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Markets drop 0.5%; autos drag

Markets drop 0.5%; autos drag
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First Published: Mon, May 16 2011. 11 00 AM IST
Updated: Mon, May 16 2011. 11 00 AM IST
Mumbai: Markets skidded 0.5% on Monday with auto companies leading the fall after state-run refiners raised petrol prices steeply on the weekend, triggering concern it could slow down demand for automobiles .
A ministerial panel is also expected to increase state-controlled prices of diesel and cooking gas this week, local media reported on Sunday, quoting Finance Minister Pranab Mukherjee.
Higher fuel prices could accelerate inflation and mount pressure on the central bank to raise interest rates in June, which would be the 10th increase since mid-March 2010.
“There are no major surprises here. It was expected that autos and metals would lead the decline after the hike in petrol prices,” Ambareesh Baliga, chief operating officer at Way2Wealth Securities, said.
Shares in Maruti Suzuki , the country’s top car maker, utility vehicles maker Mahindra & Mahindra and truck and car maker Tata Motors fell between 1.1 and 2.2% on worries the about 8.6% increase in petrol prices would hurt demand.
Car sales in India rose at its slowest pace in nearly two years in April as higher interest rates, fuel prices and vehicle costs crimped demand in the world’s second-fastest growing auto market.
At 10:03am, the 30-share BSE index was down 0.49% at 18,440.75 points, with 21 components declining.
The 50-share NSE index was down 0.32% at 5,526.80 points. In the broader market, 1,161 losers were ahead of 1,014 gainers on volume of about 73.6 million shares.
The market is also awaiting headline inflation data around 12:00pm..
The wholesale price index in April probably rose 8.43% from a year earlier, slower than March’s 8.98% increase, due to base effect, a Reuters poll showed on Thursday.
The central bank had raised rates by a hefty 50 basis points earlier this month and has warned inflation would remain around March levels in the first half of the fiscal year that began in April, before easing.
State-run oil marketing companies Indian Oil , Bharat Petroleum and Hindustan Petroleum rose between 0.2 and 1% after they raised petrol prices by about 5 rupees a litre.
The oil sector is one of the biggest contributors to federal revenues. Taxes in India, which imports about 80% of its fuel needs, are among the highest in the region, making up 46% of pump prices on petrol and 31% of diesel.
Wind turbine maker Suzlon Energy rose as much as 4.6% after the company on Saturday reported a fourth quarter net profit of 4.32 billion rupees compared with a loss of 1.88 billion in the year ago period.
The MSCI’s measure of Asian markets other than Japan was down 1.3%, while Japan’s Nikkei dropped 0.62%.
Unity Infraprojects was up 3.2% after the company said it won a project of Rs 198 crore.
Gammon Infrastructure Projects rose more than 7% after the company said late on Friday its board would meet on May 19 to consider rights issue of shares.
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First Published: Mon, May 16 2011. 11 00 AM IST
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