The markets have completely slaughtered in last two hours of session over inflation worries after substantial oil price hike. Bears became uncontrollable for bulls since last two weeks, showing no signs of recovery yet. Heavy selling pressure in European markets on the back of further credit crisis fears also added to negative sentiments. The Nifty has broken one more psychological levels of 4600 and closed below that mark. The Sensex breached 15500 level in late trade but managed to close just above that.

All BSE indices ended in red. Major butchered sectors were realty, metal, power, oil & gas, auto and capital goods stocks. Midcap and small cap stocks also hammered a lot.

Oil price hike has happened finally, government has increased petrol price by Rs 5 per litre, diesel price by Rs 3 per litre and LPG price by Rs 50 per cylinder. Markets sensed that such hike will increase inflation further, which was 8.1% in last week. This will dampen the markets more. The government has cut customs duty on petrol, diesel down to 2.5 from 7.5%, reduced customs duty on other petroleum products down to 5% and cut customs duty on crude to nil from 5%. Excise duty on diesel and petrol also cut by Re 1 per litre. These duty cut amounted to Rs 22660 crore in revenues loss. They have not raised the price of Kerosene. 

The Sensex closed at 15,514.79, down 447.77 points or 2.81% after hitting an intraday low of 15,442.34 and high of 15,992.90. The Nifty has touched a high/low of 4731.50 and 4564.50 before closing the day at 4585.60, lower by 130.3 points or 2.76%.

In the oil and gas space and amongst frontliners, ONGC is the only stock, that remained on buyers radar through the day, up nearly 5.3% and looked like beneficial from oil price hike. Otherwise the rest of shares tumbled heavily. Government has reduced burden on oil companies to some extent like Rs 21,010 crore of under-recoveries will be recovered via price hike, Rs 65,000 crore of under-recoveries to be recovered from OMCs, PSUs, Rs 94,600 crore of under-recoveries would be nmet by issuing oil bonds while Rs 29,000 crore of losses have remained unrecovered.
 
Oil Ministry forecasted oil companies FY09 revenue loss to top Rs 2.45 lakh crore while oil marketing companies, OMCs FY09 net revenue loss seen at Rs 20000 crore.

Biggest losers were Ambuja Cements (-5.46%), Tata Steel (-5.36%), HDFC Bank (-5.19%), Maruti Suzuki (-5.07%), BPCL (-8.39%), Cairn India (-7.20%), Sterlite Ind (-6.77%) and Tata Power (-6.64%).

Oil & Gas Index fell 3.39% or 352.98 points at 10,059.51 as sell off seen in BPCL, Essar Oil, Cairn India, Reliance Ind, GAIL, IOC and HPCL.

Realty stocks have knocked down the most and became underperformer of the day, index lost by 5.01% or 337.05 points at 6,389.20. Selling has seen in Akruti City, Indiabulls Real, Omaxe, Unitech, HDIL and DLF.

Metal Index was the second most loser, down by 4.98% or 808.93 points at 15,423.15 led by weakness in Sesa Goa, Sterlite Ind, Jindal Steel, Tata Steel and JSW Steel.

Power stocks fully darkened, index dipped by 4.42% or 121.83 points at 2,632.37 due to losses in power stocks like Reliance Power, Tata Power, GMR Infra, Reliance Infra, GVK Power, Suzlon Energy, NTPC and Power Grid Corp.

Auto sector was also one of worst hit sector after oil price hike because that will reduce sales volumes of auto companies in near term. Auto Index plunged 3.31% or 144.46 points at 4,225.59. Auto stocks like Maruti Suzuki, Tata Motors, Ashok Leyland, Escorts, TVS Motor, M&M and Hero Honda have hammered.

Capital Goods Index closed at 12,115.82, tumbled by 3.24% or 405.43 points as selling seen in Bharat Bijlee, Rel Ind Infra, BHEL, Siemens, Suzlon Energy, Praj Industries and L&T.

Amongst telecom space, Spice Comm, Bharti Airtel, TataTeleservices, Tata Comm, MTNL, Reliance Comm and Idea Cellular were down.

Technology space also got under selling pressure, index lost 2.54% or 114.74 points at 4,397.35 as Tech Mahindra, Satyam, Infosys, TCS, HCL Tech and Wipro weakened sentiments.

Banking stocks like Bank of India, HDFC Bank, Allahabad Bank, Kotak Mahindra, SBI and Karnataka Bank lost ground completely. Index was down 2.53% or 186.88 points at 7,210.37.

Healthcare Index slid by 2.19% to settle at 4,264.93 due to losers like Divis Labs, Orchid Chemical, Sun Pharma, Wockhardt, Lupin, Dr Reddys Labs, Aurobindo Pharm, Matrix Lab and Ranbaxy Labs.

FMCG stocks like Tata Tea, United Breweries, Colgate, HUL, ITC and Nestle also got under bears control. Index crumpled by 1.5% at 2,367.45.

Most active counters were ONGC, Reliance, Tata Steel, L&T, Reliance Petro and Bharti Airtel.
 
CNX Midcap was down 2.95% at 6200.25. BSE Midcap slipped 2.29% to settle at 6,397.37 and the Small Cap Index fell 2.06% at 7,720.26.

In the midcap space, Adhunik Metaliks, BGR Energy, Bombay Dyeing, Ahluwalia, Shiv Vani Oil, Spice Comm, Akruti City, Voltas, ABG Shipyard, Guj Alkali, Nagarjuna Fert, Moser Baer and DCB have collapsed over 7%.

Amongst small cap segment, Grabal Alok Imp, Mcleod Russel, Numeric Powe, Thomas Cook, Asian Granito, Jayshree Tea, Vipul, Kemrock Indus, Alphageo, Balmer Invest and Kewal Kiran have lost over 7%.

Turnover traded by the markets for the day stood at Rs 68992.18 crore including Rs 14174.18 crore from NSE Cash segment, Rs 48378.31 crore from NSE F&O and the balance Rs 6439.69 crore from BSE Cash segment.

Asian markets were trading mixed. Nikkei 225 Average was up 1.21% or 172.29 points at 14,381.46. Straits Times rose 4.4 points or 0.14% at 3,158.34. Seoul Composite was up 0.45% or 8.23 points at 1,827.62. Taiwan Weighted gained 0.47% or 40.25 points at 8,619.68. However, Shanghai Composite was down 2.57% or 88.21 points at 3,348.18. Hang Seng was down 71.54 points or 0.29% at 24,304.22. Jakarta Composite lost 0.92% or 22.02 points at 2,381.80.