Mumbai: Shares eased 0.4% on Tuesday as escalating unrest in Libya sent oil prices higher and spooked investors across world markets, while Reliance Industries bucked the trend following a deal with BP.
Energy major Reliance, which has the highest weight on the main index, jumped nearly 5% after BP agreed to invest $7.2 billion in the Indian company’s oil and gas blocks off the east coast.
The deal, announced late on Monday, is one of the biggest foreign direct investments in India to date.
“Reliance definitely benefits from the deal. With the cash coming in, we may see more of shale gas buys coming up. Also, it stands to benefit from BP’s technology,” said Deven Choksey, managing director and CEO of KR Choksey Shares.
By 11:17am, the 30-share BSE index was trading down 0.36% at 18,371.27, with 23 of its components declining. The 50-share NSE index was down 0.7% at 5,482.35.
Reliance, which has the heaviest weight on the index, was up 4.4% at Rs 998.50 after hitting 1,004. The stock is, however, down 5.6% this year.
“The Sensex is basically tracking the South East Asian markets. There is a fear that the unrest in Libya could spread, which will in turn affect oil prices,” said Ambareesh Baliga, senior vice president at Karvy Stock Broking.
The BSE index is down 10.5% so far in 2011, as foreign funds sold a net of $1.6 billion of Indian shares.
US crude futures hit a 2-year high on Tuesday on concern that violence in Libya could cut more of the Opec-member’s output and that a similar story could play out in other top oil producers in North Africa and the Middle East.
Financials were among the major losers on concern rising oil prices would accelerate inflation and put upward pressure on interest rates.
Leading lenders State Bank of India, ICICI Bank and HDFC Bank dropped between 1.5% and 2.1%.
In the broader market, losers were 1.5 times the number of gainers on volume of 87 million shares.
The MSCI’s measure of Asian markets other than Japan and Japan’s Nikkei were down 1.7% each.
Oil explorer Cairn India rose 1.6% to Rs 324.10 as world crude oil prices climbed on fears that violence in Libya could lead to wider supply disruptions.
Airline stocks declined on concerns firm oil prices could hit their margins. Jet Airways , Kingfisher Airlines and SpiceJet were down between 1.3% and 5.6%.