Mumbai: Erasing initial gains, the BSE benchmark Sensex fell over 93 points at mid session on Thursday on funds selling, geared by a marginal hike in food inflation, amid revision in key interest rates by the Reserve Bank of India (RBI).
The Bombay Stock Exchange benchmark Sensex, which rose 117 points at the outset, fell 93.77 points to 18,875.68 at 12:30pm, following reports that the food inflation up marginally to 15.57% for the week ended 15 January, from 15.52% in the previous week.
The gauge had lost 182 points in the previous session after the RBI increased interest rates for the seventh time since March 2010 and boosted its inflation forecast.
RBI had also raised the inflation forecast to 7.0% by 31 March, more than its earlier prediction of 5.5% as food costs soared.
Similarly, the broad-based National Stock Exchange index Nifty fell by 27.20 points to 5,660.20 at the same time with stocks in healthcare, realty and metal sector recorded fresh losses.
Markets were trading down 0.4% in the morning as the near-term outlook for foreign funds’ interest was far from promising due to better prospects elsewhere.
Traders said the market would be choppy with investors adjusting their positions on the last day for monthly derivatives contracts on the National Stock Exchange.
Weekly food and fuel price data expected by noon also weighed on investors.
Top utility vehicle maker Mahindra & Mahindra dropped 2.7% after Goldman Sachs downgraded the stock to “sell” from “buy”.
By 10:43am, the 30-share BSE index was trading down 0.44% at 18,885.90 points, with half of its components declining. It had started 0.6% higher. The 50-share NSE index was down 0.3% at 5,669.45 points.
“The trend is clearly downwards. There are no positives on the horizon to drive the market higher,” said Ambareesh Baliga, senior vice president at Karvy Stock Broking.
Foreign funds have withdrawn around $849 million from Indian equities so far this month, and the BSE index is down 7.9% in the period putting the benchmark on track for its worst monthly fall in more than two years.
The midcap sector index and smallcap sector index have both shed more than 7% this month.
“With developed economies faring better than before, there could be a reversal in hot money - the ETF flows from countries like India,” Baliga said, referring to exchange-traded funds.
Outsourcers Infosys Technologies and Wipro dropping 1.2% and 1% respectively, while sector leader Tata Consultancy Services edged 0.4% higher.
Sterlite Industries fell 3.2% after an arbitration panel ruled against the company’s call option to buy the remaining 49% in Bharat Aluminium Co.
“Sterlite may have to pay a higher price for Balco,” Baliga said.
The company, a unit of Vedanta Resources, reported a 61% jump in quarterly profit on Tuesday that was however lower than expectations.
Markets were shut on Wednesday on account of Republic Day
Private-sector lender HDFC Bank was down 1.4% ahead of its quarterly earnings announcement.
In the broader market, gainers and losers were almost equal in number, while 58 million shares changed hands on the BSE.
The MSCI’s measure of Asian markets other than Japan was up 0.4%, while Japan’s Nikkei was trading 0.8% higher.
Atlas Copco rose 15.1% to Rs 2,151 after the industrial and construction equipment maker raised its offer price to delist the company from the Indian bourses to 2,250 rupees from Rs 1,426.
State-run oil marketing companies such as Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp were down between 0.3% and 0.9%, as world oil prices extended gains for the second session.