News Column

Sensex closes in the red, rupee dips to 7-week low

June 18, 2014


Mumbai: In volatile trade, the Sensex washed out major part of previous day's gains on across-the-board selling and closed down about 275 points on Wednesday as rising crude prices due to worsening Iraq unrest threaten India's economy, already reeling under price rise and slowing growth.

The market got a jolt when the news of militant attack on Iraq's main oil refinery this morning filtered in. As a result, Sensex plunged by over 400 points mid afternoon. In energy trading, benchmark crude oil for July delivery added 41 cents to 106.77 on New York Mercantile Exchange.

Slowdown in foreign fund inflow and sharp rise in the rupee value to near 60.40 in mid-session deals also weighed on the domestic stock market sentiment. Eleven out of the 12 BSE sectoral indices closed in the red logging losses between 0.72 per cent and 2.10 per cent. Realty, oil&gas, power, consumer durable, banking, auto and IT took the lead in the downslide while only healthcare index finished in the green.

The BSE 30-share indicator resumed better and moved in a narrow range till early mid-session. After falling sharply to a low of 25,114.30, it recovered some ground to end at 25,246.25, a net fall of 274.94 points or 1.08 per cent. It had shot up by 330.71 points or 1.31 per cent on Tuesday. The 50-issue CNX Nifty of the NSE also slumped by 73.50 points, or 0.96 per cent, to end at 7,558.20.

Jignesh Chaudhary, head of research at Veracity Broking Services said: "There was concern over the impact of higher oil prices on inflation as India imports 80 per cent of its oil requirements and higher oil prices will automatically elevate the inflation."

After markets closed Tuesday, government unveiled a host of steps to tame inflation that has soared to a five-month high of 6.01 per cent in May.

Currency weakens

The rupee yesterday fell 36 paise to end at an over seven-week low of 60.39 against the United States dollar as growing unrest in Iraq pushed up crude and caution prevailed in the currency markets ahead of the outcome of US Federal Reserve meeting.

A sharp fall in local equities amid slow down in capital inflows too had a negative impact on the rupee, say dealers. Global crude oil prices rose further and the benchmark crude oil for July delivery added 41 cents to $106.77 on New York Mercantile Exchange as militants, early morning yesterday, attacked Iraq's largest oil refinery. As a result, importers, mainly oil refiners, went on a dollar buying spree.

At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced lower at 60.28 and moved erratically in a wide range of 60.06 and 60.54 before settling at 60.39, a net fall of 36 paise or 0.60 per cent.

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Source: Times of Oman

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