Rate hike fears, rising oil drag Sensex 209 points down news
17 March 2011

Indian equity benchmarks washed out all their yesterday's gains on Thursday, dragged down by financial, technology, auto, realty and select power companies' shares. Heavyweight Reliance Industries too added more pressure on the market due to profit booking. Rising crude oil prices towards USD 100/barrel on ongoing tensions in Middle East & North Africa (MENA) could be the main reason behind the sell-off in the last couple of hours of trade.

London Brent crude headed back to USD 112.37, with gaining nearly 2% and Nymex crude future was inching towards USD 100 a barrel - rising 1.5% on Middle East tensions. Oil prices had cooled off to USD 107 a barrel after that massive 8.9 magnitude earthquake hit the Japan's northern region on last Friday followed by tsunami and blasts in nuclear plants.

"Anything that causes unrest in Saudi Arabia or causes a supply side event in the Middle East will cause a sharp rebound in prices," National Australia Bank commodity economist Ben Westmore said.

"There is so much uncertainty in Japan and its ability to drive economic recovery that it's something that is casting a shadow on the outlook for global growth," said Westmore.

The 30-share BSE Sensex fell 209 points to 18,150 and the 50-share NSE Nifty slipped 65 points to 5,447.

Nifty trades weak;  IT, FMCG, auto, metal slip 1%

Banks, auto and metal shares dragged equity benchmarks lower as the Reserve Bank of India listed a host of global and macro concerns ahead, while hiking benchmark rates by 25 basis points. The central bank sees no let up in inflationary pressures immediately, and raised its forecast for March whole sale price index to around 8% from 7% earlier, and has warned of further increase in fuel prices.

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Rate hike fears, rising oil drag Sensex 209 points down