Mumbai: Shares were knocked to their lowest level in 2008 on Friday by a surge in inflation to a 13-year high above 11 percent, with Reliance Industries, telecoms and banks bearing the brunt of investor despair.
The 30-share main BSE index ended down 3.42 percent 14,571.29 points, its lowest close in 10 months, after it had risen as much as 0.7 percent before the market was sideswiped by the inflation data. Only one share in the index closed stronger.
"It is not surprising the market has taken it badly with people already starting to think about higher interest rates and other tightening measures," said Andrew Holland, head of strategic risk group at DSP Merrill Lynch in India.
Inflation rate rose 11.05 percent in the 12 months to June 7, its highest since May 1995 and well above market forecasts, as higher fuel prices fed into the data.
The Reserve Bank of India last week raised interest rates for the first time in more than a year to contain inflationary expectations, having relied on raising banks' reserve requirements over the last 18 months, and Friday's data had the market factoring in further tightenings.
The market fell as far as 14,520.88 on Friday, its lowest since Aug last year. It lost 4.1 percent on the week, a fifth successive weekly fall that brought up its longest losing streak in 15 months, and is down 28.2 percent in 2008.
Bank shares fell on expectations of further monetary tightening by the Reserve Bank of India (RBI) to contain inflation expectations. Top lender State Bank of India fell 4.11 percent to Rs 1,247.50, its lowest close in a year.
No. 2 ICICI Bank dropped 2.5 percent to Rs 734.65 and HDFC Bank dropped 1.9 percent to 10-month closing low of Rs 1,099. Top listed firm Reliance Industries, which has the heaviest weighting in the benchmark index, fell 6.6 percent to Rs 2,096.60, its lowest close in nine months, on heavy selling by funds, traders said. No. 2 mobile operator Reliance Communications lost 6.7 percent to Rs 512.30, its lowest close in over two months. It lost 9.6 percent in the week on worries that a family feud could delay or derail a multi-billion dollar tie-up with South Africa's MTN.
State-run explorer Oil and Natural Gas Corp rose 1.5 percent to Rs 866.85 ahead of its earnings on June 25, buoyed by recent upgrades by CLSA and JP Morgan. Net profit is seen rising 61 percent on high oil prices, a Reuters poll showed. In the broader market, 2,248 losers led 448 gainers on volume of more than 278 million shares.
The 50-share NSE index fell 3.48 percent to 4,347.55, its lowest close in 10 months. Elsewhere in the region, the Karachi's 100-share index fell 1.82 percent to 11,655.28, its lowest close in more than 14 months, while Colombo's All share index gained 1.11 percent to 2,459.98, its biggest daily rise in a month snapping a nine-day losing streak.
Comments
0 comment