The Hindu Business Line : Markets in bear grip again

Mumbai, April 4 Fear of price control measures by the Government found the equity markets back in a bear grip on Friday as the latest inflation figure (for the week ended March 22) touched the 7 per cent mark. The Sensex dropped by 3.09 per cent, to 15,343.12. The Nifty fell 2.61 per cent.

The markets had only last week received with shock the 13-month-high inflation figure of 6.68 per cent, reflected the following Monday when the indices fell over 4 per cent. This Friday too, the markets reacted sharply to the very high inflation numbers, said brokers.

FIIs were net sellers for Rs 848.57 crore, while domestic institutions were net buyers for Rs 579.84 crore.

“Rising inflation coupled with expectation of a CRR hike has had a negative impact on the market. A short-term recovery could be expected on Monday, especially in the opening session,” said Mr Alex Mathew, Head-Research Centre, Geojit Financial Services Ltd.

Marketmen, however, were not pessimistic about the long term. “There is a lot of fear across the markets because of the inflation, but there is value emerging too after the recent corrections,” said Mr Manish Sonthalia, Vice-President (Equity Strategy), Motilal Oswal.

“The disclosure of IIP numbers which came some weeks back indicated a slowdown of the economy and although we will have to see through a period of high inflation in the short term, in the long term the measures which have been implemented will take effect,” said Mr Sanjay Sinha, Chief Investment Officer, SBI Mutual Fund.

All the sectoral indices ended the day in red on Friday, with BSE-CG, BSE-Power and BSE-Bankex dipping by 4.50 per cent, 2.99 per cent and 2.95 per cent respectively.

Among the largest losers were BHEL, which fell by 6.89 per cent, HDFC (6.83 per cent), M&M (6 per cent), L&T (5.74 per cent) and Jaiprakash Associates by 5.21 per cent. Ranbaxy Laboratories and Tata Steel gained 2.55 per cent and 0.17 per cent respectively.

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