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Rediff.com  » Business » Markets end lower on political uncertainty

Markets end lower on political uncertainty

By Surabhi Roy
Last updated on: March 19, 2013 16:02 IST
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BSEMarkets ended over 1% down on Tuesday amid political uncertainty after the DMK withdrew support to the ruling United Progressive Alliance and the Reserve Bank of India said that the headroom for further monetary easing remains quite limited.

The Dravida Munnetra Kazhagam pulled out of the Congress-led UPA coalition on Tuesday in protest against the government's position on a U.S.-backed United Nations resolution on war crimes carried out during Sri Lanka's civil war.

The 30-share Sensex ended at 19,008 down 285 points or 1.48% and the 50-share Nifty ended at 5,746 down by 89 points or 1.53%.

The Sensex and the Nifty reached an intra-day low of 18,939 levels and 5,724 mark, respectively.

On the global front, Japan's Nikkei average rebounded 2 %on Tuesday, regaining some ground lost in the previous session as fears receded that a controversial bailout proposal for Cyprus could reignite the euro zone crisis.

Analysts said that the disruption to the Japanese market from the unusual bailout plan for Cyprus seems to have run its course, although the Japanese equities market is prone to volatility because it is vulnerable to a rise in the yen when global market uncertainty increases.

The euro and European shares fell for a second day on Tuesday as investors worried about the uncertainty over a bailout for Cyprus aimed at preventing a debt default and banking collapse.

A government spokesman said Cyprus's parliament was likely to reject plans agreed by euro zone officials over the weekend to part-fund a 10 billion euro rescue of the island with a tax of between 6.75 and 9.9 % on bank deposits.

Back home, the Reserve Bank of India (RBI) in its mid-quarter review of the monetary policy on Tuesday has cut the repo rate by 25 basis points to 7.50%, but at the same time it also said that “the

headroom for further monetary easing remains quite limited.”

Realty Index was the top loser down nearly 4% followed by metal, Bankex, capital goods, power, oil and gas, auto, consumer durables and IT indices, all slumping between 1-3%. Infact, all the sectoral indices ended in red zone.

Bank shares witnessed profit taking after recent gains after the RBI in its mid-quarter review said that the headroom for further monetary easing remains quite limited.

In the Sensex pack, HDFC and HDFC Bank were down 2-3% each on selling pressure. HDFC Bank had rebounded on Monday after the private lender said it has appointed Deloitte Touche Tohmatsu India to conduct an independent forensic enquiry into the allegations made by news website Cobrapost.

Among other bank shares, ICICI Bank and SBI were down around 2% each.

Bharti Airtel declined by over 4%. The department of telecommunications (DoT) has asked Bharti Airtel to stop 3G services within three days in the seven circles it does not have the required licences.

Coal India dipped 2%. According to reports, the government is quickly pushing ahead a blockbuster share sale of Rs 20,000 crore by offloading 10% equity in Coal India to meet half of the disinvestment target of 2013-14 in one stroke.

BHEL was the top Sensex loser, down over 4%.

Other Sensex losers include L&T, Tata Motors, M&M, TCS, Bharti Airtel and Hindustan Unilever.

The BSE Mid-cap and Small-cap indices were down 1-2% each. Market breadth in BSE ended was weak with 1,960 declining and 903 shares advancing.

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Surabhi Roy in Mumbai
Source: source
 

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