Indian stocks fall on rate hike jitters

Indian stocks fall on rate hike jitters

Mumbai: Rate hike jitters finally caught up with Indian stocks. Ahead of the Reserve Bank of India’s policy meet on Thursday, local equities fell on concerns that a further hike in interest rates will lower sales and squeeze profits of domestic firms. With inflation accelerating to 9.06% in May, the central bank is expected to increase policy rates again on Thursday. While rate hike fears led to selling in interest rate sensitive stocks, a weak opening in European stock markets sealed the day in favor of bears. Stock markets in Europe fell on concerns that a rescue package for Greece may be delayed.

Sensex: 18,132, –0.96%

Nifty: 5,447, –0.96%

FTSE 100: 5,778, –0.42%

DAX: 7,176, –0.40%

Financial services, cement and metal stocks led the losses in the Nifty 50. Investors sold SAIL on concerns that increasing interest rates and raw material costs will squeeze margins. The company is in the midst of a massive capacity expansion program. It plans to invest 14,337 crore in the current financial year. Read more...

SAIL: 139 –3.48%

IDFC: 125 –3.43%

DLF: 224 –3.43%

Concerns about falling prices and dispatches led to selling in cement stocks. Subdued demand and onset of monsoons is leading to lower cement prices. According to analysts at Emkay, cement prices across the India have seen a price cut of 5-10 per bag.

Ambuja Cement: 131 –2.52%

JP Associates: 82 –2.14%

ACC: 990 –1.74%

At the sectoral level, interest rate sensitive stocks led the losses on the BSE. Except FMCG and healthcare, all BSE sectoral indices closed the day with losses.

BSE Bankex: 12,143 –1.58%

BSE Realty: 2,122 –1.34%

BSE IT: 6,034 –1.25%

BSE Power: 2,557 –1.10%

Meanwhile, shares of Mastek jumped more than 6% after the company said its UK unit signed a multi-year IT services agreement with an initial minimum commitment of 8 million pounds.

Mastek: 6.90%

Overall, 55.55% of the shares traded on the BSE closed the day with losses.