Fuel price rise, inflation fears, cause market mayhemJune 4th, 2008 - 7:15 pm ICT by IANS
Mumbai, June 4 (IANS) The fuel price hike and fears of further rise in inflation caused mayhem in the Indian equities market Wednesday, as panicky investors brought the Sensex down by over 400 points. Metal, realty, capital goods and oil and gas were the worst hit. All the sectoral indices ended in the red.
The market started on a weak note tracking weak Asian markets and witnessed choppy swings throughout the day.
Soon after the Cabinet Committee on Political Affairs (CCPA) approved the long-awaited hike in fuel prices, the market witnessed a recovery for a short period but soon after that started falling. It lost the most ground in the last two hours of trading.
The 30-share benchmark index of the Bombay Stock Exchange (BSE), the Sensex, opened at 15,992.90 points and touched a low of 15,442.34 before closing at 15,514.79. It went down by 447.77 points at the day’s close or 2.81 percent, compared to its closing figure Tuesday.
The S&P Nifty index of the National Stock Exchange, which opened at 4,718.70 points, closed at 4,585.60 points. It went down by 130.30 points or 2.76 percent from its previous close.
The BSE Midcap index, which closed at 6,397.37 points, went down by 149.93 points or 2.29 percent.
The BSE Smallcap index, which closed at 7,720.26 points, went down by 162.03 points or 2.06 percent.
The market breadth was negative. On BSE, 676 shares advanced, 1,967 declined and 76 maintained status quo.
Explaining the knee jerk reaction to the oil price hike by investors, Ashok Jainani, head of research of Mumbai-based Khandwala Securities Limited, said: “Today’s investor reaction reflects the anxiety among the investors about the likely impact of the fuel price hike which is more than expected.
“Earlier there was an air of uncertainty in the market about the fuel price hike. Now that it has been announced, it translated into anxiety for the investors who are wary of its impacts on the rising inflation.”
The only prominent gainer of the day was ONGC at Rs.887.05, up 5.31 percent.
The top losers of the day included Ambuja Cements at Rs.87.50 down 5.46 percent; Tata Steel at Rs.815.60 down 5.36 percent; and Maruti Suzuki at Rs.746.55 down 5.07 percent.
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