Crude concerns again

STOCKS REPORT

Rising international oil prices and high domestic inflation rate led to the market tanking once again on Friday.

Automobile, steel and cement scrips were among the worst hit with the market falling almost 76 points to the day's low of 5047.75 along with week volumes. The Bombay Stock Exchange (BSE) Sensex closed at 5064.66 points, down 58.99 points from Thursday's close.

Blue-chip stocks witnessed heavy selling with 26 out of the 30 Sensex scrips closing lower. Losers outnumbered gainers in the 10:7 ratio on the BSE.

Vijay Saraf, chief operating officer, Centrum Securities, said, "Profit taking is visible in blue-chip counters and action has shifted to select mid-cap counters as people chase cheaper valuation scrips."

Fears of an increase in domestic interest rates also affected the sentiment, brokers said.

They added that the rise in the inflation rate in the year to August 7 to a three-year peak of 7.96 per cent and the rise in crude oil prices to another high of $48.98 a barrel on the US NYMEX on Friday hit the sentiment.

Analysts said the inflation rate may rise further due to a sustained rise in crude oil prices, which could result in a hike in interest rates. High interest rates can affect the corporate performance in terms of high interest costs and declining demand, they added.

Analysts said automobile stocks were worst affected by fears that a likely rise in interest rates would slow down vehicle sales. Higher fuel prices are also seen as a detriment to higher sales.

The share price of Maruti Ugyog fell 3.54 per cent to Rs 371.65 and Tata Motors was down 3.45 per cent to Rs 382.40.

Tata Power fell 4.45 per cent to Rs 249.10 and Reliance Energy fell 1.09 per cent to Rs 599.85.

Steel stocks were dragged down after the government dropped customs duty on steel to 5 per cent from 10 per cent. Tata Steel fell 2.39 per cent to Rs 259.70 and the Steel Authority of India fell 2.77 per cent to Rs 40.35.

However, technology counters saw some buying ahead of Wednesday's listing of Tata Consultancy Services.

Infosys Technologies was up 0.64 per cent to Rs 1547.05 and Wipro gained 0.58 per cent to Rs 564.10.

Heavyweights Reliance Industries fell 2.52 per cent to Rs 463.30, State Bank of India down 1.13 per cent to Rs 428, ITC down 1.10 per cent to Rs 1022.95 and Hindustan Lever Ltd down 0.60 per cent to Rs 107.05.

The other two Sensex scrips that rose on Friday were Hindalco, up 0.72 per cent to Rs 1132.50 and Grasim up 0.63 per cent to Rs 1077.80.

Cash segment volumes were lower than on Thursday, with the BSE reporting a turnover of Rs 1540.46 crore and the National Stock Exchange reporting a turnover of Rs 3475.52 crore.

Foreign institutional investors were net sellers of Indian shares worth Rs 72.50 crore on Wednesday, while domestic mutual funds were net buyers to the tune of Rs 5 crore.