11% inflation spreads panic; Sensex down 3.3% : ET

11% inflation spreads panic; Sensex down 3.3%

It was one of the worst days for the stock market since beginning of 2008. Higher than expected inflation figures saw investors pressing sell button. ( Watch ) More than 6.5 per cent fall in Reliance Industries followed by 4.5 per cent decline in Bharti Airtel saw the Sensex close at 14590.16, down 498 points or 3.30 per cent. The 30-share index fell around 700 points from high of 15,202.01 to a low of 14,519.27. National Stock Exchange’s Nifty ended at 4355.45, down 149 points or 3.30 per cent. The broad index touched a high of 4532 and low of 4333.60.

Tier II and III stocks were not spared in selling spree. BSE Midcap Index ended at 6,051.13, down 2.87 per cent and BSE Small cap Index closed at 7,418.05, down 3.16 per cent. ONGC (up 2.61%) and Mahindra & Mahindra (1.14%) were the only gainers in the 30-share index. Reliance Communications (down 6.65%), Reliance Industries (6.61%), Hindalco Industries (6.37%), Jaiprakash Associates (6.03%), Reliance Infrastructure (4.92%) and Bharti Airtel (4.76%) were under pressure. Market breadth was extremely weak with 2239 declines outnumbering 458 advances on BSE. Inflation rate touched a 13-year high of 11.05 percent for the week ended June 7 from 8.5 per cent in the previous week. Market was expecting it to be around 10.6 per cent. (All figures are provisional)

---------------------------------
Lowest Sensex close since Aug '07 as inflation hits 11%

It was a downhill journey for Indian equities on Friday as inflation shot hit a 13-year high, raising fears over economic growth and sparked panic selling across the board. Bombay Stock Exchange's Sensex settled at its lowest close since August 2007 at 14,571.29, down 516.70 points or 3.42 per cent from Thursday’s close. The index slumped to an intra-day low of 14,519.27 from a high of 15,202.01. The wider National Stock Exchange’s Nifty dropped 156.7 points or 3.48 per cent to 4347.55, breaching a crucial resistance level of 4,400. “High inflation and pessimism on the political front weighed on the market. Sensex had never closed below 14,800 since the January fall, which happened today. All the supports are broken.

We are likely to see more downside hereon. Investors should wait and watch as market will look for new bottoms and every rise should be used to exit long positions," said Rakesh Gandhi, technical analyst at Latin Manharlal Securities. The market opened on a buoyant note cheering a fall in crude oil prices and tracking positive global cues. However, the indices had to surrender all early gains after data showed inflation had shot up to 11.05 per cent in the 12 months to June 7, following the rise in state-set fuel prices. This was a big jump from 8.75 per cent a week-earlier. Even as the market plunged, Finance Minister P Chidambaram warned of stronger anti-inflation measures ahead. Though he did not elaborate on the measures being contemplated, expectations are that the Reserve Bank of India may resort to further tightening--a move that could lead to increase in lending rates for auto, housing and consumer loans.

This pressured interest rate sensitive stocks, sending the BSE Bankex, BSE Auto and BSE Realty indices on a downward spiral. Selling continued unabated in second line stocks as well. BSE Midcap and Smallcap indices ended 3.17 per cent and 3.43 per cent lower respectively. The oil & gas space was the biggest loser, after investors dumped shares of Reliance Industries. The index heavyweight fell 6.6 per cent to Rs 2,096.60, its lowest close in nine months. The other frontline counters that took a knock included Reliance Communications (down 6.65%), Hindalco Industries (6.37%), Jaiprakash Associates (6.03%), Reliance Infrastructure (4.92%) and Bharti Airtel (4.76%). ONGC (up 1.56%) was the lone gainer in the 30-share index. Market breadth was extremely weak with 2,247 declines and 450 advances on BSE. Meanwhile, stocks in Europe declined led by commodity producers as investors speculated the economic slowdown would curb demand for metals. The FTSE was down 1.03 per cent, DAX 30 lost 1.4 per cent and CAC 40 shed 1.29 per cent. In the Asia Pacific region, however, it was a mixed picture. The Nikkei ended 1.33 per cent lower, Hang Seng fell 0.23 per cent while Straits Times added 0.31 per cent and CSI 300 Index rose 2.61 per cent.

------------------------------------------
Sensex tumbles to year's low
Dalal Street panics; indices fall
The pain may be far from over. The double-digit inflation data which rattled investors, could just be the trigger to send the market tumbling even further. And this horror movie could have many scenes left. The full force of oil prices, farm loan waiver, fertiliser bill and pay commission is yet to be felt. On Friday, 11% inflation unnerved the stock market, and pushed key indices like the Sensex and Nifty to their lows of 2008. Analysts feel that with global crude oil and commodity prices ruling high and no major correction expected in the near future, inflation continues to cast shadows on the market. “Today, the policy options before the government are limited. And, for the market, there may be more pain left. There is still no valuation comfort for Sensex stocks,” said Brics Securities head of equities Anand Tandon. If a phase of high inflation and high interest rate continues, a slowdown in GDP would no longer remain an academic debate, according to analysts. Jolted by the shock news on inflation, Sensex tumbled 517 points, or 3.4%, to close at 14,571 points, while the broad-based Nifty slipped 157 points, or 3.5%, to end at 4,348 points. With this, the two indices have touched their 10-month lows.

Investor wealth eroded by Rs 1.6 lakh crore on Friday, bringing total wealth erosion since January to Rs 26.6 lakh crore. Since January, foreign institutional investors (FIIs) have sold heavily, pulling out a total of Rs 24,000 crore. At 5%, BSE’s oil and gas index was the worst-hit sectoral index, followed by real estate and metal indices, which fell 4.5% and 4% respectively. Rate-sensitive sectors like real estate and banking also took a beating on fears of possible monetary tightening by RBI. The inflation data spooked many analysts who were expecting a more modest 10%.

It is felt that RBI may go for another hike in interest rates and cash reserve ratio to bring down inflation. “Government finances have gone haywire because of soaring crude oil prices, forcing the Centre to hike fuel prices. The government appears concerned about the rising inflation and may take some measures to check it. Interest rates may go up, which in turn, will put pressure on corporate earnings,” said KR Choksey Shares and Securities chairman Kisan Choksey. Some brokers feel that the market is worried about a possible earnings slowdown and next year’s general elections. One has to see how the UPA government tackles various sensitive issues, particularly inflation, which will be key to its electoral performance, said a broker.
Call writing at 4500 caps upside, realty & banking drag


Source: http://economictimes.indiatimes.com. We thank (will be grateful to) the owners of the above articles/sites/sources/Govts for allowing/referring this. We are just providing the link/information of business updates from the leading sources for the benefit of readers. Viewers are strictly advised to take own decision in Stock buying and make verification about the information. Blog is not responsible for any faulty information