Sensex Falls 2%, Elevated Inflation

123jump.com Staff
09 May, 2008
New York City

Wholesale price index in India fell in the latest period measured two weeks ago. Rising energy and food prices continue to fuel inflation above the target set by the Reserve Bank of India. Sensex index fell 2% to 16,737. Trading on two largest stocks exchanged was 20,000 crore rupees or $5 billion. ICICI Bank, HDFC Bank and State Bank of India fell in trading. Reliance Industries fell 5.2%.

[R]10:00AM New York, 7:30PM Mumbai – Wholesale inflation at the end of week two weeks ago fell but stayed above the target set by Reserve Bank of India.[/R]

Market Sentiment

Indian shares fell on Friday for a second consecutive day after inflation rose to more than 3-year high while crude oil prices touched yet another record high near $125 per barrel.

In Mumbai trading, the key benchmark index Sensex declined 2% or 343.58 and closed at 16,737.07 levels. On the National Stock Exchange CNX Nifty lost 2% at 99.10 points at 4982.60.

Software shares advanced. ITC, Wipro, Satyam Computer gained. Grasim Industries and ONGC rose as well. However, Jaiprakash Associates, Reliance Infrastructure, ACC and Hindalco Industries were among the decliners on Sensex.

Among the BSE traded shares, 704 shares gained, 2,019 shares declined while 61 shares remained unchanged.

Turnover

Daily turnover on the BSE stood at 6,561 crore rupees and at 13,885 crore rupees on the NSE.

Aishwarya Telecom was the most active stock on the BSE with the highest turnover of 502.20 crore rupees followed by Reliance Petroleum, Reliance Capital and Reliance Industries.

Economic News

Wholesale price inflation rose to 7.61% in the twelve months period ending on 26 April 2008, marginally higher than 7.5% at the end of the previous week, according to the latest government data released on Friday morning.

Finance Minister P. Chidambaram said on Friday a slight increase in the annual wholesale price inflation rate in late April had come as a major relief, and was not statistically significant. However, inflation remains above the target set by the Reserve Bank of India.

Market Movers

Of the Sensex shares, ITC gained 1.5% at 218.30 rupees, Wipro advanced 0.8% to 501.20 rupees, Satyam Computer rose 0.5% to 473.40 rupees, Grasim Industries surged 0.4% to 2,340 rupees and ONGC climbed 0.04% to 1,028.80 rupees.

Bharti Airtel gained 1.8% to 842.20 rupees on news reports that that company has suggested it may make an offer to acquire MTN Group next week.

Among the Sensex shares, Jaiprakash Associates declined 6.6% to 251.30 rupees, Reliance Infrastructure fell 4.5% to 332.05 rupees, ACC lost 4.2% to 712 rupees and Hindalco Industries was down 3.6% to 173.55 rupees.

ICICI Bank fell 1.9% to 874.05 rupees, HDFC Bank down 3.7% to 1,451.95 rupees and State Bank of India lost 3.1% to 1,675.70 rupees.

Reliance Update

Reliance Industries declined 5.2% at 2,527.65 rupees. Reliance Petroleum declined 8.2% at 181.05 rupees and Reliance Natural Resources lost 5.9% at 106.80 rupees.

Oil prices update

International oil prices hit a new record and reached at $125 a barrel on Friday, extending this week''s record run after OPEC insisted the market was well-supplied and driven by speculators. Investors are increasingly using crude oil and other commodities to hedge their losses as the U.S. dollar weakens. While demand for crude oil has been rising in China and India, the U.S. continues to be the largest importer of crude oil in the world.