Mumbai : In volatile trade, the Sensex washed out major part of previous day’s gains on across-the-board selling and closed down about 275 points or 1.08 % to end at 25,246.25 on Wednesday as rising crude prices due to worsening Iraq unrest threaten India’s economy, already reeling under price rise and slowing growth.
The market got a jolt as tensions in Iraq escalated after militants attacked the country’s largest oil refinery in Baiji. This also led the rupee to fall sharply against the dollar. In energy trading, benchmark crude oil for July delivery added 41 cents to $106.77 on New York Mercantile Exchange while Brent for August settlement rose to about $113.60 a barrel on the London-based ICE Futures Europe exchange.
Though two oil refineries in the West Asian country are operational, there are worries that the situation in Iraq will continue to degenerate.
Eleven out of the twelve BSE sectoral indices closed in the red logging losses between 0.72 % and 2.10 %. Realty, oil&gas, power, consumer durable, banking and auto were the worst performers and selling in them dragged down indices by 1.5% intraday.
Shares of HPCL plunged 4.54 % to Rs 402.70, while BPCL lost 3.34 % to Rs 591.30 on the BSE. Similarly, IOC scrip fell 2.05 % to Rs 342.35. Jignesh Chaudhary, Head of Research, Veracity Broking Services said, “There were concerns over the impact of higher oil prices on inflation as India imports 80 % of its oil requirements and higher oil prices will automatically elevate inflation.”
The 50-issue CNX Nifty of the NSE also slumped by 73.50 points, or 0.96 %, to end at 7,558.20.
Major losers were BHEL (3.21 %), TCS (2.43 %), NTPC (2.26 %), RIL (2.12 %), Tata Motors (2.08 %), Sun Pharma (1.98 %), ICICI Bank (1.98 %) and Tata Steel (1.89 %).
World stocks were muted as investors waited for an update on the US economy later tonight from the Federal Reserve following its two-day policy meeting where it is widely expected to cut monthly stimulus further by $10 billion to $35 bln.
Meanwhile, Exporters body FIEO said the unabated turmoil in Iraq may lead to a spike in oil prices by USD 15 to 20 a barrel in the next couple of months, adding to inflation woes and jacking up India’s oil import bill. India imports about 25 million tonnes of oil from Iraq. “The crude prices have already touched USD 113 per barrel which may add to an additional USD 4-5 billion on oil imports besides pushing inflation,” FIEO President M Rafeeque Ahmed said.