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Business News/ Money / Personal-finance/  Markets fall 1%; banks slip, oil firms up
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Markets fall 1%; banks slip, oil firms up

Markets fall 1%; banks slip, oil firms up

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Mumbai: Shares slipped 1% on Wednesday as high world oil prices sparked concerns of a possible increase in domestic auto fuel prices that could stoke inflation.

Banking shares fell for a third successive day on worries rising lending rates in the sector would affect demand for loans, while a sharp increase in deposit rates would squeeze margins.

Top lender State Bank of India, which raised deposit rates by as much as 150 basis points from Tuesday, slipped 0.9%, while rivals ICICI Bank shed 1.6% and HDFC Bank fell 3.1%.

By 10:36am, the 30-share BSE index was trading 0.9% lower at 19,763.24 with 22 of its components declining. The index fell as much as 1.05% in early trade.

“It seems investors are waiting for uncertainty to settle down. Institutions are net sellers today, and follow up buying is not coming in," said K.K. Mital, chief executive for portfolio management services at Globe Capital Markets.

Foreign funds have invested more than $29 billion in Indian equities so far this year, pushing up the benchmark BSE index by about 13%.

Shares in state-run oil marketing firms rose sharply, reacting to an Economic Times report of a plan to raise petrol and fuel prices by 2 per litre, after crude prices touched a 26-month high of $90 a barrel on Tuesday.

Indian Oil Corp was up 2.7%, Hindustan Petroleum Corp rose 3.1% and Bharat Petroleum Corp gained 2.4%.

Earlier this week, oil secretary S. Sundareshan had said India could consider raising diesel prices before planned share sales of state-run Indian Oil Corp and ONGC but ruled out full deregulation of diesel prices.

“There is concern over a fuel price hike, this will add to inflation pressure. This is going to be negative for the overall market," Globe Capital’s Mital said.

Shares in state-run explorer Oil and Natural Gas Corp (ONGC) rose as much as 2% after the company said late on Tuesday its board would meet on Dec. 16 to consider a bonus share issue, stock split and payment of a special dividend ahead of a planned share sale.

Elsewhere in Asia, Japan’s benchmark Nikkei average was up 0.8% at 10:14am, while the MSCI index of Asia-Pacific stocks outside Japan was trading down 1.1% on fears of a likely Chinese interest rate rise.

In the broader Indian market, losers were 1.8 times the number of gainers on volume of 245 million shares.

The 50-share NSE index was down 0.95% at 5,919.25.

STOCKS

Packaging company Uflex Ltd was down 11% at 173 after a court held its chairman guilty in connection with a land allotment case.

Karuturi Global Ltd was down 9% after it said on Tuesday it would buy a 54% stake in Mumbai-based floral designing chain Florista.

State Bank of Bikaner and Jaipur rose 6% after the company said its board would meet on Dec. 10 to approve an up to Rs800 crore rights issue.

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Published: 08 Dec 2010, 10:46 AM IST
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