The Hindu Business Line : Stocks tumble as oil touches $100 again

Mumbai, Feb. 20 An unusual combination of adverse factors impacted equities, currency and commodity markets on Wednesday. While the benchmark BSE Sensex shed 458 points, the rupee crossed the psychological level of 40 against the dollar. Gold in the local market soared to a new record high of Rs 12,000 per 10 grams, tracking international crude that touched $100 a barrel.

Taking a cue from the weaker overnight US market and lower opening of the Asian market, Sensex closed below the 18,000 levels at 17,617 points. Nifty closed lower by 126 points at 5,154 points.

Foreign institutional investors (FIIs) offloaded shares worth Rs 266.44 crore on the Indian bourses as per the combined BSE & NSE provisional data. The domestic institutional investors were net buyers by Rs 256.18 crore on Wednesday.

Rupee

The rupee crossed the psychological level of 40 and shed 28 paise against the dollar on the back of sustained buying of the greenback by oil companies. The home currency opened on a weaker note at 40.03 due to the huge mismatch between the demand and supply of dollars, said a dealer at a private bank.

The rupee saw an intra-day low of 40.24, before ending the day at 40.21/22, down from the previous close of 39.93.

“The pulling out of dollars by the FIIs and the demand from oil companies have led to the weakening of rupee,” said a dealer at a private bank. There is a cash shortage in the system. “The mismatch between demand and supply is mainly because the exporters are holding their positions and are not selling dollars in spite of the weakening of the rupee,” said Mr Anel Bhalotea, Head-India FX and Options Desk, ICAP India.

Foreign exchange dealers expect the rupee to depreciate further and trade at 40.50-40.60 levels in this week.

Gold

Gold prices touched the psychological level of Rs 12,000 per 10 grams as the steadily depreciating rupee made the yellow metal expensive in rupee terms.

In the London spot market gold was fixed at $924.85 an ounce (A.M. fix). Gold prices gained from a combination of factors — both domestic and international. Crude oil soared to $100 per barrel on gathering concerns that OPEC may cut output on account of waning demand for heating oil as winter withdraws

Crude

Crude oil fell from a record $100.10 a barrel in New York on speculation an Energy Department report on Thursday will show a sixth week of US inventory gains.

Supplies rose 2.3 million barrels last week, a Bloomberg News survey showed. Stockpiles jumped 18.2 million barrels, or 6.4 per cent, the previous five weeks. Oil climbed 4.7 per cent on Tuesday on speculation OPEC will cut output at a meeting next month.

“Prices are down a bit as we anticipate another crude build,” said Mr Eric Wittenauer, an energy analyst at A.G. Edwards & Sons Inc in St. Louis. “The inventories should continue to build through the maintenance season as refiners prepare for summer.

Crude oil for March delivery fell 82 cents, or 0.8 per cent, to $99.19 barrel at 9:17 a.m. on the New York Mercantile Exchange.

Prices are up 71 per cent from a year ago.

Related Stories:
Oil at $100 has Govt mulling options on price hike
Crude oil prices continue to rule high, pushing $88

More Stories on : Financial Markets | Forex | Petroleum

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page