Post-Market Commentary, Friday, June 27, 2008 -Sensex slumped 619.60 points ( 4.30%) to 13,802.22

Sensex slumped 619.60 points ( 4.30%) to 13,802.22

Inflation worries, oil price surge rattle bourses

A setback to stocks in Asia and US, sharp spurt in crude oil prices and political uncertainty due to Indo-US nuclear deal rattled bourses. Sustained selling pressure in index pivotals throughout the day kept market depressed. Fears of a further monetary tightening by the Reserve Bank of India (RBI) following surge in inflation to more than a 13-year high weighed on the sentiment. The BSE Mid-Cap index, ICICI Bank and Tata Motors touched 52-week lows today.

After an initial sharp fall, the market had staged a mild recovery from lower level in early afternoon trade which proved short lived as news that crude oil has hit a fresh record high of $141.71 a barrel, once again spooked the market and Sensex ended at the lowest level of the day.

Inflation based on the wholesale price index stood at 11.42% for the week ended 14 June 2008, the highest reading in more than 13 years. The rise has been primarily on account of higher prices of food items like tea, milk and cereals. The other commodities, whose prices went up during the week were lubricants and manufactured items.

The market breadth was weak. Realty, auto and banking stocks declined sharply. Shares of oil marketing and air carriers were hit hard following surge in crude oil prices.

Political uncertainty continued to dog bourses. As per reports in a section of the media, Congress president Sonia Gandhi has given the green signal to Prime Minister Manmohan Singh to go ahead with the Indo-US nuclear deal even if it leads to the collapse of the government at the Centre. Left parties are opposing the deal and they have threatened to withdraw their support to the government if it went ahead with operationalisation of the deal.

US stocks plunged on Thursday, 26 June 2008, with the Dow Jones Industrial Average sliding about 360 points to a 21-month low as oil hit a record and Goldman Sachs urged investors to sell bank and automaker shares, escalating concern about the outlook for profits.

The 30-share BSE Sensex slumped 619.60 points or 4.30% to 13,802.22. Intense selling pulled it lower to day’s low of 13,760.78, which is its lowest level in more than 13 months

S&P CNX Nifty tanked 179.20 points or 4.15% at 4,136.65. The Nifty slipped to a low of 4,119.20 which is its 10-month low.

All sectoral indices on BSE settled with losses today. The BSE Power (down 4.87% to 2,335.26), BSE Realty index (down 4.45% at 4,875.25), BSE Metal index (down 4.53% to 13,292.45), BSE Auto (down 5.26% at 3,689.92), BSE Bankex (down 5.34% at 6,125.95), underperformed the Sensex.

The BSE Oil & Gas index (down 2.99% to 9,387.63), BSE PSU index (down 4.29% to 5,821.62), BSE Capital Goods index (down 4.09% at 10,442.14), BSE TecK index (down 3.86% to 3,093.63), BSE Consumer Durables index (down 3.13% to 3,649.33), BSE FMCG index (down 3.24% to 2,073.15), BSE Health Care index (down 1.40% at 4,150.05), BSE IT index (down 4.24% to 4,004.75), outperformed the Sensex.