Sensex Falls, Weak Rupee, Fuel Price Hike

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

Rising inflation and elevated crude oil prices dragged stocks lower. Sensex fell 1.5% or 257.47 to 16,649.64 and NSE declined 1.6% to 4,946.55. The stocks fell for the second day in a row on a weakness in realty, energy and metals and mining companies. After the release of wholesale inflation report banks and realty stocks fell. Software company TCS won an order of 1,000 crore rupees to process passport applications from the Indian government.

[R]1:30PM New York, 11:00PM Mumbai - Government considers fuel price hike rise to reduce the impact of crude price rally.[/R]

India market update

The benchmark index Sensex extended Thursday''s loss on selling in realty, oil & gas and metal stocks. Asian and European markets trading also weighed on the market sentiment.

The latest read on India''s wholesale price index showed an increase 7.82% in the 12 months to May 10, holding near the previous week''s annual rise of 7.83%. The government said it is considering an increase of fuel prices and reduction in customs and excise duties to offset the impact of the rising crude prices.

Market sentiment

At close of Friday''s trades, the 30-share BSE Sensex settled lower at 1.5% or 257.47 at 16,649.64. On the NSE the S&P CNX Nifty fell 1.6% or 78.9 at 4,946.55.

Of the BSE traded shares, 795 shares advanced, 1,924 shares declined and 71 shares remained unchanged. Among the 30-member Sensex pack, 25 shares declined while 5 shares declined.

Turnover

Daily turnover on the BSE was 5,358 crore rupees and on the NSE was 12,719 crore rupees. Reliance Capital was the most active stock on the BSE with the turnover of 283.43 crore rupees followed by Cairn India, Reliance Industries, Reliance Power and Ispat Industries.

Gainers and losers

Banking shares were mixed after inflation data. ICICI Bank fell 1.9% to 863.75 rupees and State Bank of India declined 2.1% to 1,573.25 rupees. However HDFC Bank gained 0.3% to 1,383.35 rupees.

Realty shares declined. Indiabulls Real Estate fell 4.3% to 490.45 rupees, DLF declined 1.8% to 609.75 rupees and Unitech lost 2% to 268.25 rupees.

Oil & Gas stocks declined on profit taking after a sector rally in past few days. Cairn India declined 4.1% to 306.45 rupees and ONGC fell 2.4% to 902.05 rupees. Reliance Industries lost 2.4% to 2,554.80 rupees.

Metal stocks edged lower. Sterlite Industries declined 5% to 903.20 rupees, Hindalco Industries was down 2.4% to 192.95 rupees, Tata Steel lost 1.3% to 896.50 rupees and Steel Authority of India declined 1.6% to 172.95 rupees.

ITC declined 4.5% to 213.05 rupees. The company posted 13.05% rise in net profit to 735.64 crore rupees on 17.95% rise in total income to 4,098.07 crore rupees in the fourth quarter ended March 2008 over the same quarter last year.

Bharti Airtel surged 2.4% to 836.80 rupees, HDFC gained 2% to 2,678.30 rupees, Cipla rose 0.2% to 203.50 rupees and Hindustan Unilever climbed 0.32% to 235.75 rupees.

Tata Consultancy Services declined 2.4% to 933.70 rupees. The company won a government contract estimated at 1,000 crore rupees for processing Indian passport applications.

Mahindra & Mahindra declined 0.1% to 651.90 rupees. Private equity ICICI Venture is reportedly partnering Mahindra & Mahindra in its bid to acquire Belgian gear maker VCST Industrial Products in a deal valued around 250 million euros.

Government considers fuel hike

As the surge in global crude prices continues, government said it is considering an increase of 10 rupees per litre in petrol and 5 rupees a litre in diesel prices along with reduction in customs and excise duties to offset the impact.

Petroleum secretary M S Srinivasan said that the sharp rise in international prices have increased the deficit for the state controlled oil companies. India imports nearly 65% of energy needs and spent $72 billion in last fiscal year to import crude oil and natural gas. Recent discoveries of gas in the Mumbai off shore oil locations are likely to lower the natural gas import volumes from 75% if its need to 50% in the next fiscal year.

Srinivasan however, said the cabinet scheduled for Friday will not consider raising fuel prices at least for now.

Srinivasan said the Ministry is seeking to eliminate the current customs duty on crude of 5% and import duty on petrol and diesel from 7.5% to 2.5% and a reduction in excise duty on the two petroleum products.

Finance minister P. Chidambaram said on Friday the government was watching the international price situation carefully and added that more steps are required to calm the inflation.

Inflation rises

The latest read on India''s wholesale price index showed an increase 7.82% in the 12 months to May 10, holding near the previous week''s annual rise of 7.83%, according to government data showed on Friday.

Inflation for the week ended March 15 was revised sharply higher to 8.02% from 6.68%. The wholesale price index cover large basket of items and is published weekly compared to monthly release of consumer price index.

Asian Markets Review

In Tokyo Nikkei 225 Index closed lower 33.74 or 0.24% to 14,012.20, in Hong Kong Hang Seng index decreased 329.05 or 1.31% closed to 24,714.07. In Australia ASX 200 index lower 58.90 or 1.01% to close 5,768.00. In Malaysia KL Composite index decreased 2.79 or 0.22% closed to 1,274.78.

In South Korea Kospi Index decreased 7.48 or 0.41% to close at 1,827.94, in Thailand SET index closed higher 1.05 or 0.12% to 875.59 and Indonesia JSE Index edged decreased 38.00 or 1.52% to 2,465.96. Sensex index in India decreased 257.47 or 1.52% to 16,649.64.