Indian Markets nosedive on fears of multiyear high inflation

Fears of further spike in inflation to a multiyear high post today`s fuel price coupled with weak global markets created havoc on the bourses. The market witnessed choppy swings throughout the day. Stocks across the board were hammered brutally with all sectoral indices on BSE suffering losses
The market had witnessed a short lived recovery in early afternoon trade soon after the Cabinet Committee on Political Affairs (CCPA) approved the long awaited hike in fuel prices.

The 30-share BSE Sensex tumbled 455.99 points or 2.86% at 15,506.57, as per provisional figures. Sensex gained 30.34 points at its high of 15992.90 hit in early trade. It lost 520.22 points at day`s low of 15,442.34, touched in late trade.

The broader based S&P CNX Nifty was down 134 points or 2.84% at 4,581.90 as per provisional figures.

In a crucial development, government today agreed to raise its petrol and diesel prices by about 10% in an attempt to curb mounting losses of state-owned refiners thereby stoking inflation and risking a political backlash. After 10 days of debate over the price increase, the Cabinet also agreed to cut the import duty on crude oil to support state run refining and retailing firms.

Among the 30-member Sensex pack, 29 declined while India`s largest oil exploration company in terms of market capitalisation ONGC was the lone gainer. The stock surged 5.31% to Rs 887.05 on speculation that it may have to absorb lower subsidy burden after today`s fuel price hike.

India`s largest real estate developer in terms of market capitalisation DLF shed 4.7% to Rs 555.10. The company`s net profit rose 536.6% to Rs 2590.28 crore on 388.1% rise in sales to Rs 5532.88 crore in FY 2008 over FY 2007.

Auto stocks were subdued post oil price hike announcement. Hero Honda Motors (down 4.26% to Rs 764), Mahindra & Mahindra (down 3.2% to Rs 571.50), Tata Motors (down 4.87% to Rs 542.50), Maruti Suzuki India (down 5.07% to Rs 746.55), and Bajaj Auto (down 4.91% to Rs 551.60) edged lower.Ambuja Cements (down 5.46% to Rs 87.50), HDFC Bank (down 5.19% to Rs 1,215.95), Bharat Heavy Electricals (down 4.99% to Rs 1471.25), DLF (down 3.85% to Rs 560), edged lower from Sensex pack.European markets which opened after Indian markets were weak. Key benchmark indices from France, Germany and UK were down by between 1.23% to 1.81%.