Indian markets ended on a negative note on back of selling pressure in rate sensitive stocks after headline Inflation for the month of December surged to 8.43% raising fears of rate hike.The weekly inflation had surged over 18%, as per the recently announced data. The Central Bank is scheduled for a policy review on January 25.
The Nifty edged lower to 5,696 in the morning session dragged by losses in metal shares after Steel Authority of India reported dissapointing Q3 results.
The index rebounded in noon trades and scaled to day's high of 5,834, however fresh selling in rate senstive realty and auto stocks, saw the index plunge into the red in the late noon session.
The index finally ended at 5,654, down 97 points.
The Sensex dipped below 19,000 first time since November to 18,860, down 322 points.
Analysts blamed spike in crude prices, rising interest rates, sticky inflation, disappointing industrial output data, political uncertainty, and various scams for continued free fall in the markets seen in past two weeks.
Headline inflation showed no signs of abating as WPI (Wholesale Price Index) accelerated to 8.43% in December from 7.48% in November raising expect ations of another round of rate hike during the January policy.
Sadanand Shetty, vice president & senior fund manager -- Equity, Taurus Mutual Fund said, 'corporate earnings outlook will be cut, there will be an impact of elevated price of commodities and crude prices on the margins of several sectors.'
Among individual stocks, investors punished shares which reported dissapointing results. SAIL was the top loser on Nifty, down over 6%, at Rs 161 after Q3 net dipped 34% to Rs 1,107
cr.
On the other hand, Tata Coffee surged 20% at Rs 555 and was locked in upper circuit after the world's largest coffee chain, Starbucks Corp entered into a non-binding memorandum of understanding with the company.
Rate sensitives such as financial, auto and realty shares were beaten down badly due sticky inflating data for December cementing expectations that RBI would raise rates further.
From the financial space, HDFC slipped 4.3% after it posted net profit for the third quarter at Rs 891 cr, up 33% (YoY), Axis Bank declined 5% and HDFC Bank was down 4.3%. Investors also dumped auto shares, Tata Motors fell 4%, Maruti declined 3.1% and Bajaj Auto plunged 2.7%. From realty space, Sobha Developers was down 6.1%, Indiabulls Real Estate fell 4.5% and Unitech declined 3.8%.
BSE IT index rebounded from Thursday's low and ended flat. Infosys pared gains, fell 0.3% after Goldman Sachs upgraded the stock to buy from neutral. Other rivals Wipro gained 1.7% and HCL Technologies was up 1.5%.
Top loser on the Sensex were Sterlite, down 4.3%, Hindalco dropped 2.6% and Tata Steel was off 0.5%. Only 5 components on the Sensex ended in green, Tata Power gained 2.1%, Wipro surged 1.7% and Mahindra & Mahindra ended up 0.4%.
Broader markets ended in the red, midcap and smallcap indices fell over 1% each. Market breadth was negative, 1,962 stocks declined for 880 stocks that advanced.
