News Column

Sensex tanks 275 points on fears costlier oil to hurt economy

June 19, 2014

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 USD 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 twelve 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, 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."

World stocks were muted on Wednesday as investors waited for an update on the US economy later tonight from the Federal Reserve following its two-day policy meeting where it is widely expected to cut monthly stimulus further by ?$10 billion.

Key benchmark indices in China, Hong Kong and South Korea fell by 0.09 per cent to 0.60 per cent while indices in Singapore, Taiwan and Japan rose up to 0.93 per cent. However, European markets were trading higher in their early trade as indices in France, Germany and UK moved up by 0.20 per cent to 0.39 per cent. Turning back to the local market, 23 scrips out of 30-share Sensex pack ended lower while seven finished higher. Major losers were BHEL (3.21 per cent), TCS (2.43 per cent), NTPC (2.26 per cent), RIL (2.12 per cent), Tata Motors (2.08 per cent), Sun Pharma (1.98 per cent), ICICI Bank (1.98 per cent) and Tata Steel (1.89 per cent).

Rupee falls to 7-week low

The rupee fell to a seven-week low on concern India's trade balance will deteriorate and inflation will quicken as escalating violence in Iraq boosts oil prices. The currency declined 0.6 per cent to 60.4037 per dollar in Mumbai, according to prices from local banks compiled by Bloomberg. It fell to 60.5413 earlier, the weakest level since April 29.

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Source: Khaleej Times (United Arab Emirates)

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