Fears of early election rattles bourses
Mounting political concern was the key culprit that haunted bourses since second half of day's trading session, wiping-off steady early gains. A late sell-off resulted in the benchmark index BSE Sensex cracking below the physcological 16,000 mark, only to close slightly above that level. However the S&P CNX Nifty shut shop below 4,750 level. The market breadth was weak. Asian markets, which opened before Indian markets were firm.
The market which was firm till early afternoon trade, witnessed a sharp sell-off thereafter triggered by reports that the Revolutionary Socialist Party (RSP), a member of the Left Front led by the Communist Party of India-Marxist (CPM) was pulling out of the United Progressive Alliance (UPA)-Left coordination committee. Wary investors pressed sales over uncertainty that Left parties may withdraw support to the government.
Prime Minister Manmohan Singh reportedly said that the government is left with no option but to hike the fuel prices in the wake of soaring global crude oil prices. However government's move to hike fuel price will face challenge from Left, and may propel inflation above 10%.
On the other hand, if government does not hike prices, oil marketing companies will go bankrupt, spoiling its report card.
As per petroleum minister's proposal, a hike of Rs 10 a litre in petrol prices, Rs 5 per litre in diesel and Rs 50 per cylinder in cooking fuel is to be considered to cut losses being incurred by the state-run firms. But the Left parties had said they would oppose any move to hike prices of transport and cooking fuels since the average citizen was already burdened by high inflation.
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