Sensex, Nifty Fall as Iraq Crisis Escalates

The BSE Sensex and Nifty came under heavy selling pressure on Wednesday as a weakness in the rupee, soft global markets and rising oil prices weighed on sentiments.

Brent crude stayed near nine-month high as heavy fighting in Iraq shut the country's biggest refinery and led to the withdrawal of staff by foreign oil firms, stoking worries about exports from the key oil producer.

India imports 80 per cent of its oil requirements and higher crude prices could make things more complicated for Prime Minister Narendra Modi who won last month's elections on promises of lower price rise, faster economic growth and new jobs.

"They have got hold of one refinery. Surging oil would either eat into India's balance sheet or fuel inflation. It may make life difficult for new government and the RBI," said Nirakar Pradhan, chief investment officer at Future Generali India Life Insurance.

India imports nearly 4 million barrels per day (bpd) of crude oil - of which more than half a million bpd come from Iraq.

The rupee fell to 60.42 at its day's low as the dollar held firm against most of other global currencies.  

The selloff in Indian markets was broad-based though healthcare stocks, which are considered defensive bets in a falling market, held on to modest gains.

High beta realty stocks fell sharply. Energy and power shares also saw selling pressure. Jindal Steel and Power, BPCL, IDFC and BPCL closed with over 3 per cent losses.

Reliance Industries, which held its 40th AGM today, ended 2.6 per cent lower. RIL chairman Mukesh Ambani outlined Rs 1.80 lakh crore investment plan over next three years. He also said that Reliance Jio, its telecom business, will begin operations from next year.

Drugmakers such as Cipla and Lupin closed with 2.7 per cent gains. Dr Reddy's Lab also ended higher.

The Sensex closed 275 points down at 25,246 while the Nifty closed 74 points lower at 7,558.
 

(With inputs from Reuters)