Indian stocks fell for the fifth day in a row with BSE barometer Sensex today closing 77 points down on intense selling triggered by concerns that the rise in inflation will dim chances of further rate cuts.
Market analysts said a slew of other factors such as Moody’s downgrading three private banks and weak European cues also pulled down the Sensex which was trading nearly 100 points high in the morning trade. The sentiment was also weighed down by Finance Minister Pranab Mukherjee highlighting that food inflation has reached double digits.
The Sensex,which was trading higher at 16,390.33 points,started moving down after inflation rose to 7.s23 per cent in April. Food inflation rose to 10.49 per cent. The index finally closed down at 16,215.84,its lowest level in 4 months. Investors were poorer by Rs 28,000 crore today.
Mukherjee said: “Food inflation is a matter of concern,particularly it has reached the double digit.” Markets now see little chances of interest rates coming down anytime soon. The RBI will have to take this higher number into account as it tries to support the growth rate through any future rate cuts,Dipen Shah,Head of Fundamental Research,Kotak Securities.
Three private sector banks – ICICI,HDFC and Axis bore the brunt of investor wrath after rating agency Moody’s downgraded them. Blue-chips HDFC bank and ICICI bank lost nearly 2 per cent while Axis Bank lost around 0.70 per cent.
However,the biggest losers in Sensex were DLF (2.64 per cent),Tata Motors (2.42 per cent) and RIL (2.32 per cent).
Interest-rate sensitive sectors banking and realty closed with over 1.5 per cent losses.
“Despite a relatively strong base effect,the Wholesale Price Index (WPI) edged up…higher than ours and consensus expectations,” said Rohini Malkani,Economist,Citi India.
The NSE today also witnessed a technical glitch in the derivatives segment this afternoon with the value of Nifty and other indices not getting updated but the issue got resolved later. The Nifty dropped by 21.10 or 0.43 per cent to close at 4,907.80. ent.
European stocks declined sharply in the early trade as the Greece political crisis showed no signs of abating over the weekend. Key benchmark indices in UK,Germany and France were down by 1.66 per cent to 2.34 per cent.
Asian shares ended lower as Greece’s inability to form a government fuelled worries over euro stability. Key benchmark indices in Hong Kong,Singapore,China,South Korea and Taiwan were down by 0.18 per cent to 1.15 per cent. Japan’s Nikkei rose 0.23 per cent.
Out of the 30-share Sensex pack,15 scrips declined while 15 scrips firmed up.
Other major losers from the Sensex pack were HDFC Bank (2.02 pc),BHEL (1.99 pc),Hindalco Industries (1.45 pc) and Tata Steel (0.90 pc).
However,Bajaj Auto rose by 1.80 per cent followed by Tata Power (1.51 pc),Sun Pharma (1.26 pc) and Infosys (1.13 pc).
Among the sectoral indices the BSE-Oil & Gas fell by 1.69 per cent,the BSE-Bankex shed 1.61 per cent and the BSE-Realty dropped by 1.27 per cent. The BSE-PSU also dipped by 0.91 per cent.
Brokers said stocks in BSE-Healthcare and BSE-Consumer Goods attracted good buying as investors were lured to defensive sectors. These indices inched by up to 0.80 per cent.
“Sentiments have definitely turned bearish. Already the IIP data had come at below expected level and now with inflation data also coming above 7 per cent..going ahead more downside cannot be ruled out,” said Shanu Goel,Sr. Research Analyst,Bonanza Portfolio.
The market breadth continued to remain negative as 1,657 shares finished with losses while 1,047 shares ended with gains. The total turnover fell to Rs 1,832.46 crore from last Friday’s close of 1,923.53 crore.
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