Firm crude, higher inflation shave 434 pts off Sensex

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Mumbai, Aug 21: Even as Indian markets showed signs of consolidating, news of rising crude and spiking inflation continued to weigh on the bourses on Thursday. Fears of another monetary measure by the Reserve Bank of India (RBI) to tame inflation overshadowed the overnight gains by US markets. Key equity indices continued to slide after opening in the negative for the entire trading session.

The 30-share Sensex of the Bombay Stock Exchange (BSE) ended the day with a loss of 434.50 points or 2.96% to settle at 14,243.73 points while the broader S&P CNX Nifty of the National Stock Exchange (NSE) closed the day at 4,283.85 points posting a loss of 131.90 points or 2.99%.

Anita Gandhi, head, institutional business, Arihant Capitalmarkets said, “The sell-off was mainly due to the apprehension of another spike in inflation which was due after the markets hour. Also a report by global research firm that crude may once again reach $ 140 took investors by surprise. Measures by RBI seem inevitable; they will certainly have a negative impact on the markets”.

The F&O segment of the NSE saw inclusion of 39 more stocks on Thursday. It witnessed a lackadaisical response from the market participants.

Chirag Mehta, derivatives analyst, Prabhudas Lillladher Securities said, “The newly added counters in the F&O segment did not gain much attention from investors except a few such as Akruti Nirman and KS Oil which witnessed some activities in individual stock futures. The options side saw very low liquidity.”

Meanwhile the headline inflation measured by the Wholesale price index (WPI) once again spiked to 12.63% for the week ending August 9, 2008 as against 12.44% in the previous week. Experts believe that markets will witness a subdued trading session on Friday.