Fuel price hike punctures the market

The stock markets fell like ninepins on Wednesday after the government increased the fuel prices with the benchmark Sensex shedding over 440 points, the biggest fall in two months, on heavy selling pressure across counters which was aided by weak European bourses as well.

The 30-share index of the Bombay Stock Exchange ended the day at 15,514.79, lower by 447.77 points, or 2.81 per cent, from its previous close. The biggest fall of the BSE barometer before this was on April 4 when it registered a loss of 489.43 points.

The 50-share S&P CNX Nifty of the National Stock Exchange slumped by 130.30 points or 2.76 per cent to close at 4,585.60 from its last close.

The government today announced a hike petrol and diesel prices by Rs 5 and Rs 3 a litre respectively and initiated a slew of measures in a bid to offset any negative impact of soaring global crude prices on national oil companies.

Marketmen said the hike were higher than expected and the investors feared that the increase would may lead to further inflationary pressures.

The markets were resilient for a while after the announcement of hike in fuel prices but later tumbled as investors resorted to frantic selling pressure as European markets fell sharply in their early trade.

Bourses in Germany, France and London were down by 1.30 per cent to 1.89 per cent.

Foreign institutional investors (FIIs) too were sustained net sellers in equity.

As per provisional figures, FIIs sold shares worth Rs 1,020.70 crore in equity on June 3.