Sensex sheds 633 points as policy logjam threatens growth

The Bombay Stock Exchange benchmark Sensex failed to maintain last week’s gains by slipping over 633 points during this week on fresh selling pressure due to concerns over the government’s inability to continue with policy reforms after it suspended plans to allow FDI in multi-brand retail.

Concerns over the outcome of European Union summit also spooked the domestic sentiment.

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The 30-share Sensex fell 633.37 points or 3.76 percent to 16,213.46 from its last week-end level. The 50-share S&P CNX Nifty also tumbled 183.45 points or 3.63 percent to 4,866.70.

The BSE Mid-Cap index fell 2.47 percent, while the BSE Small-Cap index dropped 2.21 percent.

Facing a harsh political reaction that paralysed Parliament, the Congress-led UPA government put on hold plans to allow foreign multi-brand retailers like Wal-Mart to open stores in India.

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Comments of the Finance Minister, Mr Pranab Mukherjee, on gloomy GDP growth also affected the market sentiment. He said surging food and fuel prices amid weak global economic growth are adversely impacting the country’s GDP growth.

The Centre also said it will not be easy to restrict the fiscal deficit to 4.6 percent of GDP in 2011-12 due to uncertainty on the disinvestment front and a likely increase in subsidies, but maintained that the slippage will be minimal.

Heavy sell-off was seen in capital goods, realty, metal, refinery, power, banking and auto sectors.

Meanwhile, food inflation fell sharply to 6.60 percent for the week ended 26 November against 8 percent in the previous week.

Asian shares ended lower after a closely-watched European Union summit failed to secure the full backing of the 27 nations for treaty changes to help fight the region’s debt crisis.

From the 30-member Sensex pack, 28 shares declined and only two rose.

Interest rate sensitive banking stocks fell on profit taking after recent gains, triggered by hopes that a slowing economy could prompt the Reserve Bank of India (RBI) to pause further rate hikes.

Metal and mining shares declined as the prices of industrial metals fell. Sterlite Industries (7.35 per cent), Coal India (5.31 percent), Tata Steel (4.92 percent) and Hindalco Ind (2.48 percent) and Jindal Steel (0.58 percent) were among the losers.

Index heavyweight Reliance Industries (RIL) shed 6.83 percent.

IT stocks outperformed the market on a weak rupee. Wipro shot up 2.5 percent, while Infosys Tech rose 0.35 per cent.

Other losers from the Sensex pack were Bharti Airtel (8.06 percent), ICICI Bank (7.12 percent), BHEL (6.50 percent), Larsen (6.39 percent), Mahindra and Mahindra (5.92 percent), Jaiprakash Associates (5.87 percent), ITC (4.58 percent), HDFC Bank (4.50 percent), DLF (4.16 percent), Tata Motors (4.34 percent) and Sunpharma (3.87 percent).

Among the major indices, the BSE-Capital goods fell sharply by 5.42 percent, followed by the BSE-Realty 4.81 percent, the BSE-Oil & Gas 4.62 percent, the BSE-Metal (4.52 percent), the BSE-Power 4.33 percent, the BSE-IPO 3.92 percent, the Bankex 3.73 percent, the BSE-Auto 3.38 percent and the BSE-PSU 3.29 percent.

The dollex-30, the dollex-100 and the dollex-200 also dropped 5.68 percent, 5.40 percent and 5.28 percent, respectively.

Total turnover on the BSE and NSE fell to Rs 8,808.57 crore and Rs 38,674.95 crore, respectively, against the last week-end level of Rs 9,980.59 crore and Rs 55,291.88 crore.

PTI