Rising oil prices, domestic inflationary pressures impact
The Bombay Stock Exchange sensitive index, Sensex, tumbled by 545.92 points to 17632.41 on Thursday on rising global oil prices and domestic inflationary pressures. It touched the day's low of 17559.70. The broad-based National Stock Exchange index Nifty broke two crucial levels of 5400 and 5300 to close with a loss of 174.65 points at 5262.70, after touching the day's low of 5242.50.
Global oil prices surged more than 7.5 per cent to its highest since August 2008 on Thursday due to concerns of unrest in Libya which could spread to other major oil producers in the Middle East, including Saudi Arabia.
Brent crude futures for April shot up by $8.54 a barrel to a high of $119.79 due to disruption of oil supply stemming from the revolt in the world's 12th biggest exporter. Eastern areas of Libya, holding major portion of oil resources, have slipped from the control of Muammar Gaddafi, who has unleashed a bloody crackdown on protesters to keep his 41-year grip on power. Investment bankers warned that the spread of unrest to other oil producing countries could create severe oil shortages.
Back home, food inflation rose further to 11.49 per cent for the week ended February 12 from 11.05 per cent in the previous week. The bench mark index has lost 8.2 per cent since the Reserve Bank of India hiked interest rates for the seventh time on January 25 and revised upwards its inflation estimate.
However, the market movements have been affected by several other factors, which include the third quarter earnings which disappointed markets. Manishi Raychaudhuri, Head of Research, BNP Paribas Securities India, said “taking into account macro variables and sector-specific variables, we believe there could be a 2-3 per cent further downside risk to current Sensex EPS estimates. Globally too, stocks bore the brunt of selling on fears that unrest in Libya spreading to other oil producing regions could create severe oil shortages, threatening to block the recovery in developed countries and adding to inflationary pressure in emerging countries.
Rupee tumbles 36 paise
The rupee on Thursday fell sharply by 36 paise against the U.S. currency due to heavy month-end dollar demand from importers following high crude oil prices and a hefty decline in equity markets. The rupee settled at 45.48/49, a steep fall of 0.80 per cent, or 36 paise over the previous close of 45.12/13.