Sensex, Nifty close lower as rising inflation dents rate cut hopes
Mumbai: The BSE Sensex closed below the 33,000-mark on Tuesday after rising inflation numbers squeezed the headroom for an interest rate cut by the Reserve Bank of India (RBI) at its policy review in December.
Inflation at the wholesale level raced to a six-month high of 3.59% in October, fuelled by food articles, data released showed. Retail or consumer price index-based inflation, which came in on Monday, had jumped to a seven-month high of 3.58% in October.
The Sensex changed its course many a time during the day, before it settled at 32,941.87—a three-week low, down 91.69 points, or 0.28%. The index had a fall of 281 points on Monday. The broader 50-share NSE Nifty dropped 38.35 points, or 0.38%, to close at 10,186.60 after shutting between 10,248 and 10,175.55.
“Rise in inflation numbers and weakness in Asian peers blunted the expectations of a recovery and domestic market remained range-bound. Persistent weakness in the rupee also weighed down investors’ sentiment,” said Anand James, chief market strategist, Geojit Financial Services.
Analysts say jump in Brent crude price to nearly $64 has also dented the chances of a rate reduction at RBI’s December policy meet. Uncertainty over US tax reform, slowdown in Chinese factory output and growing political issues in the UK weaned investors away from placing more bets.
L&T bled the most, falling 2.46%, followed by PowerGrid, Asian Paints, TCS and ONGC. Hero MotoCorp, Axis Bank, Bajaj Auto and M&M counters, however, saw buying activity. The loss in BSE capital goods was maximum at 1.41%, followed by telecom, infrastructure and PSU.
Share sale by foreign portfolio investors was worth a net Rs233.58 crore on Monday, provisional data showed. Domestic institutional investors also let go of shares net Rs268.77 crore. Weakness rubbed off on broader markets, with mid-cap and small-cap indices falling by up to 0.22%.