Market tanks for 5th day

Our Bureau Mumbai | Updated on January 11, 2011

Inflation, interest rate hike fears spook investors

Domestic stocks fell for the fifth straight trading session on Monday, on concerns of food inflation, interest rate hike and rising commodity prices.

The Sensex and the Nifty have been falling continuously every trading day since January 4.

The Sensex, which closed at 20,561 on January 3 (the first trading day of the year), has been sliding ever since, and closed at 19,224 on Monday, down 467 points from its previous close.

The Nifty also displayed similar pattern losing nearly 400 points from its January 3 close of 6157.6 to 5762.8 at close on Monday.

Infosys and Bharti Airtel were the only Sensex gainers while on the Nifty HCL Tech made for the third gainer.

The turnover on the Nifty increased from Rs 4,477 crore on January 3 to Rs 7,920 crore on Monday. That the market fall was backed by heavy turnover indicates that the market is headed for a correction, said market analysts.

“The Sensex could be heading towards 18,500-19,300 levels in the near term signalling a much needed correction,” said Mr Vinod Ohri, President-Equity, Gupta Equities.

Auto, banking stocks hit

“Interest rate sensitive sectors such as banking and auto were the worst hit today but these were the ones which had gained the most when the indices had rallied upwards last year,” he added.

FIIs sold equity worth Rs 1,138.78 crore in the net whereas domestic institutions were net buyers of equity for Rs 1,018.54 crore. Retail investors sold stocks worth Rs 71.98 crore in the net on the BSE on Monday.

The strengthening US dollar has increased India's commodity bills, said market experts. “Global commodity prices, especially fuels such as coal and oil are a concern,” said Mr K. Ramanathan, CIO, Single Manager Investments, ING Investment Management. “This could lead to earnings downgrades and margin pressures in the coming quarter,” he added.

Retail investors have been grappling with spiralling food inflation especially of vegetables. “Food inflation has taken a toll on our wallet,” said retail investor Mr Shailesh Khera. “With oil prices likely to rise further and an interest rate hike round the corner, the markets suddenly look shaky,” he added.

Published on January 11, 2011

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