Banks Drag Sensex 2.9% Lower

123jump.com Staff
14 Aug, 2008
New York City

Stocks in Mumbai fell sharply after wholesale inflation at the end of the first week in August surged to a record high. The rising fuel and food prices contributed to the rise. The index had risen only 4% in the same period last year. The rise in inflation only firms the RBI stance in keeping the monetary policy tight. Banks and financial stocks fell. Automakers fell after the government indicated no plans to lower fuel prices, despite the recent declines.

[R]2:00PM New York, 12:30 PM Mumbai - India’s wholesales inflation accelerates to 12.44% in the year to for the week ending in August 2nd.[/R]

Indian shares extended their losses as government data showed that wholesale prices rose by more than forecasted in the year ending August 2nd. Resurgent oil prices and falling vehicle sales also weighed on stocks.

Market Sentiment

In Mumbai, BSE 30-share Sensex declined 2.92% or 443.64 to 14,724.18 in the week ended Thursday, 14 August 2008, falling 27.42% in the calendar year 2008, and the CNX Nifty shed 2.18% or 98.80 to 4,430.70 in the week.

The financial markets will be closed tomorrow for Independence Day.

Trading Statistics

Foreign investors bought shares worth 986.10 crore rupees in the August 2008 and sold shares worth 26,315.90 crore rupees in the fiscal year 2008, while mutual funds sold shares worth 228.60 crore rupees in August 2008.

India’s Annualized Wholesales Prices Rise 12.44%

Reuters News reported today that according to government statistics India’s wholesale price index increased to 12.44% in the year to August 2 from the previous annual rise of 12.01% for the corresponding week. Economists had expected that the rate will top 12.21%.

In addition, inflation for the week ended June 7 rose to 11.66% from 11.05%, while the annual inflation rate was 4.39% in the same period a year ago.

Gainers & Losers

Telecommunications stocks fell on news that the finance ministry was not consulted on the implications of 3G policy guidelines, sparking speculation that the introduction of the service will be delayed. Reliance Communications fell 3.34% to 423.90 rupees, Bharti Airtel shed 3.63% to 819.30 rupees, and Idea Cellular slumped 3.37% to 86.15 rupees.

Financial stocks fell on fears that rising inflation will prompt the Reserve Bank of India to further tighten its monetary policy stance. State Bank of India plunged 4.32% to 1458.20 rupees, ICICI Bank slipped4.98% to 673.25 rupees and HDFC Bank slid 6.26% to 1175.20 rupees.

IT stocks fell as well. Infosys dropped1.86% to 1689.45 rupees, Satyam Computer Services tumbled 1.12% to 411.90 rupees, and Tata Consultancy Services plummeted 2.34% to 831.45 rupees.

Automakers were mixed on indications by the government will not relax retail fuel prices in tandem will retreating global crude oil prices and Society of Indian Automobile Manufacturers said passenger car sales fell 1.7% to 87,724 units in July 2008 from the comparable period a year ago.

Maruti Suzuki India shed 2.69% to 650.55 rupees, Hero Honda Motors declined 4.27% to 785.15 rupees and Tata Motors slipped 2.69% to 432.25 rupees, but Mahindra & Mahindra increased 1.22% to 583 rupees, Bajaj Auto soared 0.45% to 561.85 rupees.

Reliance Industries rose 0.17% to 2275.30 rupees in the week as the High Court case with Reliance Natural Resources over which company has right over gas supplies was further adjourned.

Tata Steel declined 4.14% to 616.20 rupees.

Hindalco Industries dropped 4.37% to 135.80 rupees after its board was supposed to determine the price and other terms and conditions on a proposed rights offer.

Larsen & Toubro declined 3.53% to 2660.55 rupees after reporting that engineering, procurement and construction orders topped 3,816 crore rupees from the steel and zinc industry.

NTPC fell 0.98% to 181.65 rupees.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 66.25 or 0.51% to 12,956.80, Hang Seng index in Hong Kong increased 99.39 or 0.47% closed to 21,392.71. ASX 200 index in Australia increased 29.50 or 0.60% to close 4,981.10. The KL Composite index in Malaysia decreased 3.10 or 0.28% closed to 1,109.43.

The Kospi Index in South Korea increased 9.47 or 0.61% to close at 1,572.19, SET index in Thailand closed higher 4.00 or 0.57% to 705.60 and JSE Index in Indonesia increased 43.12 or 2.09% to 2,106.64. The Sensex index in India decreased 368.94 or 2.44% closed to 14,724.18.