Global cues, rise in oil drag Nifty below 5500
22 Feb 2011
Indian equity benchmarks retreated on Tuesday following a sell-off across the globe, tracking sharp rise in crude oil prices since yesterday due to rising concerns in Libya. The Nifty shut shop below the 5500-mark.
The worst is not over for the markets yet, believes Nischal Maheshwari, head of research at Edelweiss Securities. ''Oil prices are playing spoil sport and nobody can really predict which way oil is going to go,'' he explains adding, ''I don't think so we have made the bottom in this market.''
He expects to see margin pressures creeping in the next two quarters. Edelweiss' Sensex EPS estimate is Rs 1,264 for FY12, which is quite low compared to what the consensus of around Rs 1350-mark. ''I actually see a downside on this number rather than any upside pressure there,'' Maheshwari adds.
Crude oil prices jumped 9% to above USD 94 a barrel today on fears that violence in Libya could lead to wider supply disruptions from the OPEC country. Libya is one of Africa's biggest oil producers - accounting for around 2% of global daily output. Libyan leader Muammar Gaddafi faced a mounting revolt against his 41-year rule.
Concerns were heightened by a statement from Seif al-Islam Gadhafi, the son of Libya's longtime leader Moammar Gadhafi where he said that the civil war was a real possibility and that his father would fight until "the last bullet". According to human rights groups, over 300 people have been killed in the revolt which entered the eighth day today.
Financial, infrastructure, metal, auto, realty and PSU oil & gas companies' shares dragged the markets lower. However, Reliance Industries, Cairn, Sterlite Industries, Reliance Communications, Dr Reddy's Labs, Reliance Capital and ACC were only gainers on Nifty.