Inflation suppresses down Sensex 706.07 pts in the week

By Staff
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Google Oneindia News

{image-sensex, big_28062008.jpg news.oneindia.in}Mumbai, Jun 28: Benchmark index of Bombay Stock Exchange tumbled 706.07 points in the week ended on June 27, sinking over a year-low at 13,802.22 on the worries of sky rocketing prices, fear of further interest rate hike and prevailing uncertainty over Indo-US nuclear deal.

A combination of political rift over nuclear deal, global crude oil prices at optimum height and spiraling inflation weighed heavily on the market sentiment that was mirrored in Indian bourses, marketmen observed. Sensex fell 5.28 per cent to the lowest level of 13-months low, while the S &P CNX Nifty index of National Stock Exchange dropped 210.90 points or 4.85 per cent at 4,136.65, hit a 10-month low.

BSE Mid-Cap index plunged 473.68 points or 7.85 per cent to 5,558.75 and Small-Cap index slumped 459.59 points or 6.21 per cent to 6,938.07.

Interest rate sensitive stocks like Banking, Auto and Realty stocks were crushed badly under the down trend pressure during the week, brokers said.

HDFC Bank declined by 7.31 per cent to Rs 1,018.65, State Bank of India fell 7.15 per cent to Rs 1,158.30 and ICICI Bank plunged 11.10 per cent at Rs 653.10 after hitting a 52-week low of Rs 643 in the week.

Engineering and construction major Larsen &Toubro fell 11.57 per cent at Rs 2,267.15, Infosys Technologies tumbled 6.57 per cent at Rs 1,707.60, Wipro slid 6.65 per cent to Rs 442.60.

Country's largest state-run oil exploration company Oil&Natural Gas Corporation (ONGC) fell 4.23 per cent to Rs 830.15, pharma major Ranbaxy Laboratories fell 3.61 per cent to Rs 523.05, Tata Steel fell 6.54 per cent to Rs 726.75 and Reliance Communications lost 3.61 per cent to Rs 473.55.

Meanwhile, in an effort to curb inflation, the Reserve Bank had raised its short-term lending rate for the banks - repo rate and their deposits to the apex bank - Cash Reserve Ratio (CRR) by 50 basis points.

It had hiked the repo rate to 8.5 per cent with effect from June 24, to the highest since March 2002 and the second hike this month.

The RBI had earlier on June 11 2008, raised the repo rate, by 25 basis points to 8 per cent.

RBI also increased the CRR to 8.75 per cent from 8.25 per cent in two 25-basis-point stages with effect from July 5 and July 19.

Further, the Wholesale Price Index (WPI) based inflation rate hit a fresh 13-year high at 11.42 per cent for the week ended on June 14, 2008, from 11.05 per cent in the previous week, government data released on Friday showed.

Marketmen were of the view that the market would remain subdued in the next week due to expected negative sentiment in the global market on account of soaring oil prices and sustained inflation expectations heightening the possibilities of further tight monetary measure by the apex bank.

UNI

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