Sensex tanks 427 points after inflation rise hits rate cut hopes

Mumbai: Indian benchmark indices hit their lowest levels in a month 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 selloff. Midcap and smallcap 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 yesterday, markets opened on a strong note with the benchmark BSE Sensex reclaiming the important 29,000mark on positive global cues and passage of the longdelayed insurance bill. Betterthan expected IIP growth initially enthused participants.

However, investors quickly focussed on retail inflation that rose to three month high of 5.37 percent in February. The initial enthusiasm proved to be shortlived as key benchmark indices lost ground in a sudden bout of volatility.

The Sensex opened with a gapup 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 percent, over its last close. On a weekly basis, it has stumbled by 945.65 points or 3.21 percent.

Among 30 Sensex components, 27 stocks ended down while Bharti Airtel, ONGC and NTPC gained.

The 50share broader NSENifty plummeted by a hefty 128.25 points, or 1.46 percent, to end at 8,647.75 after touching an intraday 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 percent 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 0.111.39 percent 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 earlierthanexpected 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 percent, followed by L&T 3.1 percent, Wipro 2.64 percent, Bajaj Auto 2.64 percent, Axis Bank 2.51 percent, Hindalco 2.34 percent, ICICI Bank, 2.32 percent, Sun Pharma 2.26 percent, SBI 2.21 percent and Tata Power 2.21.

Sesa Sterlite 2.20 percent, Cipla 2.18 percent, HUL 2.10 percent, ITC 2.06 percent, Tata Steel 2.05 percent, Dr Reddy’s Lab 1.67 percent, RIL 1.57 percent, TCS 1.45 percent, GAIL 1.44 percent, M&M 1.37 percent, Hero Moto 1.25 percent and HDFC Bank 1.15 percent logged sharp to moderate losses.

Jayant Manglik, Presidentretail 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 yesterday, 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 yesterday.

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