Business | Markets
Channel Sponsor
Indian index plunges 3.42% to lowest level in 2008
Indian shares were knocked to their lowest level in 2008 on Friday by a surge in inflation to a 13-year high above 11 per cent, with Reliance Industries,
- Reuters
- Published: 00:08 June 21, 2008
Mumbai: Indian shares were knocked to their lowest level in 2008 on Friday by a surge in inflation to a 13-year high above 11 per cent, with Reliance Industries, telecoms and banks bearing the brunt of investor despair.
The 30-share main BSE index ended down 3.42 per cent 14,571.29, its lowest close in 10 months, after it had risen as much as 0.7 per cent before the market was sideswiped by the inflation data. Only one share in the index closed stronger.
"It is not surprising the market has taken it badly with people already starting to think about higher interest rates and other tightening measures," said Andrew Holland, head of strategic risk group at DSP Merrill Lynch in India.
Inflation rose 11.05 per cent in the 12 months to June 7, its highest since May 1995 and well above market forecasts, as higher fuel prices fed into the data.
The central bank has raised interest rates for the first time in more than a year to contain inflationary expectations, having relied on raising banks' reserve requirements over the last 18 months, and yesterday's data had the market factoring in further tightenings.
Successive falls
The market fell as low as 14,520.88 yesterday, its lowest since August last year. It lost 4.1 per cent on the week, a fifth successive weekly fall that resulted in its longest losing streak in 15 months, and is down 28.2 per cent in 2008.
Bank shares fell on expectations of further monetary tightening by the central bank to contain inflation expectations.
State Bank of India fell 4.11 per cent to Rs1,247.50, its lowest close in a year. ICICI Bank dropped 2.5 per cent to Rs734.65 and HDFC Bank dropped 1.9 per cent to 10-month closing low of Rs1,099.
Reliance Industries, which has the heaviest weighting in the benchmark index, fell 6.6 per cent to Rs2,096.60, its lowest close in nine months, on heavy selling by funds, traders said.
Reliance Communications lost 6.7 per cent to Rs512.30, its lowest close in over two months. It lost 9.6 per cent in the week on worries that a family feud could delay or derail a multi-billion dollar tie-up with South Africa's MTN.
Oil and Natural Gas Corp rose 1.5 per cent to Rs866.85 ahead of its earnings on June 25, buoyed by recent upgrades by CLSA and JP Morgan. Net profit is seen rising 61 per cent on high oil prices, a Reuters poll showed.
In the broader market, 2,248 losers led 448 gainers on volume of more than 278 million shares.
The 50-share NSE index fell 3.48 per cent to 4,347.55, its lowest close in 10 months.
Hindalco fell 6.4 per cent to a three-month closing low of Rs161 on concerns of earnings dilution from a rights issue.
The aluminium maker set a one for three rights share issue to help replace a bridge loan it took to help funds its $5.9 billion purchase of Canada's Novelis last year.
Share this article
Popular in Business
-
Budget travel
Airlines in the region
Take a pictorial look at some of the budget airlines in GCC
Business Editor's choice
-
Credit swaps... a fair trade
Would you swap an unbuilt unit at the Lagoons for an apartment at JBR?
-
In pictures: New BMW Z4
The new model is much more user-friendly and driver focused
-
Lebanon realty robust
Overseas Lebanese fuel real estate surge
