Markets continue southward-bound journey

Mumbai, Jun 7 (UNI) For the second successive session, the Bombay Stock Exchange (BSE) Sensex today plunged by another 69.75 points to settle on negative terrain at 14,186.18, amid concerns of an eventual hike in interest rates ahead of the Bank of England (BOE)'s meeting later today.

''After holding on to the 14,500 levels for about 10 sessions in a row, the Sensitive Index (Sensex) had finally cracked yesterday by over 279 points. Today, once again it continues with it's southward bound journey amidst high degree of volatility. Weakness stemmed on the bourses in late trading ahead of the BOE's meeting today,'' traders rued.

The 30-share Sensex had opened weaker at 14,195.84 from it's previous close of 14,255.93, to reach a high of 14,362.58 and a low of 14,139.09 during intra-day trade.

On the other hand, the broader National Stock Exchange (NSE) S&P CNX Nifty Index also tanked by 18.75 points to settle in the red at 4,179.50 from it's previous close of 4,198.25 points, after opening marginally weaker at 4, 197.60 and reaching an intra-day high of 4,230.05 and a low of 4,130.50.

Market analysts said the total turnover on the premier BSE amounted to Rs 4,269 crore and explained that the market breadth was negative here as 1,436 shares declined while 1,123 advanced and 76 remained unchanged. Among the Sensex pack, 21 declined while the rest advanced, they added.

Foreign Institutional Investors (FIIs) were net sellers to the tune of approximately Rs 230.97 crore while and domestic institutions were net buyers worth nearly Rs 355.44 yesterday, market pundits observed.

Information Technology (IT) pivotals posted gains, as buying continued. The Indian Rupee hovered near one-week low today, as investors unwound short positions in the dollar on concerns that local stocks would extend losses and spark a wave of capital outflows.

Four of the top six gainers among the elite Sensex pack were from the IT sector, which included TCS, Satyam Computers, Infosys Technologies and Wipro. IT stock have not performed in the market's recent surge due to the strong Rupee. A rise in the Rupee directly impacts revenue and profit of IT firms, which derive a lion's share of revenue from exports to the US.

The other blue-chip gainers were Hindalco Industries and Reliance Communications (RCOM).

The prominent laggards were Bajaj Auto, Tata Motors, Maruti Udyog, Reliance Industries (RIL) , State Bank of India (SBI), Oil&Natural Gas Corporation (ONGC) and Larsen&Toubro.

Most of the European indices, which had opened firm, pared gains later. In contrast, Asian markets had pared early losses. Japan's Nikkei was up 0.07 per cent at 18,053.38. Earlier during the day, it had shed about 0.8 per cent. South Korea's Seoul Composite had moved into the green from red, during the day. It was up 0.62 per cent at 1,753.04. Taiwan's Taiwan Weighted was up 0.49 per cent or 8,355.26.

China's Shanghai Composite index was up 3.03 per cent at 3,890.80.

British interest rates are likely to remain unchanged at a six-year peak of 5.5 per cent today when Bank of England (BOE) policy makers convene later in the evening. But another hike is due in the near future as the bank seeks to tame inflation, analysts pointed out.

US stocks slid for a second straight session yesterday, after an increase in labour costs stirred concerns about inflation and interest rates and as the yield on the benchmark 10-year treasury flirted with 5 per cent. The Dow Jones fell 129.79 points, or 0.95 per cent, to 13,465.67, losing more than 210 points in two days.

Broader stock indicators also fell. The Standard&Poor's 500 index fell 0.89 per cent, to 1,517.38, and the Nasdaq composite index fell 0.92 per cent to 2,587.18.

Yesterday, the European Central Bank (ECB) raised its key interest rate a quarter percentage point to 4 per cent in the eighth increase in 18 months, and the highest reading for five and a half years. It also signalled a further hike could come, perhaps in the months of September this year, to combat inflation in a dynamic eurozone economy.

Oil prices were higher in Asian trading after news that refinery production in the US fell last week at the same time as the peak season there for demand for gasoline began. The New York Mercantile Exchange's main oil futures contract, light sweet crude for delivery in July, was up by 0.07 per cent at USD 66.03 per barrel from USD 65.96 in late trading in the US overnight. Brent North Sea crude for July had added USD 0.05 at USD 71.07.

UNI