Sensex drops 140 points on weak rupee, global worries (Weekly market review)May 19th, 2012 - 6:52 pm ICT by IANS
Mumbai, May 19 (IANS) The Indian equities markets’ benchmark indices declined nearly one percent in a volatile trading this week as a record drop in the value of rupee and lingering eurozone crisis weighed heavily on the investors’ sentiments.
The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) ended the week at 16,152.75 points, down 0.86 percent or 140.23 points from its previous week’s close at 16,292.98 points.
The markets started the week on a negative note and selling pressure intensified towards the middle of the week. The benchmark Sensex slipped below the psychological resistance level of 16,000 points Wednesday.
Finance Minister Pranab Mukherjee blamed uncertainties in global economy, especially in the eurozone, for the sell-off in the Indian markets.
Mukherjee also said early this week that India’s growth story was intact and the government would introduce new austerity measures to bring discipline in government spending.
The wide-based 50-scrip S&P; CNX Nifty of the National Stock Exchange also witnessed volatile trading and ended the week nearly one percent down at 4,891.45 points.
The Indian rupee slumped to record low this week. It hit an intra-day record low of 54.91 against a dollar Friday.
In fact, the rupee hit intra-day record lows during the last three trading sessions. The rupee had hit a low of 54.60 against a dollar Thursday, surpassing previous day’s record of 54.52.
It also hit a new closing low of 54.49 against a dollar Wednesday and ended the week at 54.42.
Analysts said the rupee might soon touch 55 to a dollar due to grim economic outlook and limitation of options left with the central bank to intervene in the market.
“Rupee is driving the markets. Traders and investors are keeping a close eye on the RBI action, though it seems the RBI is running out of options,” said Kishor P Ostwal, chairman and managing director of CNI Research Ltd.
He said the rupee was heading towards 55 to a dollar which would keep the Indian equity markets on edge.
Poor growth and inflation data also dampened sentiments at the market.
The official data released this week showed that inflationary pressure persisted in the economy. The headline inflation based on the Wholesale Price Index (WPI) accelerated to 7.23 percent in April as compared to 6.89 percent in the previous month.
Inflation based on retail prices entered into double-digit largely due to a sharp increase in the prices of vegetables and food items. Consumer Price Index based inflation grew to 10.36 percent in April as compared to 9.38 percent in the previous month.
The latest data released by the Central Statistics Office showed that India’s industrial output shrank by 3.5 percent in March due to poor show of manufacturing and mining sectors. It was the first contraction in the factory output since October 2011, when it shrank by 4.7 percent.