Stock markets turned distinctly weak on rising food inflation and a possibility of further hike in interest rates, with the BSE benchmark Sensex dipping another 285 points on Thursday to end at over 4-1/2-month low of 18,684.43.

The market witnessed all-round selling on the last day for settlement of derivatives contracts this month. Thus, with over 180 point fall in the last session, Sensex has lost about 467 points in two trading days.

Heavyweights like Infosys Tech, RIL and ICICI Bank led the fall on covering of long positions by wary operators, expecting further fall due to rise in food inflation amid overnight rise in interest rates.

Realty, health care, metal and banking counters were the pace-setters of the decline. Other segments also suffered sharp dips as all the 13 sectoral indices ended in the red, logging a loss between 1.14 per cent and 3.57 per cent.

The market was already in the negative grip after the hike in the lending (repo) and borrowing (reverse repo) rates by 25 basis points each by the Reserve Bank on January 25 in its quarterly monetary policy review.

It suffered further setback on rise in food inflation - up at 15.57 per cent for the week ended January 15, rekindling fears that RBI may hike policy rates again to tame overall inflation, making corporate and consumer loans dearer. This prompted institutional and retail investors to go on profit-booking or even to go short.

The Bombay Stock Exchange 30-share bellwether index opened higher at 19,086.69 on initial firm Asian cues but fell back sharply to settle the day at 18,684.43, netting a steep fall of 285.02 points or 1.5 per cent. Previously, it had dropped 181.83 points or 0.95 per cent.

Related Topics
comment COMMENT NOW