Sensex Drops 2%, Rupee 13-month Low

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

Sensex in Mumbai trading fell as crude oil continued to rise and rupee fell to a 13-month low. The rupee traded in a wide range between 42.61 and 42.84 a dollar and closed at the weakest level of the day. The government is likely to pass another fuel price hike to consumers as crude oil price rises above $130 a barrel. Sensex declined 2% or 336.05 at 16,907.11. On the NSE, the S&P CNX Nifty edged lower at 1.8% or 92.2 at 5,025.45.

[R]10:00AM New York, 7:30PM Mumbai - Indian shares decline as rupees fell to a 13- month low and fears of inflation persisted as the government reviews another feul price hike.[/R]

India market update

The benchmark Sensex index fell on Thursday with large caps leading the decliners. Weak U.S. stocks and surging crude oil prices weighed on the market sentiment. The Indian rupee today fell to a fresh low in more than 13 months of 42.83/84 against the U.S. dollar after crude oil surged to a record high of $132 a barrel in the international market.

Rising crude oil prices fueled the inflation fears and dragged rupee to a new low.

Market Sentiment

After Thursday''s trades, the 30-share BSE Sensex declined 2% or 336.05 at 16,907.11. On the NSE, the S&P CNX Nifty edged lower at 1.8% or 92.2 at 5,025.45.

Of the BSE traded shares, 1,040 stocks gained, 1,684 stocks fell and 67 stocks remained unchanged. Among the 30-member Sensex index, 29 stocks declined and only 1 share advanced.

Turnover

Turnover on the BSE stood at 5,742 crore rupees and on the National Stock Exchange at 13,532 crore rupees. Reliance Capital was the most active stock on the BSE with the highest turnover of 225.63 crore rupees followed by Cairn India, Reliance Power and Reliance Industries.

Gainers and Losers

Banking stocks declined. ICICI Bank fell 3.4% to 880.40 rupees, HDFC Bank lost 2.4% to 1,379.90 rupees and State Bank of India fell 3.3% to 1,607 rupees.

Realty stocks fell. Unitech lost 3.1% to 273.85 rupees and DLF declined 2.2% to 620.70 rupees.

Capital goods stocks traded lower. Larsen & Toubro lost 2.6% to 2,916.80 rupees, Bharat Heavy Electricals was down 1.3% to 1,748.05 rupees and Suzlon Energy declined 5.6% to 291.60 rupees.

Auto stocks lost. Tata Motors fell 4% to 661.45 rupees, Maruti Suzuki India declined 1.8% to 800.50 rupees and Hero Honda Motors lost 0.03% to 788.50 rupees.

Oil and Natural Gas Corporation fell 1.5% to 924.35 rupees. According to media reports, the company is planning to sell 30% to 40% each in two blocks in Vietnam to share the risks and drilling costs. ONGC owns 100% in the two deep water exploration blocks.

Ranbaxy Laboratories declined 1.1% to 498.25 rupees on news reports that it has struck two deals with group companies. Ranbaxy has sold some land and building for 90 crore rupees to a group company. It has also picked up 24.91% stake in Shimal Laboratories, another promoter family company, for 93.4 crore rupees.

Hindalco Industries rose 0.2% to Rs 197.65.

Mahindra & Mahindra declined 2.2% to 652.35 rupees on reports that the company has signed a term sheet with Kinetic Motors to acquire a majority stake in the company. Reports say M&M is looking to acquire 76% stake in Kinetic Motors valued at about 120 crore rupees.

Reliance Companies update

Reliance Industries declined 1.9% to 2,617.35 rupees, Reliance Infrastructure lost 4% to 1,322.95 rupees and Reliance Communications lost 3.2% to 584.65 rupees.

Government considers fuel hike

Another rise in fuel price at petrol pump stations is likely as international crude oil prices continue to rise. Crude oil has closed higher in the twelve of the last fourteen trading days and reached a new high of $132 a barrel. In New York trading, after the Mumbai market close crude traded above $135 but closed near $130 a barrel.

Petroleum Minister Murli Deora said if increasing petrol and diesel prices was an option to protect the PSU, then it should be taken as a remedial measure.

Rupee at 13-month Low

The Indian rupee today fell to a new low in more than 13 months to 42.83 a dollar as crude oil surged above $132 a barrel. Rising oil prices increases India’s import bill and a demand for dollar increases. The rupee settled at 42.83 after trading in a broad range between 42.62 and 42.90 against a dollar.