May Deficit Widens, Sensex Falls

123jump.com Staff
01 Jul, 2008
New York City

Stocks in India fell 2.5% after record crude oil price in the region soured the trading sentiment. Rupee fell against dollar as rising oil price lift trade deficit for the country. Separately May trade deficit surged to $10.8 billion on 13% rise in exports and 27% rise in imports. Oil import cost surged 51% from a year ago. Rupee fell to 43.56 a dollar.

[R]10:00AM New York, 7:30PM Mumbai - Indian shares extended losses on record oil price, weak rupee and continued political uncertainties.[/R]

Market sentiment

Indian equities declined on Tuesday on record high oil prices, surging inflation, higher interest rates and political uncertainty.

Crude oil traded above $141 a barrel on Tuesday after reaching as high as $143.67 a day ago. India imports early $8 billion of crude oil a month, single largest import item for the nation.

The 30-share BSE Sensex index fell 2.5% or 340.62 to 13,461.60. On the National Stock Exchange, the CNX Nifty index declined 3.6% or 158.8 points at 3,896.75.

Of the BSE trading shares, 406 shares advanced 2,272 shares and 46 shares remained unchanged. Of the Sensex index shares, 29 shares declined while only one gained.

Trading statistics

Daily turnover on the BSE stood at 4961.13 crore rupees and on the NSE reached 12,027 crore rupees.

Reliance Industries was the most active stock on the BSE with the trading turnover of 421.51 crore rupees followed by Reliance Capital, Reliance Petroleum, Reliance Infrastructure and Reliance Communications.

Reliance Natural Resources led the trading with a volume of 1.62 crore shares on BSE followed by Reliance Petroleum, Ispat Industries, IFCI and Chambal Fertilisers and Chemicals.

Lower Fiscal Deficit

India will contain its fiscal deficit for the financial year ending in March 2009 below its budget estimate, Finance Minister Palaniappan Chidambaram said on Tuesday.

On Monday, the government said the deficit during the April-May period stood at 732.01 billion rupees or 54.9% of the annual target.

Normal Rainfall Predicted

The Indian Meteorological Department, in its long-range forecast update for the 2008 monsoon maintained that total rainfall for the nation is expected to meet long-term average.

The department classifies rainfall as near normal when it''s between 96% and 104% of the 50-year average. Good rains will bolster farm production which in turn may help rein in inflation.

Exports Rise 12.9%, Deficit Widens

India''s exports grew 12.9% in May from a year earlier to $13.78 billion, while the trade deficit widened to $10.77 billion as the pace of export growth slowed and cost of imported oil surged.

Commerce and Industry Ministry said imports rose 27.1% to $24.55 billion in May, compared to $19.31 billion in the same month a year ago. Oil import bill in May stood at 50.8% higher than a year ago at $8.47 billion.

Gainers and losers

Auto stocks declined. Maruti Suzuki India lost 8.1% to 568 rupees. The company said its vehicle sales rose 2% to 61,247 units in June compared to a year ago.

Tata Motors declined 4.2% to 408.45 rupees. The company said on Tuesday it had raised prices of commercial vehicles by an average of 3% to cover the rising cost of steel and other metal products.

Metal stocks were battered. Hindalco Industries fell 5.7% to 134.05 rupees, Tata Steel fell 4.2% to 697.85 rupees and Steel Authority of India was down 1.1% to 137.90 rupees.

Realty stocks extended recent steep fall. Indiabulls Real Estate declined 7.7% to 250.45 rupees, Unitech fell 6.5% to 159.60 rupees and DLF declined 7% to 368.40 rupees.

Banking stocks fell after some of the major lenders hiked their lending rates. ICICI Bank and HDFC raised their lending rates with effect from July 1. Both institutions have also increased their deposit rates between 0.5% and 1%.

ICICI Bank increased its benchmark advance rate and floating reference rate by 0.75% to 16.5% and 13.5% respectively.

HDFC home loan borrowers will also have to pay more following a 0.5% increase in retail prime rate announced by the Reserve Bank of India. ICICI Bank declined 6.5% to 589.50 rupees and HDFC fell 6.5% to 1,835.45 rupees.

NTPC rose 1% to 153.20 and was the lone gainer from Sensex index.

Reliance companies update

Reliance Industries declined 2.3% to 2,044.20 rupees, Reliance Communications declined 10.5% to 396 rupees and Reliance Infrastructure was down 10.5% to 702.05 rupees.