India Stocks Review: Inflation shocker pulls mkt 3% lower; RIL dn

[K.Karthik Raja]

India Stocks Review: Inflation shocker pulls mkt 3% lower; RIL dn
Friday, Jun 20

MUMBAI - Key share indices today ended 3% down, the lowest closing
levels since August 2007, as foreign and domestic funds resorted to
selling on fears of more monetary tightening measures by Reserve Bank
of India after inflation topped 11%.
Inflation for week to Jun 7 surged to a 13-year high of 11.05%,
factoring in the government's decision to raise fuel prices early this
month, against 8.75% a week ago.
Hitesh Agrawal, head of research at Angel Broking, said, "This is
an
absolute surprise, no doubt way beyond our expectations. Inflation
above 11% is a serious setback and has now become critical. Now we
would see more stringent measures from RBI to clamp down on inflation.
A 50-basis-point repo rate hike seems very much on the cards."
Bombay Stock Exchange's 30-Share Sensex ended at 14571.29, down
516.70 points, or 3.4%, from Thursday. Intraday, it hit a new 2008 low
of 14520.88. Intraday it touched a high of 15194.73.
National Stock Exchange's 50-share Nifty closed at 4347.55, down
156.70 points, or 3.5%, after dropping to 4333.60 - its lowest level
in 2008 -
intraday.
CNX Midcap and S&P CNX 500 indices ended down over 3% each.
Total volume on BSE and NSE combined was 175 bln rupees today,
against 139 bln rupees in the previous session.
Index heavyweight Reliance Industries tumbled nearly 7% on selling
by foreign institutional investors. The stock slid to 2,075.30 rupees
- its
lowest level in 2008 - before ending at 2,099 rupees.
Interest rate sensitive stocks took a beating as well, with BSE
Realty index falling 4.5%.
DLF and Unitech ended down 4% and 2%, respectively.
State Bank of India led bank shares lower as high inflation is
seen
dampening profit growth outlook for the sector in the next two
quarters,
analysts said.
Auto shares fell on worries of a further slowdown in demand due to
higher interest rates in the wake of rising inflation.
Hero Honda Motors and Tata Motors ended down 5% and 3%,
respectively.
A fall in global crude oil prices, which initially was responsible
for a
positive start to today's session, weighed down shares of Cairn India.
The stock ended down nearly 6%.
Hindalco Industries ended down 6% at 161 rupees after it said it
would raise up to 50 bln rupees via a one-for-three rights issue.
Reliance Communications slid nearly 7% to 492 rupees, weighed down
by weakness in the broader market and on concerns over the future of
its proposed deal with MTN Group amid RIL's opposition to the same.
Zee Entertainment Enterprises, down 8.5% at 222 rupees on profit
sales, was the worst hit on Nifty.
Oil and Natural Gas Corp, up over 1% at 868 rupees on value
buying, was the sole Nifty gainer.
.
KEY MARKET MOVES
* In the 50-share Nifty, 1 rose and 49 fell.
* In the 30-share Sensex, 1 rose and 29 fell.
* On BSE, there were 450 advances and 2,247 declines.
* BSE Oil & Gas: Down 5%; BSE Metal: Down 4%; Bank Nifty: Down
3.3%
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Bombay Stock Exchange : National Stock Exchange
Sensex: 14571.29, dn 516.70 pts (3.4%) : Nifty: 4347.55, dn 156.70 pts
(3.5%)
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