Fuel price hike concerns pull markets down repeatedly (Weekly Roundup)

May 31st, 2008 - 1:31 pm ICT by admin  

A file-photo of Sensex

Mumbai, May 31 (IANS) Soaring crude oil prices and its possible impact on domestic fuel prices kept pulling Indian equity markets down this week. Three out of five trading sessions ended in the red. However, better than expected GDP growth results for the quarter boosted market sentiment at the end of the week.

The gross domestic product (GDP) grew 8.8 percent in the last quarter of 2007-08, the government announced Friday. At the same time, it announced another rise in the inflation rate to 8.1 percent for the week ended May 17, from 7.82 percent in the previous week. That did not seem to have worried the market much.

According to market regulator Securities and Exchanges Board of India (SEBI), the Indian equities market attracted foreign institutional investment (FII) of $938.9 million during the week.

Looking at the week overall, the benchmark index of the Bombay Stock Exchange (BSE), the Sensex, declined 234.07 points or 1.41 percent to 16,415.57. The S&P Nifty index lost 76.45 points or 1.54 percent to 4,870.10 in the week.

The BSE Mid-Cap index lost 176.57 points or 2.55 percent to 6,760.54. The BSE Small-Cap index slumped 384.39 points or 4.51 percent to 8,133.04.

On Monday the Sensex went down by 301.14 points or 1.81 percent to 16,348.50 on weak cues from other Asian markets. Banking and capital goods sectors suffered the most.

On Tuesday the Sensex fell a further 72.91 points or 0.45 percent to 16,275.59. Weakness in the second half of the trading session dragged the market lower.

On Wednesday the Sensex rose 249.78 points or 1.53 percent to 16,525.37.

On Thursday the Sensex lost 209.11 points or 1.27 percent to fall to 16,316.26. The market, which moved between positive and negative zone, slumped in late trade.

On the last day of the trading session Friday, the Sensex rose 99.31 points or 0.61 percent to 16,415.57. The strong GDP growth data boosted market sentiment.

Explaining the overall fall in the market this week, financial analyst S.P. Tulsian of Tulsian.com said: “There is too much uncertainty among the domestic investors about the oil price hike. In the next two or three days we may expect the government’s announcement on the fuel price hike. This might act as a positive trigger for the market as the uncertainty will be over.”

However, he added that overall concerns about the economy such as rising inflation will continue to weigh on the market. Tulsian expected the market to be range bound next week also.

During this week, India’s largest telecom services provider Bharti Airtel advanced its stock price 4.74 percent to Rs.876.45. Reliance Communications rose 0.85 percent to Rs.577.15 on the back of an announcement that it was negotiating a possible agreement with South Africa’s MTN Group.

India’s largest commercial vehicle maker by sales Tata Motors declined 9.56 percent to Rs.576.90.

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