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Sensex at 8-week low as SBI falls

Sensex at 8-week low as SBI falls
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First Published: Tue, May 17 2011. 11 24 PM IST
Updated: Tue, May 17 2011. 11 24 PM IST
Mumbai: The Bombay Stock Exchange (BSE) Sensex fell 1.1% on Tuesday to its lowest close in eight weeks after State Bank of India (SBI), the country’s largest lender, posted an unexpected slump in quarterly profit, spooking investor confidence that has been hobbled by rising interest rates.
SBI dropped as much as 8.2% after its March quarter profit slumped to Rs20.9 crore from Rs1,867 crore a year ago, on higher provisions for bad loans.
State-run explorer Oil and Natural Gas Corp. Ltd (ONGC) was another big loser on media reports that its share of the fuel subsidy has been increased.
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The 30-share BSE index shed 1.13%, or 207.68 points, to 18,137.35, its lowest close since 22 March. Nineteen of its components fell.
In the broader market, 1,739 losers were ahead of 1,074 gainers on low volume of about 219.4 million shares.
“The market is looking for a trigger, and today there was negative trigger,” said K.K. Mital, head of portfolio management at Globe Capital Market Ltd. “The SBI results have dampened overall sentiment in the market, especially in the banking space.”
SBI ended down 7.7% at Rs2,414.70, its lowest close in more than 22 months.
The government-controlled bank said provisions for bad loans in the fourth quarter rose 49% from a year ago, while operating costs increased 12.5%.
Other financial stocks also fell after higher-than-expected inflation in April strengthened expectations for another rate increase in June, which would be the 10th rise since mid-March 2010.
ICICI Bank Ltd lost 1.7%, while mortgage lender Housing Development Finance Corp. Ltd slipped 0.4%. The sectoral index fell 2.2%.
“Investors are in a wait-and-watch mode. The market will continue to trade in a very narrow range. We don’t expect any improvement in sentiment in the near term,” said R.K. Gupta, managing director at Taurus Mutual Fund.
ONGC fell 6.6%, the most since January 2009, after media reports that the government had raised the company’s share of fuel subsidy to 38.5%.
The shortfall between market prices and state-set fuel prices is shared among state-run oil firms and the government. Upstream firms, including ONGC, so far had to bear a third of the subsidy.
ONGC chairman A.K. Hazarika told television channel CNBC TV18 that the company had yet to hear on the matter from the government.
Reliance Industries Ltd lost 2.6% to Rs920.65. The stock, which has the heaviest weight on the benchmark index, has shed 13% this year, mainly on concerns over decline in gas output from its blocks off India’s east coast.
Automobile companies fell on worries that high fuel prices may slow demand for vehicles in India, the world’s second fastest growing auto market. In April, car sales rose at their slowest pace in nearly two years as higher interest rates and vehicle costs crimped demand.
Maruti Suzuki (India) Ltd fell 1.7%, Tata Motors Ltd lost 2.2%, while motorcycle maker Hero Honda Motors Ltd dropped 3.2%.
Among gainers, Hindustan Unilever Ltd and diversified cigarette maker ITC Ltd rose 1.5% and 0.9%, respectively.
The 50-share National Stock Exchange (NSE) index ended down 1.1% at 5,438.95.
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First Published: Tue, May 17 2011. 11 24 PM IST
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