Sensex sheds 156 pts after govt raises fuel prices

June 25, 2010 10:14 am | Updated 04:52 pm IST - Mumbai

Investors watch the display screen on the facade of the Bombay Stock Exchange (BSE) in Mumbai. Stocks opened 92 points lower on Friday. File photo

Investors watch the display screen on the facade of the Bombay Stock Exchange (BSE) in Mumbai. Stocks opened 92 points lower on Friday. File photo

The Bombay Stock Exchange benchmark Sensex on Saturday fell for second straight day losing 156 points as investors sold banking, metal and IT stocks on fears of rate hike by RBI after government raised fuel prices.

The 30-share barometer declined by 155.71 points to 17,574.53 points. The Sensex had lost over 25 points in the previous session.

In 30-BSE index components, 22 stocks closed with losses.

The broad-based National Stock Exchange index Nifty fell by 51.55 points to 5,269.05 points.

Brokers said that selling pressure gathered momentum soon after the government hiked fuel prices, raising fears that it would jack up inflation. A high inflation may prompt RBI to increase its policy rates to arrest spike in commodity prices.

The government today freed petrol from all pricing controls and hiked prices of diesel, cooking gas and kerosene by Rs. 2 a litre, Rs. 35 per cylinder and Rs. 3 a litre. Petrol will cost Rs. 3.73 per litre more.

The banking index suffered the most by losing 2.19 per cent to 10,752.74 followed by metal index by 1.85 per cent to 14,882.71. The IT index lost 1.42 per cent to 5,323.87 and realty sector index by 1.08 per cent to 3,149.64.

Finance company stocks led the fall in tandem with weak global trend on fears the rising inflation might force lenders to hike interest rate ahead of the week-end G20 meeting.

However, refinery stocks led by the most-heaviest Reliance Industries rebounded from early losses to close higher by 1.14 per cent at Rs. 1,063.25 on hopes the hike in fuel prices might boost company earnings.

State-run oil major Hindustan Petroleum spurted by 13.66 per cent to Rs. 401.05 and Bharat Petroleum by Rs. 12.84 per cent to Rs. 621.35. With the result oil and gas sector index bucked the trend and gained 2.88 per cent to 10,604.07.

The Asian stock markets were down while the European bourses opened lower this afternoon on fears the sovereign debt crisis might deepen.

With the selling pressure spreading over a wide-front, midcap index dropped by 0.70 per cent to 7,082.51 and smallcap index by 0.54 per cent to 8,989.20.

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