Rising inflation, crude prove a deterrent

STOCKS REPORT

Soaring inflation rate of 7.5 per cent and rising global crude prices to a new all-time high of $44.7 a barrel, resulted in sharp offloading of stocks by institutional investors.

The 30-share BSE Sensex lost more than 90 points in intra-day trades to touch a low of 5,166.19, before closing at 5,196.66, down 55.7 points or 1.06 per cent.

The Nifty ended 21.55 points lower to close at 1,633.40. The market breadth was negative as losers outpaced gainers 985 to 738.

The total turnover on the BSE, however, rose to Rs 2,146 crore as against Rs 1,858.61 crore on Thursday.

Brokers said, concerns of rising inflation resulted in a sharp sell off as investors fear that the interest rates may rise following a sharp jump in inflation, which in turn will eat into corporate profits.

Of the 30-share BSE basket, auto major Maruti Udyog was the biggest loser. The stock was down 3.44 per cent at Rs 399.70.

Among the indices, the BSE PSU index was the biggest loser ending 2.04 per cent lower at 3,323.19, followed by the Bankex and the BSE-TECk index, as sentiment turned extremely cautious.

Government data out on Friday showed India's wholesale price inflation jumped to 7.51 per cent in the year to July 24 "" a level not seen since February 2001 "" from 6.52 per cent a week before and 4.32 per cent in late April.

Technology stocks witnessed profit booking after a smart rally over the past few days. Heavyweight Infosys Technologies stock shed 1.97 per cent to Rs 1,526.30, Wipro stock was down 2.42 per cent to Rs 550.80 and Satyam ended 1.42 per cent lower to close at Rs 344.4.

Refinery stocks were hammered as global crude oil prices touched a record-high of close $44 a barrel.

Oil PSU HPCL stock was down 2.36 per cent to Rs 320.75, IOC was down 4.5 per cent to Rs 406.65, while ONGC was down 2.79 per cent to close at Rs 718.

Among heavyweights, ICICI Bank stock ended 2.29 per cent lower to Rs 272.55, Reliance Industries was down 1.81 per cent to Rs 493.85, State Bank of India was down 1.42 per cent to Rs 344.40 and Hindustan Lever ended 0.56 per cent lower to Rs 116.15.

C Jayaram, director, Kotak Securities said, "The inflation number of 7.5 is a huge surprise and is something not factored in the markets. If the inflation spins out of control, there are a lot of downstream issues that would bother markets."

Foreign institutional investors (FIIs) were net buyers to the tune of Rs 171.9 crore on Thursday, while the MF's were net seller of equities worth Rs 67.4 crore.

Cement pivotal, however, managed to buck the negative trend.

ACC stock was up 1.66 per cent to Rs 257.45, Grasim was up 1.58 per cent to Rs 1,039.90 and Gujarat Ambuja Cements stock was up 0.91 per cent to Rs 303.40 on the back of strong sales in July 2004.

Steel stocks witnessed profit booking after a recent sharp rise. Steel Authority of India (Sail) was down 1.21 per cent to Rs 40.80, down from the day's high of Rs 42.15. The counter was very active counter on the Bombay Stock Exchange.

Others such as Uttam Galva Steel down 5.26 per cent to Rs 21.60, Jindal Vijayanagar Steels down 1.63 per cent to Rs 12.06, Jindal Iron & Steel down 2.03 per cent to Rs 270.25 and Essar Steel, down 1.95 per cent to Rs 27,65 also ended lower after recent gains.

Media stocks were down with Crest Comm ending 7.51 per cent lower to Rs 52.35, ETC Networks was down 7.27 per cent to Rs 38.25, Padmalaya Telefilms was down 5.94 per cent to Rs 68.90 and Adlabs Films was down 4.83 per cent to Rs 86.70.