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Indian markets slide as crude prices surge


The Sensex logged all-time historic intra-day high of 25,725.12 during the week but ended at 25,228.17, showing a weekly fall of 0.66 per cent or 168.29 points. Photo: Bloomberg News

Mumbai: The sudden unexpected spike in crude prices played spoilsport for the Indian market, sidelining Sensex all-time highs amid some of the positiveness of country's macro level during the week.

The stocks were down due to soaring oil prices due to escalating violence in Iraq, threatening supply crunch and rupee depreciation which could affect the country's import bill and current account deficit triggering a sell-off during the weekend trade.

The week saw the market despite cautiousness, rallying and registering couple of record highs and even all-time highs boosted by government business-friendly economic agenda as well as optimism over important macro data's of Industrial Production (IIP) and Inflation based Consumer Price Index (CPI) amid increased buying by foreign funds (FIIs).

Barring IT, healthcare and tech which attracted good buying interest, other sectoral indices witnessed selling with Realty, PSU, Oil & Gas, Metal, Power and Banking leading the downslide.

Second line shares too underperformed the Sensex as the BSE-Midcap and BSE-Smallcap indices closed down by 1.79 per cent and 1.02 per cent.

The Sensex logged all-time historic intra-day high of 25,725.12 during the week and a low of 25,171.61 before concluding the week at 25,228.17, showing a weekly fall of 0.66 per cent or 168.29 points.

Similarly, the wide-based 50-issue CNX Nifty of the NSE also zoomed to new intra-day peak of 7,700.05 before ending at 7,542.10, a loss of 41.30 points or 0.54 per cent.

Escalating violence in Iraq also triggered a sell-off on last day of the week. Meanwhile, Exports grew by a six-month high of 12.40 per cent in May this year against the same period last year while imports, on the other hand, contracted 11.41 per cent in May. Trade deficit declined by 42.01 per cent in May against same month of 2013-14.

The growth in April 2014 IIP stood at 3.4 per cent versus -0.5 per cent in March 2014. Improvement in IIP data and recent pick up in exports suggests early signs of pick up in the economy.

May 2014 CPI inflation declined to 8.28 per cent versus 8.59 per cent in April 2014, inching closer to RBI's target of eight per cent by January 2015. Last day heavy fall in the rupee value after global oil prices surged on supply concerns over the unrest in Iraq led the Indian currency to log its straight third week fall in an otherwise dull trading week.

Dollar demand
Sustained dollar demand from importers, some weakness in local equities also weighed on the rupee, a forex dealer said. Crude prices logged a nine-month high after militants closed in on Iraq's capital Baghdad, fuelling fears over supplies from the crude producer.

US benchmark, West Texas Intermediate, advanced 73 cents to $107.26 after surging $2.13 in New York to reach its highest level since September.

At the Forex market, the domestic unit resumed the week better at 59.10 a dollar from last weekend's close of 59.17 and immediately touched a high of 58.98 on firm local equities.

Later, it moved in a narrow range till Thursday on alternate bouts of demand and supply before succumbing to heavy dollar demand from importers on Friday to register a low of 59.80. It finished the week at 59.77, revealing a fall of 60 paise or 1.01 per cent.

In straight three week, it has plunged by 125 paise or 2.14 per cent. On Friday, it has lost 52 paise — its biggest drop since January 24, 2014 when it had dropped by 73 paise.

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