Nifty ends lower as oil hits $96/bbl

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Indian equity benchmarks continued the downtrend for the second consecutive session on the back of a fall in European markets and a further rise in crude oil prices.

The Nifty ended below the 5450 level on Wednesday, pulled down by financial, infrastructure, realty and technology companies' shares. Indices were quite choppy since morning but slipped into the red in the last one hour of trade.

Crude oil inched up 2.5% to USD 96.08 a barrel today - its highest level since October 2008 - on growing fears that the unrest in Libya could spread to other top oil producers in the region and cut output further.

Violent clashes in Libya have resulted in at least three oil companies halting output in Africa's third-largest producer, which pumps 1.6 million barrels per day (bpd), or nearly 2% of global supply.

"The Libyan situation has just highlighted the concern for the entire Gulf region. As we have seen this contagion spread from Tunisia to Egypt to Libya and now to Bahrain and Dubai and other areas of influence which are now coming under the concern of the people's revolution. It is more of a concern for the entire area and the potential that this could escalate, which is the concern and why people are actually building in this Middle Eastern premium," Jonathan Barratt, the Managing Director of Commodity Broking Services said.

International Energy Agency (IEA) executive director Nobuo Tanaka said that sustained oil prices over USD 100 per barrel for the rest of the year could tip the global economy back into a repeat of the 2008 economic crisis.

European markets also slipped half a percent to one percent, at the time of closing of Indian equities. The 30-share BSE Sensex fell 117.83 points or 0.64%, to settle at 18,178.33 and the 50-share NSE Nifty dropped 31.85 points or 0.58%, to end at 5,437.35.

However, Anil Dhirubhai Ambani Group (ADAG), auto and cement companies' shares limited the losses. Heavyweights Reliance Industries and HDFC gained 1%.

India's largest lender SBI' shares was the leading loser with 4% fall followed by ICICI Bank with 2% decline. HDFC Bank, IDFC, PNB and Axis Bank were down 1%. DLF from realty space lost over 3%.

Infrastructure companies like BHEL and Jaiprakash Associates were down 2%; L&T was down 0.3%. TCS, Infosys and Wipro from technology pack tanked 1-2%.

Ranbaxy Labs was the top loser on Nifty with 6% fall as pharma major has reported a net loss of Rs 98 crore in fourth quarter of CY10 as against a profit of Rs 262 crore in same quarter the previous year.

However, ADAG companies' shares like Reliance Capital and Reliance Communications were up 1.5-3%. Reliance Infrastructure was the biggest gainer with 12% rally as it has started operations for country's first Airport Express, which connects airport terminal 3 with Delhi.

Tata Motors and Maruti from auto space gained nearly one percent. Hero Honda shot up nearly 6%.

In midcap space, State Bank of Bikaner, State Bank of Mysore, Man Infra and State Bank of Travancore rallied 18-20%. Kansai Nerolac gained 6%.

However, Radico Khaitan crashed 9% as the company made alleged disclosure of Rs 100 crore during I-T raids, according to sources. NV Distilleries also raided by I-T department authorities, say sources.

Aurobindo Pharma, Gitanjali Gems, Punj Lloyd and PTC India fell 5-8%.

In smallcap space, Zensar Tech, Borosil Glass, Zenith Infotech, Surana Inds and Geodesic jumped 6-10% while Graviss Hosp, A K Capital, Shrenuj & Co, Jagatjit Inds and
Mafatlal Ind lost 7-10%.

About 1215 shares advanced as against 1640 shares declined on the Bombay Stock Exchange.

"Libya concerns will also affect some of the Indian Companies which have operations in Middle East & Africa. Most severely affected could be Punj Lloyd whose 33% of more then Rs 256 bn order book comes from Libya. The order execution was already moving slowly and these incidences are likely to stall it further. Other companies which have operations in Middle East and may be affected are Voltas which has sizeable operations in both Egypt and Libya, IVRCL which has an order from Middle East, Everest Kanto which has orders from Iran and surrounding Middle East countries, BHEL & L&T which have couple of orders in this area though they are not significant compared to the entire order book, 10% of Praj's order book is also from Middle East & Africa and hence may see execution delay," Preeti Samtani, VP - Institutional Equities of GEPL Capital Pvt Ltd said.

(With inputs from Reuters)