Sensex falls to one-week low, RIL dips 2%

The country's stocks, led by Reliance Industries (RIL), fell to the lowest in more than a week on concern that political uncertainty may harm the markets as the ruling party and its allies may not win enough votes to form the government.

RIL, the country's biggest company by market value, dropped 2 per cent, while Larsen & Toubro, the nation’s largest engineering company declined 2.8 per cent. Hindustan Unilever (HUL), the country’s leading household products maker, lost 2.94 per cent on concern it may face more competition.

“Investors are waiting for the outcome of the election results before making fresh commitments,” said Mahesh Patil, who helps manage $1 billion in equities at Birla Sun Life Mutual Fund in Mumbai.

 

The Bombay Stock Exchange’s (BSE) Sensitive Index or Sensex fell 193.44 points, or 1.6 per cent, to 11,682.99, the lowest since April 29. The S&P CNX Nifty Index on the National Stock Exchange (NSE) declined 1.8 per cent to 3,554.60 points. The BSE 200 Index dropped 1.6 per cent to 1,381.24. SGX Nifty futures for May delivery retreated 2 per cent to 3,555.5.

RIL retreated 2 per cent to Rs 1,861.6, the biggest drop since April 28. Larsen & Toubro declined 2.8 per cent to Rs 963.8. The two companies made up 32 per cent of the Sensex’s decline today.

“People are booking profits before the election results,” said Mohit Mirchandani, head of equity investment at Taurus Mutual Fund, who helps manage the equivalent of $34 million. “Nobody wants to carry forward positions before such a big event. Markets will remain volatile for some time.”

Narrow lead
Opinion polls conducted by television networks in the country before polling started on April 16 gave the ruling Congress Party and its allies a slender lead over rivals. The alliance may still win fewer seats than required to form the next government, the surveys showed.

HUL fell 2.9 per cent to Rs 226.05. The company posted a 3.7 per cent increase in profit in the quarter ended March after a one-time charge for retirement benefits and restructuring.

Net income increased to Rs 395 crore, lagging behind the Rs 451 crore median estimate of 15 analysts surveyed by Bloomberg News. Net income before one-time items rose 20 per cent, the company said.

“Decline in market share and volume is pulling Hindustan Unilever’s stock down,” said Anand Shah, an analyst at Angel Broking in Mumbai.