Stock inflation dips below 1/20th of WPI rate | business | Hindustan Times
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Stock inflation dips below 1/20th of WPI rate

business Updated: Jun 22, 2008 16:41 IST

With inflation rising to highest in 13 years, stocks seem to have become a cheap commodity with a one-year appreciation of less than one per cent, compared to over 11 per cent for wholesale prices of various items tracked in the government's data.

The stock market suffered heavy battering after the government data last week showed the annual rate of rise in wholesale prices at 11.05 per cent for the week ended June 7.

After a 517-point fall to its lowest in 2008 on Friday, the one-year gain for Sensex has fallen to mere 0.5 per cent.

In contrast, the surge in Wholesale Price Index (WPI) in the past one year is about 22-times at 11.05 per cent.

The Sensex, which has fallen by close to 1,200 points in past three days, closed at 14,571.29 points on Friday, the last trading so far. A year ago, the Sensex stood marginally lower at 14,499.24 points on June 21, 2007.

This puts the one-year gain in the barometer index of Indian stock market at 72.05 points or 0.5 per cent. The analysts expect the one-year movement to slip into negative territory very soon if bearish trend continues on the bourses.

The Sensex has lost over 6,500 points from its all-time peak of 21,206.77 points scaled earlier this year on January 10. In the past one month alone, the fall has been of more than 2,500 points or over 15 per cent.

Besides, it is inching closer to its lowest in past one level of 13,779.88 points, hit on August 17, 2007.

In addition to weak global cues, inflationary pressures have been a key reason behind the recent plunge in the market.

Inflationary concerns and negative cues from abroad are likely to keep bourses under pressure this week, though some support may be seen by middle of the week, domestic brokerage firm SMC Global Vice President Rajesh Jain said.