Inflation Worries Drag Sensex

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

The Ministry of Commerce reported today that India

[R]10:00AM New York, 7:30 PM Mumbai- Inflation rises to 12.40% in the week to August 16.[/R]

Market Sentiment

In Mumbai, the BSE 30-share Sensex declined 1.74% or 248.45 to 14,048.34, and the CNX Nifty dropped 1.82% or 78.10 to 4214. Of the stocks traded on the BSE, 912 rose, 1718 declined and 84 were unchanged.

Trading Statistics

Daily turnover on BSE stood at 4,035 crore rupees from 3,701.35 crore rupees yesterday.

Wipro fell 2.67% to 414 rupees, Satyam Computer Services shed 0.10% to 404.50 rupees and TCS dropped 3.24% to 792 rupees.

Inflation Rises to 12.40%

The Ministry of Commerce reported today that India’s inflation remained at a 16-year high, rising to 12.40% in the week ended August 16 from 12.63% in the previous week.

However, economists had expected to rate to rise to 12.78%.

The inflation rate remained at high levels because of monsoon floods that hit states such as Punjab, Haryana and Andhra Pradesh, raising speculation that the central bank might be forced to keep rates high.

The commerce ministry also revised upwards its inflation estimate for the week ended June 21 to 11.91% from 11.63%.

Oil Soars to $120 a barrel

Separately the online edition reported that oil temporarily traded as high as $120 a barrel on fears that Tropical Storm Gustav may disrupt supplies from the Gulf of Mexico. Crude oil reached an intra-day high of $120.50 a barrel. Gustav is projected to reach the U.S. Gulf Coast on Monday.

Gainers & Losers

Financial stocks fell on fears that rising inflation will force the Reserve Bank of India to tighten its monetary policy stance. ICICI Bank dipped 2.28% to 634.05 rupees, HDFC Bank shed 0.44% to 1,228 rupees, and State Bank of India slipped 1.97% to 1,304.70 rupees.

Realty stock fell as well. DLF plunged 3.31% to 462.35 rupees, Unitech tumbled 2.21% to 152.90 rupees, Ansal Infrastructures declined 3.66% to 96 rupees, Sobha Developers dropped 3.31% to 257 rupees.

Cement stocks fell on a brokerage report that cement prices will decline between 15% and 20% between the fiscal years 2009 to 2010 because of the anticipated increase in cement supplies. ACC tumbled 1.34% to 551 rupees, Ambuja Cement slipped 1.69% to 78.55 rupees, UltraTech Cement Company declined 1% to 588.90 rupees, and India Cement edged down 2.96% to 136 rupees.

IT stocks also slumped. Infosys Technologies fell 0.47% to 1700 rupees.

Oil & Natural Gas Corporation fell 0.34% to 1,002.25 rupees after British company Imperial Energy said management has given the nod to a takeover from the company for £1.4 billion.

Bharat Heavy Electricals lost 3.29% to 1,626 rupees and Larsen & Toubro slumped 2.58% to 2,510 rupees.

Bharti Airtel dipped 0.14% to 803 rupees on reports that the company has linked up with Google, KDDI Corporation, Global Transit and SingTel to form a consortium, called South East Asia Japan Cable (SJC), which will connect Southeast Asia.

Reliance Communications plummeted 2.47% to 387.50 rupees.

Mahindra & Mahindra (M&M) declined 2.76% to 560 rupees on rumors that the company might bid for Malaguti Moto.

Ranbaxy Laboratories advanced 0.31% to 513 rupees on reports the Foreign Investment Promotion Board yesterday sanctioned the acquisition of the company by Japan''s Daiichi Sankyo.

Maruti Suzuki India gained 0.57% to 630 rupees and ITC edged up 0.54% to 184.50 rupees.

Mastek increased 0.24% to 358.30 rupees and Pyramid Saimira Theatre jumped 3.85% to 139 rupees on news the company will soon acquire Reel Cinemas for around 200 crore rupees.

Zandu Pharmaceutical Works rallied 5% to 6,553.65 rupees, Marksans Pharma rose 5% to 20.35 rupees after the company said it has acquired 100% stake in Relonchem.

Apollo Sindhoori Capital Investments climbed 9.65% to 58 rupees.

Reliance Industries fell 2.88% to 2,086 rupees and Tata Steel shed 2.24% to 568.40 rupees.