Sensex Ends 219 Points Lower; Energy And Auto Stocks Witness Selling
After witnessing volatile trades during the day, Indian share markets ended their session on a negative note. Losses were largely seen in the oil & gas sector, auto sector and capital goods sector, while IT stocks ended the day higher.
At the closing bell, the BSE Sensex stood lower by 219 points (down 0.6%) and the NSE Nifty closed lower by 59 points (down 0.6%). The BSE Mid Cap index ended the day down by 0.8%, while the BSE Small Cap index ended the day down by 0.9%.
Asian stock markets finished on a negative note as of the most recent closing prices. The Hang Seng was down 1.3% and the Nikkei stood lower by 0.8%.
The rupee was trading at 68.12 to the US$ at the time of writing.
In the news from the banking sector, Karnataka Bank share price was in focus today as the lender yesterday announced that it is planning to achieve a farm credit portfolio of Rs 90 bn for 2018-19.
As per the announcement, the bank will bestow a special focus to leverage these positives, and the management has advised the branches to focus on areas such as warehouse receipt finance, irrigation, farm mechanization, agricultural gold loan, crop loans, development loans and loans to agro-processing units for increasing the farm credit portfolio.
According to Mahabaleshwara MS, Managing Director and CEO of the bank, there are enough opportunities for financing in the agricultural sector following the government's vision to double farmer's income by 2022. As per him following modern agricultural practices will lead to an increase in productivity and the bank will be in the forefront in extending a helping hand to farmers for adopting new technologies.
Karnataka Bank share price closed the day down by around 1.6% on the BSE today.
Apart from Karnataka Bank, KRBL share price was also in focus today. Shares of the company plunged 20% in today's trade after it was reported that former director Gautam Khaitan had been arrested by the Enforcement Directorate in connection with AgustaWestland helicopter scam.
In other news, petrol price in Mumbai breached the Rs 85 per litre mark last week. This marks an all-time high for fuel prices in Mumbai. The situation is similar in Delhi and Chennai, where petrol was sold for Rs 77.5 and Rs 80.4 per liter, respectively last week.
The rise in prices comes as oil companies have raised prices for the 11th successive day, as per a leading financial daily. So far, central and state governments have not shown willingness to bring down prices by cutting their tax component. There has been talk of the government levying a windfall tax on oil producers like ONGC as part of a permanent solution it is working on for moderating the spiraling retail prices of petrol and diesel.
Presently, the government levies heavy taxes which account for about half the cost of petrol and 40% of the diesel price. So, one of the possible ways for the government to reduce the rates changes the way in which pump prices are calculated.
The above rise in fuel prices is seen on the back of rising crude oil prices. In the past one year alone, oil prices have surged more than 50%.
Also note that rising crude oil prices not only affect fuel prices, but also has many other repercussions for the Indian economy.
They can be a big worry for the Modi government as well.
Have a look at the chart below. It shows India's total import bill of crude oil and petroleum products on an annual basis during the Manmohan Singh regime and the Narendra Modi regime.
Here's Why Crude Oil Was Modi's Best Friend So Far
It is clearly evident that the Modi government has been a big beneficiary of lower crude oil prices.
Apart from that, what does rising crude oil prices mean for stock markets?
How the government handles this situation of rising crude oil and fuel prices remains to be seen. Meanwhile, we will keep you posted on all the developments from this space. Stay tuned.
Disclosure: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. ...
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