The Indian market fell the most in five months on Monday spooked by crude oil prices, hovering around 10-month highs due to escalating tensions over Iran’s nuclear programme. Profit-booking in the past few trading sessions, after a sharp 20 per cent rally since mid-December, has seen the benchmark indices correct six per cent in the past four trading sessions.
Falling for a fourth straight day, the benchmark Sensex plunged 477.82 points, or 2.67 per cent, to 17,445.75, its lowest level since February 2. The 50-share Nifty dropped 148.1 points, or 2.73 per cent, to 5,281.20. Monday’s fall was the sharpest since September 22, 2011, when the market had plunged more than four per cent. The benchmark Brent crude is currently at $124 a barrel on fears of supply disruptions from Iran.
“The big risk at the moment is oil prices, which the market had been ignoring all this while,” said Andrew Holland, CEO (equities) at Ambit Capital. “In the past, high oil prices have led to an economic slowdown globally. For India, it not just inflation but also the fiscal deficit that gets impacted.”
| MAJOR GLOBAL INDICES | ||
| 27-Feb | % change* | |
| > ASIA/PACIFIC | ||
| Nifty | 5,281.20 | -2.73 |
| Sensex | 17,445.75 | -2.67 |
| Kospi | 1,991.16 | -1.42 |
| S&P/Asx 200 | 4,267.37 | -0.92 |
| Hang Seng | 21,217.86 | -0.88 |
| Jakarta Composite | 3,861.02 | -0.86 |
| Nikkei 225 | 9,633.93 | -0.14 |
| > THE US** | ||
| Dow Jones Indus Avg | 13,007.58 | 0.19 |
| S&P 500 | 1,369.79 | 0.30 |
| Nasdaq Composite | 2,970.37 | 0.22 |
| > EUROPE** | ||
| CAC 40 | 3,441.45 | -0.74 |
| DAX | 6,849.60 | -0.22 |
| Euro Stoxx 50 Price | 2,513.06 | -0.42 |
| FTSE | 5,915.55 | -0.33 |
| *Change over previous close; **Till 2350 IST Compiled by BS Research Bureau Source: Bloomberg | ||
Added Nirmal Jain, Chairman, IIFL, “Crude is the most important trigger because that will impact our monetary policy as well. If crude oil prices remain high, headline inflation could tend higher, which could lead to the Reserve Bank of India refraining from interest rate cuts.”
Even G20 leaders on Sunday raised an alert on economic threats from rising oil prices. Global markets, too, were under pressure due to high oil prices, with the European markets opening more than one per cent lower and most Asian markets closing with losses.
Back home, the market breadth was clearly negative as there were over three declining stocks for every advancing stock. The rate-sensitive, high beta banking, metal and real estate indices witnessed the sharpest fall. Sensex heavyweight Reliance Industries, which dropped 4.8 per cent, was the biggest contributor to the index losses, followed by ICICI Bank, which dropped close to five per cent.
Among other index stocks, Tata Steel and Hero MotoCorp fell more than six per cent each.
Foreign institutional investors (FIIs) continued to remain on the buying side. However, their quantum of buying was lower at just Rs 329 crore on Monday. Meanwhile, domestic institutional investors offloaded stocks worth Rs 700 crore. FIIs have invested over $5.5 billion in the Indian market so far in 2012, helping the benchmark Sensex climb 13 per cent during this period.
