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Sensex slips under rate hike fears, Middle East tensions

business Updated: Feb 26, 2011 13:44 IST
equities markets

It was a bad week for the country's equity markets with investors choosing to offload stocks as another round of monetary tightening by the country's central bank loomed and oil prices rose as tensions in the Middle East and Libya continued.

The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) ended the week at 17,700.91 points, down 2.8% or 510.61 points from the previous week's close of 18,211.52 points.

The 50-scrip S&P CNX Nifty of the National Stock Exchange ended the week at 5,303.55 points, down 155.4 points or 2.84% from the previous week close of 5,458.95 points.

Broader markets saw more losses, with the BSE midcap index falling 4.63% and the BSE smallcap index slipping 4.18%.

According to data available with the Securities and Exchange Board of India (SEBI), foreign institutional investors sold stocks worth $432.79 million during the week.

Food inflation moved up to 11.49% for the week ended Feb 12 as compared with 11.05% in the previous week. The barometer for measuring food prices has remained in high double-digit for most part of current fiscal.

The annual inflation based on wholesale prices stood at 8.23% in January. Even the annual review of the economy - the Economic Survey - released on Friday cautioned against high inflation and advocated hiking interest rates by the Reserve Bank of India.

The recent spike in crude oil price has further complicated the situation for the economic policy makers in India. Crude oil price surged to $112 a barrel (159 litres) on Friday on concerns that political unrest in the Middle East will create supply shortages.

On a weekly basis, there were only three gainers on the 30-scrip Sensex: Hindustan Unilever, up 1.7% at Rs 279.50; Reliance Industries, up 1.1% at Rs 965.95; and TCS, up 0.2% at Rs 1,111.20.

Losers on the benchmark index included Reliance Communications, down 13.2% at Rs.87.55; Tata Motors, down 11.6% at Rs 1,105.10; Jaiprakash Associates, down 11.4% at Rs 79.80; and M&M, down 11.4% at Rs.595.10.

Global markets too were not spared as the political turmoil in Libya and prospects of agitation spreading to more countries in the Arab world sent traders on a selling spree.

Economists warned that if oil prices rise above $120 a barrel and continued to hover around that level for some time, the economic recovery seen in many countries after the global meltdown could get derailed.

Hong Kong's Hang Seng shed 2.47% lower during the week to end at 23,012.37 points, while a benchmark of Chinese markets, Shanghai Composite index, moved 0.73% lower to close at 2,878.57 points.

The Japanese Nikkei ended 2.91% lower at 10,526.76 points compared to last Friday's close.

Among the European markets, the UK's FTSE 100 advanced ended 1.34% down at 6,001.20, the French CAC 40 fell 2.09% at 4,070.38 points and its the German peer ended the week 3.25% lower.

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