Reference Auto

It seems that the crises in West Asia as well as North Africa are unlikely to wane soon enough and this is likely to take a big toll on oil prices in the medium term and put India’s benchmark index, the Sensex, on a slippery path for quite a while.

Last week, both the key indices, the Sensex and Nifty, slid by almost 3 per cent as the markets were apprehensive that the raging global food prices, owing to the unrest in the Middle East region, may lead to spiralling of inflation.

Global crude prices have surpassed $100 a barrel in New York last week due to growing worries over the turmoil in Libya. There are fears that oil supplies could be hit hard.

India imports over two-thirds of its oil and the West Asian and African crises could have a domino effect and also hit the economy of the country, which is grappling to tackle the high inflation. Even if the situation in the Middle East defuses soon enough, oil prices will take months to stabilise.

The Bombay Stock Exchange’s 30-share Sensex started the week on a high note, touching 18,457.90 but fell to a low of 17,469.97 before ending last week at 17,700.91, a fall of 510.61 points or 2.80 per cent.

The benchmark index had gained 482.91 points or 2.72 per cent in the previous week. The 50-share NSE Nifty had gone up 155.95 points or 2.86 per cent to close at 5,303.

The Mid-Cap Index went down 4.70% and the BSE Small-Cap Index shed 4%.

Among the sectors, the BSE Capital Goods, Bank, Auto and Realty indices tanked 4.5-6%. Healthcare and Metal indices saw a slide of up to 4%.

Ranbaxy shares were down 11% on disappointing results. Among others, BPCL, DLF, Mahindra, Larsen and Toubro and Tata Motors fell as much as 7-8.5%.

SBI, RCom, Jaiprakash Associates, HDFC Bank, BHEL, NTPC, Maruti and Bajaj Auto tanked 5-6%. However, Reliance Infrastructure, Cairn India and RIL went up 3.5-6%.

The Budget has provided a fillip to foreign investors, including FIIs, and this could help bring back positive sentiment to the market.

However, with the raging inflation, which is showing no signs of easing, and the West Asia and North Africa crises taking a toll on the bourses, the markets are unlikely to be buoyant enough for the Sensex to touch the 25,000-mark by the year end, as predicted by certain experts.