Oil prices roil markets again

Sensex down 385 pts; rupee at 3-year low.

The Indian markets took a harder knock compared with their Asian peers on Monday amid growing worries about high oil prices and the conflict in West Asia.

In the biggest single-day loss since June 13, the Sensex lost 385 points, or 3.6 per cent, to 10,293.22. The US market stock futures, too, pointed to a lower opening.

The rupee also fell to 46.76/77 "" its lowest in more than three years. The dollar gained 0.85 percent on the day, making its biggest one-day rise against the rupee in percentage terms since May 15.

The rupee's fortunes have swayed with the ebb and flow of foreign investment into shares this year and analysts said a slide on the stock market also pushed the currency down.

Spooked by Japanese interest-rate hikes and spikes in the price of oil, foreign institutional investors continued their sell-off for the second day yesterday.

They cut their exposure by Rs 670 crore, taking the two-day toll to nearly Rs 1,100 crore, against a net purchase of 791 crore during June.

During May, when the markets nosedived, they had sold equities worth Rs 11,500 crore in the secondary market.

Brent Oil pushed towards record highs touching $77.95 a barrel, but later dropped to $75.73 on a report that Iran had accepted incentives to resolve a dispute over its nuclear programme.

The Sensex has lost more than 19 per cent from its peak in May as foreign funds trimmed their net investment in Indian equities to $2.6 billion compared with $10.7 billion in 2005.

Losers beat gainers more than two to one in a volume of 121.5 million shares. The 50-share NSE index dropped 3.71 per cent to 3,007.55.

However, the BSE Small-Cap and BSE Mid-Cap were relatively better off, with the two indices losing 2.2 per cent and 2 per cent, respectively. All the BSE sectoral indices closed in the red. Among the major laggards were auto, oil and gas, metal and capital goods.

In fact, BSE auto (4.4 per cent), oil & gas (3.96 per cent), metals (3.85 per cent) and capital goods (3.2 per cent) were the biggest losers. Other prominent losers were FMCG (2.97 per cent), pharma (2.86 per cent) and IT (2.9 per cent) sectors.

The big losers were Reliance Communications (7.8 per cnet), ONGC (7.2 per cent), Dr Reddy's (5.85 per cent), Tata Motors (5.8 per cent), HDFC (5.39 per cent), Reliance Energy (5.38 per cent), Satyam (5.36 per cent), HLL (5.27 per cent) and Maruti (5.16 per cent).

Among the other stocks, Bajaj Auto, Hindalco, Ranbaxy, SBI, BHEL, NTPC, Cipla, Tata Steel, HDFC Bank and Larsen & Toubro declined 3-5 per cent each.