Carnage in markets; Nifty ends below 4600, ONGC up 6 per cent

04 June 2008

The markets have completely slaughtered in last two hours of session over inflation worries after substantial oil price hike. Bears became uncontrollable for bulls since last two weeks, showing no signs of recovery yet. Heavy selling pressure in European markets on the back of further credit crisis fears also added to negative sentiments. The Nifty has broken one more psychological levels of 4600 and closed below that mark. The Sensex breached 15500 level in late trade but managed to close just above that.

All BSE indices ended in red. Major butchered sectors were realty, metal, power, oil & gas, auto and capital goods stocks. Midcap and small cap stocks also hammered a lot.

Oil price hike has happened finally, government has increased petrol price by Rs 5 per litre, diesel price by Rs 3 per litre and LPG price by Rs 50 per cylinder. Markets sensed that such hike will increase inflation further, which was 8.1% in last week. This will dampen the markets more. The government has cut customs duty on petrol, diesel down to 2.5 from 7.5%, reduced customs duty on other petroleum products down to 5% and cut customs duty on crude to nil from 5%. Excise duty on diesel and petrol also cut by Re 1 per litre. These duty cut amounted to Rs 22660 crore in revenues loss. They have not raised the price of Kerosene. 

The Sensex closed at 15,514.79, down 447.77 points or 2.81% after hitting an intraday low of 15,442.34 and high of 15,992.90. The Nifty has touched a high/low of 4731.50 and 4564.50 before closing the day at 4585.60, lower by 130.3 points or 2.76%.

In the oil and gas space and amongst frontliners, ONGC is the only stock, that remained on buyers radar through the day, up nearly 5.3% and looked like beneficial from oil price hike. Otherwise the rest of shares tumbled heavily. Government has reduced burden on oil companies to some extent like Rs 21,010 crore of under-recoveries will be recovered via price hike, Rs 65,000 crore of under-recoveries to be recovered from OMCs, PSUs, Rs 94,600 crore of under-recoveries would be nmet by issuing oil bonds while Rs 29,000 crore of losses have remained unrecovered.
 
Oil Ministry forecasted oil companies FY09 revenue loss to top Rs 2.45 lakh crore while oil marketing companies, OMCs FY09 net revenue loss seen at Rs 20000 crore.

Biggest losers were Ambuja Cements (-5.46%), Tata Steel (-5.36%), HDFC Bank (-5.19%), Maruti Suzuki (-5.07%), BPCL (-8.39%), Cairn India (-7.20%), Sterlite Ind (-6.77%) and Tata Power (-6.64%).