Markets shattered on oil spike, inflation worries;Bank down 5.3%

27 June 2008

Markets were completely under rough weather after free fall in US markets. Crude at new all-time high and likely subsequent impact on Indian Inflation has spooked the markets. Bears smashed out bulls. It was a dreadful opening session for July series as well. Rate sensitives like auto, banking and realty stocks have taken huge beating. Infrastructure sectors like capital goods, telecom, metal and power also hammered a lot. All indices witnessed huge selling pressure. The Sensex has lost over 650 points and the Nifty 195 points during the day.

Main reason behind today's fall was sharp sell off in US markets on the back of rising crude oil price and disappointing earnings from tech giants.The Dow Jones fell more than 350 points in Thursday's trade to close at its lowest level since September 2006. Crude Futures has hit new all-time high of $141.71 a barrel on the NYMEX during the day.

Purvin & Gertz said that reduced interest rates and weak dollar have led to crude rally. He also said crude is likely to gain if ECB hikes rates in July.

The Sensex has touched an intraday low of 13,760.24, down nearly 661.58 points over previous close. It ended the day at 13,802.22, down 619.60 points or 4.3%. The Nifty has slipped below 4200, which closed at 4136.65, down 179.2 points or 4.15%. It has hit a low of 4119.20, down 196.65 points over previous close.

Inflation for the week ended June 14 has risen further at 11.42% as against 11.05% in earlier week. Inflation for April 19 revised to 8.23% versus 7.57% earlier. Experts believe that inflation may increase further if crude oil prices stay at these levels.

HSBC spokeperson says that don't expect inflation will have peaked, may go upto 15%. They also see double digit inflation to stay for about 9 months and are cautious on the growth rate outlook for FY10.