Sensex falls 206 points to 6-wk low

Mumbai: The Sensex today fell to a six-week low as it lost over 206 points after less-than-enthusing earnings of FMCG major ITC hit sentiment amid selling pressure in interest-rate sensitive sectors on concerns that RBI may keep interest rates unchanged at its policy review next week.

The BSE benchmark index, which had lost 72 points in the previous session, opened marginally higher amid mixed Asian cues but shares in capital goods, PSU, banks, FMCG and IT faced selling pressure throughout the session. The Sensex fell by 206.23 points, or 1.22 per cent to 16,639.82, a level last seen on June 7.

Shares of ITC — the most influential stock in Sensex — closed 2 per cent down, after its first quarter revenue at Rs 6,552.21 crore and profits at Rs 1,602.14 crore could not beat expectations. "We continue to remain neutral on the stock, as we believe it is fairly priced at current levels," said V Srinivasan, Research Analyst, Angel Broking.

Twenty two stocks including Tata Power, Wipro, and SBI closed lower in the 30-share index. Tata Motors was the worst hit at 3.8 per cent. Fears of rising inflation, driven by possible hikes in fuel and commodity prices, have stoked worries that Reserve Bank of India might keep rates unchanged on July 31 even as the rain situation continues to be poor, brokers said.

"Deficient monsoon witnessed in the country is continuously putting pressure," said Nidhi Sarswat, Senior Research Analyst, Bonanza Portfolio. Real estate stocks suffered the most damage with the sectoral index losing over 3 per cent with DLF falling 2.85 per cent while Parsvnath Developers tanked 20 per cent.

The capital goods index dropped over 2 per cent as L&T counter faced selling while Bhel fell 1.8 per cent after its Q1 margins and order intake appeared lacklustre, traders said. The 50-share NSE Nifty tumbled by 66.60 points to 5,043. Meanwhile, the rupee was last trading at 55.99 a dollar compared to its previous close of 56.16.

On possible steps that may be taken by RBI on July 31, rating agency ICRA said, "…expect the RBI to retain the policy rate in the near term until monsoon-related concerns are assuaged. Likely to address frictional liquidity pressures over the short-term through further open market operations."

Profit-booking by retail investors on the last day of July derivative contracts today was seen, traders said. "Nifty July series ended with a loss of 2 per cent," said Sahaj Agrawal, AVP-Derivatives, Kotak Securities. Heavy sell-off was witnessed in second-line stocks, an indication of pulling out by retail investors. BSE-Smallcap and BSE-Midcap indices closed with 2.07 per cent losses each.

Foreign Institutional Investors (FIIs) sold shares for the second day in a row and pulled out Rs 583.61 cr, provisional data showed on Wednesday. Asian shares closed mixed with an upward bias on hopes of more US stimulus to support the growth. Key indices in China and Taiwan finished lower while those from Hong Kong, Japan, Singapore and South Korea closed higher.

European markets were quoting up to 1 per cent lower in their afternoon deals ahead of Italian debt sale and US jobless claims numbers. Back home, major losers from the Sensex were Tata Motors (3.80 pc), Tata Power (2.91 pc), Wipro (2.64 pc), Sterlite Industries (2.64 pc), SBI (2.58 pc), ONGC (2.24 pc), ITC (2.02 pc), Infosys (1.97 pc), BHEL (1.80 pc), L&T (1.71 pc), HDFC Bank (1.56 pc), ICICI Bank (1.23 pc) and RIL (1.17 pc).

Among the gainers, Sun Pharma rose by 2.32 per cent, followed by Bajaj Auto (1.37 pc) and NTPC (1.03 pc). In sectoral indices, the BSE-Realty slumped by 3.07 per cent, followed by BSE-CG (2.04 pc), BSE-PSU (1.69 pc), BSE- Bankex (1.67 pc), BSE-FMCG (1.57 pc) and BSE-IT (1.51 pc). The market breadth was sharply negative as 1,934 stocks closed with losses while 842 scrips finished with gains. The total turnover was up at Rs 2,174.96 crore from Rs 1,818.43 crore on Wednesday.