Oil jitters clutch Sensex, gold up

Crude oil prices at a record $78 a barrel, gold prices at 7-wk highs.

Crude oil prices surged to record highs of above $78 a barrel, gold prices touched a seven-week high, and the Bank of Japan decided to end the six-year-old zero-interest-rate regime today.

The deluge of bad news from global markets pulled the BSE Sensex down by 180.28 points, after foreign institutional investors (FIIs) recorded their biggest single-day sell-off since May-end.

The Sensex closed at 10,678.22, and the Nifty at 3,123, down 46 points, even as Nymex Crude touched an all-time high of above $78 a barrel. Going by provisional figures, the FIIs unloaded equity worth Rs 426 crore on the two exchanges.

In keeping with the institutional nature of today's sell-off, most of the impact was borne by blue-chip index shares, with the BSE Small cap and Mid cap indices sliding only half as much as the other indices, 0.59 and 0.73 per cent, respectively.

Oil surged to record highs on fears that the conflict between Israel and Hizbollah guerrillas could escalate and spread to other West Asian countries.

Iran's nuclear stand-off with the West, fears over oil supply in Nigeria on account of militant attacks, an influx of fund buying, and falling US crude supplies also contributed to the rise in the oil market "" which has been up nearly 30 per cent this year. London Brent rose 55 cents to $77.24, after jumping to a record $78.03 a barrel earlier in the session.

Powered by record oil prices and tension across West Asia, gold prices climbed to a seven-week high today, but surrendered half of the gains to profit-taking in later trade.

Standard gold gained Rs 170 per 10 gm in the Zaveri bazaar in Mumbai to touch Rs 9,940, its highest since May 30, from Rs 9,770 on Thursday. Similarly, pure gold touched a month's high of Rs 9,990 per 10 gm.

With weak global cues in anticipation of the rate hike, the Sensex opened low, with a gap of 75 points on yesterday's close, and plunged further to 10,564, the day's low being 294 points below the previous close.

The Metal index dropped 2.2 per cent, and the Auto index slipped 1.8 per cent, while the Bankex, Teck, FMCG, and Healthcare indices were down by more than 1 per cent each.

Among the index stocks, Hindalco, Tata Motors, and Grasim declined by around 4 per cent each, while Satyam slipped by more than 3 per cent, and Larsen & Toubro, Ranbaxy, Wipro, HDFC Bank, and Bharti Airtel dropped over 2.5 per cent each.

Among the Sensex gainers, Hero Honda was up over 1 per cent to Rs 718, and SBI advanced nearly 1 per cent to Rs 738.

The market breadth remained negative on the BSE, with nearly 1,369 stocks out of the total 2,446 declining. Reliance topped the turnover chart with nearly Rs 184 crore worth of shares being traded on the counter today. It was followed by Reliance Communications, Tata Steel, Satyam and Suzlon.

Petrol may cost Re 1 more

The recent jump in international crude price to over $75 per barrel has led to the possibility of an increase in the retail prices of petrol and diesel by about Re 1 and Rs 0.90 respectively.

"The next price review meeting of the oil ministry is not expected to be held before July 31," an oil ministry official told Business Standard.