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Sensex closes 203 pts down on likely RBI inaction, EU woes
Clean Media Correspondent
Mumbai, June 14 (CMC) The BSE Sensex and NSE Nifty tanked more than 1% on Thursday as rising inflation for May diminished hopes of aggressive monetary easing, and weak European markets also added fuel to the fire.
The BSE benchmark fell as much as 221 points intraday, before closing down 202.63 points at 16,677.88, which shot up more than 900 points in previous seven out of eight sessions. Meanwhile, the NSE benchmark slipped 66.70 points or 1.3% to 5,054.75.
Banks, capital goods, metals, auto and power stocks took a beating.
Inflation for May rose to 7.55% as against 7.23% in previous month that certainly dampened hopes of aggressive rate-cut by the Reserve Bank of India in its mid-quarter policy review on June 18, say experts. However, experts still feel the RBI may surprise on Monday.
CRISIL Research has revised its average inflation forecast for 2012-13 up to 7 per cent, from its previous expectation of 6.5% that reflects the higher-than-anticipated increase in food inflation, and the impact of the weak currency on imported component of inflation.
"Although overall inflationary pressures continue to remain high, the Reserve Bank of India could announce a rate cut in its mid-quarter monetary policy review on June 18, aimed at lowering cost of credit and reviving business sentiments in the scenario of weakening growth," says CRISIL.
SL Bansal, CMD of Oriental Bank Of Commerce feels the RBI can offer 25 bps cut in CRR and 25 bps cut in repo rate.
Country's largest lenders State Bank of India and ICICI Bank crashed 3-3.5% while their rival HDFC Bank was down 1.5%. PNB tumbled 5.5% as it traded ex-dividend today.
Housing finance company HDFC declined 1.6% after Macquarie downgraded the stock to underperform from outperform with a target price of Rs 550, which is a cut of 30%.
Top commercial vehicle maker Tata Motors topped the selling list among Sensex 30, losing 4.56% ahead of JLR release.
Engineering and construction major by sales Larsen & Toubro plunged 4% while state-owned capital goods company BHEL slipped 1.5%.
India's largest car maker Maruti Suzuki dropped 2.6% and top telecom operator Bharti Airtel was down 0.75%.
However, software services exporter Infosys outperformed, rising 1%. Shares of ITC, Cipla and Sterlite Industries too gained.
Declining shares outnumbered advancing by 1015 to 406 on the National Stock Exchange.
In the second line shares, Pantaloon Retail, Ashok Leyland, PFC, Educomp Solutions, IFCI and Reliance Power were down 3-5%.
Chambal Fertiliser lost 3% after cabinet deferred a proposal to hike urea prices.
European markets edged lower ahead of Greek auction over the weekend. Rising Spanish bond yields to record high also dampened mood. France's CAC, Germany's DAX and Britain's FTSE fell nearly 1%. Spain's 10-year bond yields hit a euro-era record of 7% mark for the first time.
Sensex closes 203 pts down on likely RBI inaction, EU woes
Clean Media Correspondent
Mumbai, June 14 (CMC) The BSE Sensex and NSE Nifty tanked more than 1% on Thursday as rising inflation for May diminished hopes of aggressive monetary easing, and weak European markets also added fuel to the fire.
The BSE benchmark fell as much as 221 points intraday, before closing down 202.63 points at 16,677.88, which shot up more than 900 points in previous seven out of eight sessions. Meanwhile, the NSE benchmark slipped 66.70 points or 1.3% to 5,054.75.
Banks, capital goods, metals, auto and power stocks took a beating.
Inflation for May rose to 7.55% as against 7.23% in previous month that certainly dampened hopes of aggressive rate-cut by the Reserve Bank of India in its mid-quarter policy review on June 18, say experts. However, experts still feel the RBI may surprise on Monday.
CRISIL Research has revised its average inflation forecast for 2012-13 up to 7 per cent, from its previous expectation of 6.5% that reflects the higher-than-anticipated increase in food inflation, and the impact of the weak currency on imported component of inflation.
"Although overall inflationary pressures continue to remain high, the Reserve Bank of India could announce a rate cut in its mid-quarter monetary policy review on June 18, aimed at lowering cost of credit and reviving business sentiments in the scenario of weakening growth," says CRISIL.
SL Bansal, CMD of Oriental Bank Of Commerce feels the RBI can offer 25 bps cut in CRR and 25 bps cut in repo rate.
Country's largest lenders State Bank of India and ICICI Bank crashed 3-3.5% while their rival HDFC Bank was down 1.5%. PNB tumbled 5.5% as it traded ex-dividend today.
Housing finance company HDFC declined 1.6% after Macquarie downgraded the stock to underperform from outperform with a target price of Rs 550, which is a cut of 30%.
Top commercial vehicle maker Tata Motors topped the selling list among Sensex 30, losing 4.56% ahead of JLR release.
Engineering and construction major by sales Larsen & Toubro plunged 4% while state-owned capital goods company BHEL slipped 1.5%.
India's largest car maker Maruti Suzuki dropped 2.6% and top telecom operator Bharti Airtel was down 0.75%.
However, software services exporter Infosys outperformed, rising 1%. Shares of ITC, Cipla and Sterlite Industries too gained.
Declining shares outnumbered advancing by 1015 to 406 on the National Stock Exchange.
In the second line shares, Pantaloon Retail, Ashok Leyland, PFC, Educomp Solutions, IFCI and Reliance Power were down 3-5%.
Chambal Fertiliser lost 3% after cabinet deferred a proposal to hike urea prices.
European markets edged lower ahead of Greek auction over the weekend. Rising Spanish bond yields to record high also dampened mood. France's CAC, Germany's DAX and Britain's FTSE fell nearly 1%. Spain's 10-year bond yields hit a euro-era record of 7% mark for the first time.
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