Inflation jitters

STOCKS REPORT

The equity markets reacted negatively to the Union finance minister P Chidambaram's statement on Tuesday that the government would take action in a 'measured' way, both in the monetary and fiscal front, to check inflation.

He had also warned the manufacturers against pushing up commodity prices. The market interpreted it to mean that commodity prices would artificially be kept down.

The BSE Sensex closed down 76.89 points at 5175.16, after opening at 5263.27 and falling to an intra-day low of 5159.53. The broader NSE Nifty index fell 30.55 points to close at 1621.60.

Market watchers said that there was an apprehension in the market that the government would put a cap on commodity prices to stem the rising rate of inflation. Stocks of commodity sectors such as steel, cement and petrochemicals came under selling pressure.The rising prices of crude oil also added to the uneasiness in the market.

Over the last two trading sessions the index has risen by over 1 per cent. End of the day figures showed that losers outpaced gainers by more than 2:1 in trades of 14. 8 crore shares.

Dealers said that the market was due for a correction anyway and it came sooner caused in part by the finance minister's statements on Tuesday.

Petrochemicals major Reliance Industries slipped 3.4 per cent to close at Rs 479.90. SAIL closed at Rs 38.40, down by 6.6 per cent, while Tata Steel closed at Rs 258.60 down by 4.5 per cent.

In the cement sector Grasim Industries Ltd went down by 2.3 per cent to close at Rs 1021.80, while ACC closed at Rs 254.50, down by 2.1 per cent

With crude oil prices holding on to the $45 a barrel level, refinery companies were also impacted. BPCL went down 3.4 per cent to close at Rs 333.95, while Indian Oil fell nearly 2 per cent to close at Rs 393.30. HPCL also closed down 1.6 per cent to close at Rs 315.75.

Among the other PSU stocks, ONGC closed at Rs 685.35 down by 3.64 per cent, while BHEL closed at Rs 559.75, down by 1.37 per cent.

Auto stocks also saw losses. Hero Honda was down 3.11 per cent to Rs 450.05, Tata Motors closed down 2.75 per cent to Rs 422, Maruti Udyog closed down 2.90 per cent at Rs 401.65, while Bajaj Auto went down 1.60 per cent to Rs 876.70.

Tech stocks were also weak on Wednesday. Satyam Computer closed down 1.47 per cent at Rs 342.10, Infosys went down 1.34 per cent to Rs 1,503.35 and Wipro closed down 0.88 per cent at Rs 556.60.