Sensex closes 208 pts lower on poor SBI nos, oil subsidy woes
Caught in a veritable bear-hug, the BSE benchmark Sensex tumbled by 208 points today as SBI posted its lowest quarterly earnings in a decade amid concerns that the fuel subsidy burden of oil companies may go up.business Updated: May 17, 2011 17:08 IST
Caught in a veritable bear-hug, the BSE benchmark Sensex tumbled by 208 points today as SBI posted its lowest quarterly earnings in a decade amid concerns that the fuel subsidy burden of oil companies may go up.
The 30-share barometer, which shed 186.25 points in the previous session, fell further by 207.68 points to 18,137.35 on Tuesday amid a weakening global trend. Shares of State Bank of India registered their sharpest decline in two years following a steep fall in fourth quarter profit on account of higher provisioning against bad loans.
The Sensex has declined by 12% this year on concerns that higher borrowing costs will hurt corporate earnings. The RBI recently raised interest rates by half a percentage point to their highest level since July, 2008, at 7.25%.
In a similar fashion, the broad-based National Stock Exchange index Nifty plunged by 60.05 points to 5,438.95, after touching an intra-day low of 5,421.05.
Brokers said the market is trapped in a bear-hug on negative factors such as a fall in quarter earnings, rising concerns over inflation after a fuel price hike and melting world stock markets.
They said the quarterly earnings reported by the country's largest state-run lender, State Bank of India, came as a strong blow to the market, which sent banking stocks tumbling down. In addition, refinery and oil exloring companies have come under increasing pressure over fuel subsidy concerns.
Shares of SBI tanked by Rs 203.70 to Rs 2,413.60, the largest decline since July, 2009, after the banker's net income plunged by 99% for the three months ended March as provisioning against bad loans and taxes rose drastically.
Even before SBI's announcement, the market was in selling mode, with rising fuel prices raising inflationary concerns and prompting speculation that the Reserve Bank of India will further hike interest rates at its next meeting in June.
The firm with the most weight in the 30-share Sensex pack, Reliance Industries, fell by Rs 23.90 to Rs 920.40, while the second-most weighted company, Infosys, slid by Rs 5.80 to Rs 2,843.95.
The two companies account for nearly 23% of the total weight of the index. ONGC, the largest oil producer and an index-related stock, also dropped by Rs 19.95 to Rs 277.55.
Oil India, another state-run explorer, fell by Rs 66.80 to Rs 1,289.20, its biggest drop since listing in September, 2009, while gas transportation major Gail India lost Rs 17.65 to Rs 433.