intervene to curb rising inflation. HDFC, ICICI Bank and State Bank of India fell.

The latest inflation rate, highest in the last forty month, has already affected consumer sentiment and retail sales are expected to decline in coming months. RBI is likely to increase rates sooner than anticipated to keep economy from overheating and keep consumer prices in check.

RBI is likely to increase cash reserve ratio at banks and reduce liquidity in the financial system and drive rates for loans higher.

Bharat Heavy Electricals and HDFC led decliners in the Sensex index while Ranbaxy Laboratories and Tata Steel led the gainers.

Of the stocks traded on BSE, 808 advanced, 1,823 declined and 66 remained unchanged.

Trading Turnover

Daily turnover on the BSE stood at 4,947 crore rupees and was at 12,115 crore rupees on the NSE.

Reliance Petroleum was the most active stock on the BSE with the highest turnover of 247.62 crore rupees followed by Reliance Capital, Bharat Heavy Electricals, Reliance Industries and Larsen & Toubro.

Gainers and Decliners

Ranbaxy Laboratories gained 2.6% to 458.5 rupees and Tata Steel surged 0.2% to 660.70 rupees.
Bharat Heavy Electricals shed 6.9% to 1,634.10 rupees and Larsen & Toubro was down 5.7% to 2,686.35 rupees.

HDFC Bank fell 2.9% to 1,292.15 rupees, ICICI Bank lost 3.1% to 763.70 rupees and State Bank of India declined 2.1% to 1,605.35 rupees.

Tata Power Company declined 3.4% to 1,120.30 rupees and NTPC lost 2.3% to 189.75 rupees.

Wipro declined 4.5% to 415.60 rupees, Infosys fell 2.6% to 1,482.90 rupees and Satyam Computer Services was down 0.7% to 425.25 rupees.

HDFC fell 6.8% to 2,275.95 rupees, Mahindra & Mahindra lost 6% to 605.15 rupees and Bharti Airtel lost 4.5% to 783.85 rupees.

ACC declined 0.2% to 835 rupees despite March cement shipments rising 4.9% to 1.92 million tons.

Reliance Update

Reliance Industries was down 3% to 2,322.20 rupees, Reliance Energy fell 1.9% to 1,166.35 rupees and Reliance Power lost 2.3% to 321.90 rupees