Friday May 9, 01:10 PM
Indian shares tumble on rising inflation; Reliance Industries down 5.19 pct
MUMBAI (Thomson Financial) - Indian shares ended lower Friday, the fifth successive day of losses, as the country's inflation shows no signs of relenting and amid negative cues from Europe as crude prices continue to soar.
'The market is still very weak and participation is very low amid soaring crude prices and rising inflation,' said Trinadh Kiran, head of e-broking at New Delhi-based Unicon Securities. 'It is better to stay on the sidelines and watch for definite cues now in the market,' he added.
The 30-share benchmark Sensex of the Bombay Stock Exchange (BSE) fell 343.58 points or 2.01 percent to 16,737.07, down 4.90 percent this week and off 21 percent from the all-time high of 21,206.77 points it touched on Jan. 10. The broader 50-share S&P CNX Nifty of the National Stock Exchange (NSE) declined 99.10 points or 1.95 percent to 4,982.60.
The Sensex has closed below the 17,000-mark for the first time since Apr. 24, when it closed the day at 16,721.08.
Oil rose to a series of records highs, hitting almost $125 at one point, as peak prices attracted a rush of fund investment. At 0929 GMT, New York-traded West Texas Intermediate crude for June delivery was at $124.81 a barrel while in London, Brent crude for June delivery was up $1.14 to $123.98 a barrel. Goldman Sachs (NYSE: GS - news) analysts recently predicted prices will rise as high as $150 to $200 a barrel within two years and the forecast has driven much of oil's gains in recent days.
On the domestic front, the country's widely-tracked wholesale price index (WPI) showed no sign of relenting as it almost touched a four-year high of 7.61 percent for the week ended Apr. 26 on the back of rising food prices. WPI for the week ended Apr. 19 was 7.57 percent.
India faces general elections next year and the government is making all attempts to fight rising prices. The Indian commodities market regulator on May 7 said it suspended trade in potato, soy oil, rubber and chana for four months, in a move to tame spiraling inflation. The suspension comes despite the Abhijit Sen committee, appointed by the government of India, saying it did not find any evidence of prices in the futures market affecting spot prices of commodities.
In early 2006, the government had banned futures trade in essential commodities like rice, wheat and lentils.
The Reserve Bank of India also aided the government by raising the cash reserve ratio, the amount which banks park at the central bank, by 75 basis points between mid- and end-April in an attempt to curb spending.
In the equity markets today, four Sensex stocks declined for each one that advanced and engineering company Jaiprakash Associates Ltd. was top loser, as it sank 6.60 percent to 251.30 rupees.
Reliance Industries Ltd (Stuttgart: 884241 - news) ., the country's biggest company, dipped 138.50 rupees or 5.19 percent to 2,527.65 on a volume of about 1 million shares, slightly above the 200-day average daily volume of 0.9 million shares.
Anil Ambani-controlled Reliance Infrastructure Ltd., formerly known as Reliance Energy (Berlin: BVT.BE - news) , retreated 4.45 percent to 1,332.05 rupees and State Bank of India (SBID.IL - news) , the country's biggest bank by assets, lost 3.13 percent to 1,675.70 rupees.
India's biggest private lender ICICI Bank Ltd. declined 1.94 percent to 874.05 rupees while DLF Ltd., the country's biggest property developer, slid 2.08 percent to 630.40 rupees.
Engineering (Milan: ENG.MI - news) and construction major Larsen & Toubro Ltd. fell 1.75 percent to 2,835.55 rupees while Tata Consultancy Services Ltd., the country's biggest software exporter, slipped 2.78 percent to 917.45 rupees.
India's largest telecom company Bharti Airtel Ltd., which is in talks of acquiring a controlling stake in South Africa's MTN Group, was top gainer climbing 1.75 percent to 842.20 rupees while ITC Ltd. gained 1.51 percent to 218.30 rupees.
All BSE sector indices declined except for the consumer goods index, which rose 0.55 percent. The oil and gas gauge was top loser among the 12 indices that declined, losing 4.71 percent. Dealers said rising crude prices will put pressure on margins of domestic oil companies as refined oil is sold at government-controlled, subsidised prices.
The realty gauge slid 2.95 percent and the banking index fell 2.78 percent.
Breadth was weak in the broader market as there were nearly three declines for each stock that advanced on a volume of about 403.5 million shares.
Reliance Petroleum Ltd. was top loser among Nifty companies plummeting 8.05 percent to 181.00 rupees while ITC was top gainer, as it edged up 1.65 percent to 218.55 rupees.
Unicon's Kiran expects the Nifty to drop down to 4,600-4,700 levels in the short term.
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