Mumbai: Indian benchmark indices hit their lowest levels in a month on Friday with the Sensex tanking 427 points to 28,503.30 and the Nifty plunging 128 points to 8,647.75 due to intense selling pressure after rise in retail inflation dashed hopes of aggressive interest rate cuts. The selling was indiscriminate as all sectoral indices bore the brunt of the intense sell-off. Mid-cap and small-cap shares too crumbled. Losers on the BSE outnumbered the gainers with over 1900 stocks ending in the red while 900 edged up.
Extending its strong recovery momentum seen on Thursday, markets opened on a strong note with the benchmark BSE Sensex reclaiming the important 29,000-mark on positive global cues and passage of the long-delayed insurance bill. Better-than-expected IIP growth initially enthused participants.
However, investors quickly focussed on retail inflation that rose to three month high of 5.37 per cent in February. The initial enthusiasm proved to be short-lived as key benchmark indices lost ground in a sudden bout of volatility. The Sensex opened with a gap-up at 29,134.93 and swung between a wide range of 29,183.76 and 28,448.48 before concluding at 28,503.30, posting a massive loss of 427.11 points, or 1.48 per cent, over its last close. On a weekly basis, it has stumbled by 945.65 points or 3.21 per cent.
Among 30 Sensex components, 27 stocks ended down while Bharti Airtel, ONGC and NTPC gained. The 50-share broader NSE-Nifty plummeted by a hefty 128.25 points, or 1.46 per cent, to end at 8,647.75 after touching an intra-day high of 8,849.75 and low of 8,631.75.
"Uptick in food inflation could continue into March with rain disruptions over last month causing some short term flare ups....given the limited room to manoeuvre and RBI's challenging task of taking CPI inflation down to 4 per cent by early 2018, the central bank can ill afford to cut policy rates aggressively from here," said Pranjul Bhandari, Chief India Economist, HSBC.
On the global front, major equities in the region ended higher tracking positive lead from Wall Street overnight. Key indices in China, Hong Kong, Japan and South Korea gaining 0.11-1.39 per cent while Singapore and Taiwan settled lower. Europe was trading better in late morning deals on hopes a rate hike by US Federal Reserve may be delayed due to disappointing data on retail sales.
Heightened speculations of an earlier-than-expected rate hike with the Federal Reserve's March 18 monetary policy meeting looming large alongwith concerns over Greece situation also forced some to offload stocks, said a trader. Back home, BHEL was the top loser in Sensex with a fall of 3.41 per cent, followed by L&T 3.1 per cent, Wipro 2.64 per cent, Bajaj Auto 2.64 per cent, Axis Bank 2.51 per cent, Hindalco 2.34 per cent, ICICI Bank, 2.32 per cent, Sun Pharma 2.26 per cent, SBI 2.21 per cent and Tata Power 2.21.
Sesa Sterlite 2.20 per cent, Cipla 2.18 per cent, HUL 2.10 per cent, ITC 2.06 per cent, Tata Steel 2.05 per cent, Dr Reddy's Lab 1.67 per cent, RIL 1.57 per cent, TCS 1.45 per cent, GAIL 1.44 per cent, M&M 1.37 per cent, Hero Moto 1.25 pc and HDFC Bank 1.15 per cent logged sharp to moderate losses.
Jayant Manglik, President-retail distribution, Religare Securities said: "Market resumed its corrective phase as equity benchmark failed to surpass major hurdle in early trade on Friday, despite positive cues from domestic front. After an initial uptick, we saw continuous decline in the index till the end. Selling pressure gripped stocks across the board as a result all the sectoral indices also ended in red."
Meanwhile, Foreign Portfolio Investors (FPIs) bought shares Rs 733.09 crore on Thursday, as per provisional data. Total market breadth turned negative as 1,963 stocks finished with losses and 900 ended with gains while 110 held steady. The total turnover was up at Rs 3,865.60 crore from Rs 3,726.88 crore on Thursday.
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