The ongoing political uncertainty and boiling crude oil prices dampened sentiments in the equity markets on Monday. Auto stocks witnessed a sharp fall on fear of a rise in petrol prices in the near term. The 30-share BSE index fell 263.78 points, or 1.43 per cent, to 18,222.67. The broader index S&P CNX Nifty of the National Stock Exchange (NSE) was down 75 6 points or 1.36 per cent at 5,463. During the day, the Sensex had slipped 428 points. All the sectoral indices lost between 0.19 per cent and 2.55 per cent.
However, domestic players feel oil prices may fall sharply in the near future, which will trigger a huge rally.
“Both India and China together consume at least 14 per cent of the global oil production. Currently, while India has reserves of crude for 22 days, China can go without buying it for 180 days. This is enough to cool down crude prices. As per top government officials, India has already cut its crude imports. Once, crude prices fall below $100 a barrel, stock prices will rally,” said Kishor Ostwal, managing director of CNI Global Research.
Global crude prices rose over $106 a barrel to a nearly 29-month high on Monday.
At home, the pull-out of the DMK, the ruling Congress party’s primary ally, from the UPA II coalition, saw investor sentiment weaken. However, re-negotiations had started between the Congress party and DMK on Monday evening.
“A patch-up between the Congress and DMK is likely. Whenever this happens, markets may rally significantly as there will be no threat to the passing of the Budget,” said Ajay Pandey, assistant vice-president of institutional sales at Intime Spectrum Securities.
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The BSE Auto index fell the most among sectoral indices, losing 2.55 per cent. The country’s top car maker, Maruti Suzuki, was down 3.73 per cent, while another auto major Tata Motors fell by 3.64 per cent.
The BSE Capital Goods index dipped 2.36 per cent after heavyweights power equipment maker BHEL and engineering giant Larsen& Toubro declined. BHEL lost 3.21 per cent and Larsen & Toubro dropped by 2.69 per cent.
The BSE Realty fell 1.66 per cent, the Bankex 1.60 per cent, the BSE Metal 1.43 per cent and the BSE CD 1.35 per cent. Overall, 65.87 per cent or 1,972 stocks fell against the advances of 30.33 per cent or 908 shares.