Mkt jittery over high inflation, Sensex plunges
Stocks: The Bombay Stock Exchange benchmark Sensex shed 6.28 per cent in the opening week of the new fiscal as rising inflation and a new accounting norm made investors jittery amid continued fears of a US recession.
Reports that the Institute of Chartered Accountants of India has asked companies to disclose and/or provide for all losses on derivative contracts from the current financial year led to fears that fourth quarter earnings of companies will be adversely affected.
Earlier in last month, investors anticipated impressive profit growth in fourth quarter following robust advance tax payments by companies.
The inflation too remain a cause of concern at a time when domestic industry was under pressure due to high prices. Consistent rise in inflation to 7.0 per cent has raised possibility that the government will intervene with tight monetary measures.
The Reserve Bank may raise the Cash Reserve Ratio (CRR) to rein in inflation. An increase in CRR would suck out liquidity in banking system and result in a rise in cost of funds and reduction in demand.
In the week to April 5, the BSE bellwether moved in a wide range of 16,236.70 and 15,297.96 before ending the week at 15,343.12, a net loss of 1,028.17 points from its last weekend's close of 16,371.29.
The broader 50-share S&P CNX Nifty of the National Stock Exchange also tumbled by 295.00 points, or 5.97 per cent to close the week at 4,647.00 from its previous weekend's close of 4,942.00. MORE