Sensex dips 208 pts on weak SBI results; down to 8-week low

[1]

The BSE Sensex on Tuesday dipped 208 points to nearly 8-week low of 18,137, as investors sold banking and oil stocks after the country's largest lender SBI posted a sharp dip in Q4 profits and reports that government will increase subsidy burden on ONGC.

SBI net profit tumbled to Rs 20.88 crore for the fourth quarter ended March 31, as against Rs 1,866.60 crore in Q4 of last fiscal due to higher provisioning for bad loans and operating expenses. The SBI stock tumbled 7.78 per cent.

ONGC fell 6.71 per cent on reports that the government has increased its contribution to fuel subsidy to 38.5 per cent from 33 per cent for 2010-11.

Although the move is a positive for refiners like IOC, their stocks fell over delays in government move to raise diesel prices. Last week, the government was expected to raise diesel prices by about Rs 4 to partially reduce the subsidy burden on them.

Sensex top heavyweight and refinery major RIL also shed 2.53 per cent, pulling down the market further.

The 30-share Bombay Stock Exchange index, Sensex, initially touched a high of 18,435.80 but fell back to settle the day at about 8-week low of 18,137.35, down 207.68 points or 1.13 per cent.

On Monday, it fell 186.25 points or 1.01 per cent amid investor concerns of high inflation and further rise in interest rates, triggered by moves to revise upwards the fuel prices in line with international rates.

The NSE 50-issue index, Nifty, dropped 60.05 points or 1.09 per cent to 5,438.95.

Global markets were also weak and failed to bolster investor sentiment.

"Today was a really bad day for the index bellwethers like ONGC, SBI and Reliance. If it wasn't for strength in ITC, HUL and TCS, the damage could have been much more," said Amar Ambani, Head of Research (India Private Clients) at IIFL.

He said that going ahead, the results of biggies like Bajaj Auto, L&T and ITC will have a bearing on the market sentiment.

However, Ambani added, "But above all, inflation continues to be the biggest impediment for the market and it is not likely to go away in a hurry. So, the market will remain under pressure till there is any material moderation in inflation and FII flows turn positive."