Sensex falls 271 points on European debt worries

Metal stocks beaten the most on reports demand may slow.

Equity markets took a beating on Friday on concerns the debt crisis in Europe would impede growth across the globe. Benchmark indices across Europe and Asia fell as the euro registered fresh declines against the dollar.

On the Bombay Stock Exchange (BSE), the 30-share benchmark, Sensex, lost 271.27 points, after registering gains in the last two trading sessions. The Sensex settled the day at 16,994.60, down 1.57 per cent. Most sectoral indices ended in the red, with the BSE metal index shedding more than three per cent, or 574 points. The broader 50-share Nifty of the National Stock Exchange lost 85.40 points, or 1.65 per cent, and closed at 5,093.50.

Metal stocks were beaten the most on Friday on fear that demand may weaken in the coming months on account of slowing of the world’s major economies. Tata Steel lost 4.7 per cent, or Rs 26.80, to close at Rs 548.55. Sterlite Industries lost nearly four per cent to Rs 701.40. Incidentally, copper led the decline in industrial metals on the London Metal Exchange (LME). The three-month futures contract dropped $175 to $6,985 a metric tonne on the LME.
 

IN THE RED
Top 5 Sensex Losers
	May 14, ‘10	% Chg*
Tata Steel	548.55	-4.66
SBI	2222.65	-4.00
Sterlite Ind	701.40	-3.82
Hindalco	163.60	-3.34
Jaiprakash Asso	129.70	-2.74
Top 5 BSE Sectoral Losers
Metal	15892.30	-3.48
Realty	3289.70	-2.49
Oil & Gas	9871.60	-1.95
Bankex	10845.52	-1.85
Cap. Goods	13226.85	-1.78
* Over previous close                       (Price in Rs) Compiled by BS Research Bureau

“Most market players are taking a cautious stand on metals due to the China factor,” said an institutional head of a domestic brokerage. “China has made it clear that it will look at tightening liquidity, which is bound to impact global demand.”

Among other major index constituents, Wipro, Tata Power, RIL, L&T, DLF, BHEL and SBI ended the day in the red. SBI's fourth-quarter net profit fell 32 per cent from a year ago, dragged mainly by a sharp jump in provisions against bad loans.

In Europe, FTSE was trading down nearly two per cent, or over 100 points. The benchmark indices of Belgium and France lost more than two per cent. Further, the euro weakened against the dollar, falling to the lowest level since November 2008. Interestingly, the cost of insuring against default by Greece rose even as a bailout package totalling nearly $1 trillion was approved a few days ago.

The scene was no different in the Asian market, with Japan's Nikkei losing nearly 1.50 per cent, while the Hang Seng in Hong Kong was down 1.36 per cent. China's Shanghai Composite lost 0.51 per cent.

Meanwhile, India's inflation rate advanced 9.59 per cent in April, higher than what most economists were expecting. Reserve Bank of India Deputy Governor Subir Gokarn has said that India will exit the monetary stimulus in a “calibrated” manner.

According to provisional numbers, foreign institutional investors were net sellers of stocks worth a paltry Rs 15.57 crore. Domestic institutional investors were net buyers at Rs 222.40 crore.