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Sensex sheds 272 points on global concerns

Last updated on: March 15, 2011 16:21 IST

Sensex sheds 272 points on global concerns

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BS Reporter in Mumbai

Increasing nuclear hazards in Japan, following another blast at the ill-fated Fukushima nuclear plant, spread a cloud of nervousness around the world, as a reuslt of which the Indian bourses opened to negative start on Tuesday.

After plunging to the day's low of 17,921 soon after opening, the Sensex recovered partially, but it remained in a negative belt throughout, up until the late afternoon trading session.

At close, the BSE benchmark extended its losses to end at 18,168 down 272 points, while the Nifty ended at 5,450 down 82 points.

Japan's benchmark, the Nikkei 225, which declined 6% at close on Monday, was down 13% in early trades, and this led to an opening of 18,030 for the Sensex, down 414 points, but the index soon regained during the late morning session, with energy shares leading the gains.

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Image: A shocked investor.
Photographs: Reuters
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Reliance Industries at Rs 1,036 up 2% and Reliance Communications at Rs 101 up 0.5% were the only gainers on the Sensex.

RIL gained on a higher y-o-y advance tax payment of Rs 1,054 crore versus Rs 770 crore paid last fiscal.

Jaiprakash Associates at Rs 81, Maruti Suzuki at Rs 1,215, both down 4%, and ONGC at Rs 271 down 3% were the major Sensex losers.

On the whole, the scenario looked grim for investors around the world, as several analysts believe the crisis in Japan has assumed far greater proportion than the oil crisis in Libya, which sent oil prices spiralling to 2.5 year highs last week.

With several refineries shut down in Japan, oil demand is projected to decline temporarily, which may cool oil prices further.

As an after-effect, stock prices of several oil manufacturing companies rose because of the anticipations regarding reduction in subsidy margins for public OMCs.

The Oil & Gas index was the only index in the green on the sectoral chart at 9,969, up only 0.3%, with Reliance Industries, which gained 3% at close on Monday, at Rs 1,036 up 2% was the only gainer in this space.

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"If the Libyan crisis spreads to other countries, there may be a spike in crude oil prices.

However, at the same time, we would expect Japan to consume less amount of oil going forward because huge part of their economy will be impacted.

Hence, we expect short-term correction in oil," said Vaibhav Sanghavi, Director (Equities), Ambit Capital, when asked about his views on the oil and gas sector.

A positive outlook on the government's advance tax collections did not seem to have any impact on the market sentiment, as all the sectoral indices traded in neagative territory.

The Realty index bore the brunt of heavy selling, and the index slipped 3% to at 2,054.

Top losers in this space were HDIL at Rs 157 down 6%, Orbit Corp at Rs 49 and Mahindra Lifespaces at Rs 336, both down 5%.

Auto stocks were dumped, because a majority of auto components, which are imported from Japan, will see a supply crunch due to the deteriorating condition in the country.

Most auto manufacturing companies are located in Japan.

Also, rising input costs have dented margins for auto companies, as have anticipations of a probable rate hike by the RBI, when the apex bank announces it's mid-quarter policy review due on March 17.

The Auto index declined 2% at 8,649, and the top losers on the index were Maruti Suzuki at Rs 1,215 down 4%, Exide Industries at Rs 132 and Mahindra & Mahindra at Rs 644 both down 3%.


Image: Japan markets are down.
Photographs: Reuters
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