Sensex slumps 525 points on rate hike, weak global cues (Weekly market review)

July 30th, 2011 - 2:48 pm ICT by IANS  

Sensex Mumbai, July 30 (IANS) Benchmark indices of Indian equities markets slumped almost 3 percent in weekly trade as a more than expected rate hike by the Reserve Bank of India and concerns over the US debt crisis weighed investor sentiment.

The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE), ended the week at 18,197.20 points, down 2.80 percent or 525.10 points from its previous week’s close at 18,722.30 points.

The Sensex closed in the red after four out of the five trading sessions this week. The markets had opened the week on a positive note, with the Sensex closing 149 points higher Monday. However, the Sensex slumped 369 points Tuesday after the central bank hiked key policy rates by 50 basis points against the market expectations of 25 basis points.

The RBI hike was the 11th such exercise since January 2010 to tame inflation. The repurchase rate, the interest the central bank levies on short-term borrowing by commercial banks, has been hiked to 8 percent from 7.5 percent and reverse repurchase rate, or interest paid on short-term lending, raised to 7 percent from 6.5 percent.

Analysts feel the aggressive monetary tightening measures by the central bank would further dampen industrial growth.

“With the growth momentum already under pressure, this move will further hurt the future prospects,” said Rajiv Kumar, Secretary General of Federation of Indian Chambers of Commerce and Industry (FICCI).

At the National Stock Exchange, the 50-scrip S&P; CNX Nifty also slumped almost three percent in the weekly trade. The Nifty closed 0.10 percent down at Rs.5,482 points Friday, the last trading day of the week.

Disappointing earnings of some companies also dampened markets sentiment.

ONGC dropped 2.44 percent at Rs.269.90 Friday a day after the company reported less than expected 12 percent increase in its first quarter profit.

Jindal Steel fell 4.65 percent at Rs.584.95 after reporting 2.5 percent drop in its first quarter profit.

Other major Sensex losers Friday were: Jaiprakash Asso, down 3.58 percent at Rs.67.35; Hero Honda, down 2.14 percent at Rs.1,783; and Sterlite Inds, down 1.93 percent at Rs.159.90.

ICICI Bank jumped 1.99 percent at Rs.1,037.75 after it reported a 30 percent rise in its quarterly profit.

Maruti Suzuki, up 1.81 percent at Rs.1,207.90; Bharti Airtel, up 1.43 percent at Rs.437; Bajaj Auto, up 1.27 percent at Rs.1,461.50; and ITC, up 1.09 percent at Rs.208.30 were among the major gainers on the Sensex Friday.

Markets declined across the world on continued concern over the US debt crisis. Among the Asian markets, the Japanese Nikkei fell 0.69 percent at 9,833.03 points. The Hang Seng of the Hong Kong stock exchange dropped 0.58 percent at 22,440.20 points and the Chinese Shanghai composite index dropped 0.26 percent at 2,701.73 points Friday.

Most European markets closed in the red throughout the week. Britain’s FTSE 100 fell 0.99 percent down at 5,815.19 points, the French CAC 40 fell 1.07 percent at 3,672.77 points and the German DAX declined 0.44 percent at 7,158.77 points Friday.

The Dow Jones Industrial Average index of the US closed 0.79 percent down at 12,143.20 points Friday.

US markets remained subdued this week as President Barack Obama failed to strike a deal with Republicans to lift the $14.3 trillion US debt limit.

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