Mounting political concerns haunted bourses since second half of day's trading session, wiping-off steady early gains. A late sell-off was triggered by fears of early elections after Prime Minister Manmohan Singh’s comments that the government has no option but to hike fuel prices, pulling the benchmark index BSE Sensex below the physcological 16,000 mark.
Weak European markets also played the spoilsport. The market breadth was weak. Asian markets, which opened before Indian markets were firm.
The market which was firm till early afternoon trade, witnessed a sell-off thereafter triggered by reports that the Revolutionary Socialist Party (RSP), a member of the Left Front led by the Communist Party of India-Marxist (CPM) was pulling out of the United Progressive Alliance (UPA)-Left coordination committee.
Slower manufacturing growth and widening trade deficit, dampened the sentiment further.
The 30-share BSE Sensex provisionally ended with 424.36 points or 2.59% losss at 15,991.21 which is also its day’s low. The index climbed 217.15 points at day’s high of 16,632.72, hit at the onset of trading session.
The broader based S&P CNX Nifty was down 153.75 points or 3.16% at 4,716.35, as per provisional closing. Nifty has struck an intra-day high of 4,908.80 in opening trade.
The market breadth was weak on BSE with 597 shares advancing as compared to 2069 stocks that declined. 50 stocks remained unchanged.
The BSE Mid-Cap index declined 2.83% to 6,569.47 and BSE Small-Cap index down 2.26% to 7,948.98.
Prime Minister Manmohan Singh reportedly said that the government is left with no option but to hike the fuel prices in the wake of soaring global crude oil prices. However government's move to hike fuel price will face challenge from Left, and may propel inflation above 10%.
On the other hand, if government does not hike prices, oil marketing companies will go bankrupt, spoiling its report card.
As per petroleum minister's proposal, a hike of Rs 10 a litre in petrol prices, Rs 5 per litre in diesel and Rs 50 per cylinder in cooking fuel is to be considered to cut losses being incurred by the state-run firms. But the Left parties had said they would oppose any move to hike prices of transport and cooking fuels since the average citizen was already burdened by high inflation.
Indian manufacturing activity slowed a fraction in May 2008 to its lowest in 10 months, although output and new export orders rose, but input and factory gate prices increased, a survey showed. The ABN AMRO Bank purchasing managers' index (PMI) was a seasonally adjusted 57.4 in May 2008 after 57.5 in April 2008, significantly below its December 2007 reading of 61.9 which was the highest in the survey's three-year history.
Meanwhile, trade deficit widened to $9.87 billion in April 2008 as against $6.81 billion in April 2007. Exports grew to $14.4 billion in April 2008-09, against $10.95 billion a year ago.
India’s largest private sector firm by market capitalisation and oil refiner Reliance Industries declined 2.85% to Rs 2333.10. It came off from its high of Rs 2437.
Realty stocks fell. Indiabulls real Estate (down 3.07% to Rs 466.40), Unitech (down 7.1% to Rs 216) and DLF (down 4.16% to Rs 563) edged lower.
Metal stocks declined. Tata Steel (down 4.14% to Rs 865.50), National Aluminium Company (down 5.4% to Rs 505.05) and Hindalco Industries (down 5.42% to Rs 181.55), Sterlite Industries (down 2.66% to Rs 910), Steel Authority of India (down 3.54% to Rs 154) edged lower.
Power stocks declined. Reliance Infrastructure (down 4.9% to Rs 1,170.40), NTPC (down 6.39% to Rs 161.25), Power Grid Corporation of India (down 4.11% to Rs 94.45), Reliance Power (down 3.07% to Rs 228.60) and Tata Power Company (down 4.77% to Rs 1,292) declined.
Banking stocks declined. HDFC Bank (down 3.78% to Rs 1,306.55), ICICI Bank (down 2.97% to Rs 764.85) and State Bank of India (down 3.41% to Rs 1,394.10) edged lower.
Bajaj Auto rose 0.27% to Rs 576 after posting 7.57% rise in motorcycle sales to 179,649 units in May 2008 over May 2007.The sale of total two wheelers rose 6.86% to 180,935 units, in May 2008 over May 2007. The total two and three wheeler sale rose by 4.17% to 201,511 units in May 2008 over May 2007.
India’s largest motorcycle maker by sales Hero Honda Motors rose 5.6% to Rs 788.55. It reported a 9.54 % rise in its motorcycle sales in May 2008 at 3,12,317 units as compared with 2,85,109 units in May 2007.
India’s largest car maker by sales Maruti Suzuki India rose 2.94% to Rs 787. The company’s total vehilcle sales rose 16% to 69,001 units in May 2008 over May 2007. Mahindra & Mahindra (up 0.76% to Rs 597.05) edged higher. However Tata Motors declined 0.85% to Rs 572.
ITC (up 1.01% to Rs 219.85) and Bharti Airtel (up 0.14% to Rs 877.70) edged higher.
ACC (down 5.23% to Rs 626.10), Bharat Heavy Electricals (down4% to Rs 1595.65), Reliance Communications (down 3.78% to Rs 555.35), Ambuja Cements (down 3.1% to Rs 92.25), Ranbaxy Laboratories (down 2.76% to Rs 514.05), Wipro (down 2.51% to Rs 495.25 edged lower.
Allahabad Bank declined 2.17% to Rs 78.80 after its board approved to approach the Ministry of Finance, Government of India to accord their permission to float rights issue by the bank.
Nagarjuna Construction Company declined 4.76% to Rs 188 despite company securing four new orders aggregating Rs 250 crores.
European markets, which opened after Indian market, were trading weak. Key benchmark indices in France, Germany and UK were down by between 0.79% to 1.38%.
Most of the Asian markets were trading higher today, 2 June 2008. Hong Kong's Hang Seng, Taiwan Weighted, Singapore's Straits Times and Japan's Nikkei, China's Shanghai Composite were up by between 0.34% to 1.22%.
However South Korea’s Seoul Composite declined 0.24% at 1,847.99. US markets closed mixed on Friday, 30 May 2008. Dell earnings were better than expectations and rebound in oil price led technology and energy shares higher. The Dow Jones industrial average fell 7.9 points to 12,638.32. However the technology-led Nasdaq Composite index gained 14.34 points to 2, 522.66.
U.S. light, sweet crude oil futures dipped 14 cents to $127.21 a barrel today, 2 June 2008 as traders took profits tracking the dollar for direction.
India's GDP grew a strong 8.8% in Q4 March 2008 from a year earlier, led by strong expansion in the services sector, data released by the government on Friday, 30 May 2008 showed. The Q4 annual GDP growth matched an upwardly revised 8.8% growth in Q3 December 2007. The GDP growth was 9% in FY 2008 (year ended March 2008). The government had earlier estimated annual growth of 8.7% in FY 2008.
India's inflation based on the wholesale price index rose 8.1% in 12 months to 17 May 2008, the highest reading in more than 3-½ years and above the previous week's annual rise of 7.82%, government data released on Friday, 30 May 2008, showed. Inflation for the week ended 22 March 2008 was revised upwards to 7.85% from 7%.
Liberalisation of imports, banning exports and a cut in excise and customs duties are some of the many steps initiated by the United Progressive Alliance (UPA) government to control inflation in the country, Finance Minister P Chidambaram said on 1 June 2008.
Source: Capital Market
