As the hopes of a rate cut by the Reserve Bank of India (RBI) waned after stubborn inflation figures were reported, the Bombay Stock Exchange (BSE) 30-share sensitive index, Sensex, dipped by more than 200 points on Thursday, its biggest fall in two weeks.

The wholesale price index inflation (WPI) rose in May to 7.55 per cent from 7.23 per cent in April.

Meanwhile the rupee closed at 55.80/81 a dollar compared to Wednesday's close of 55.68/69.

The Sensex closed at 16677.88 with a fall of 202.63 points or 1.20 per cent, led by realty stocks which dipped by 2.91 per cent, followed by banks (2.82 per cent), capital goods (2.79 per cent), power (2.16 per cent) and automobile (1.99 per cent).

On the National Stock Exchange (NSE) the 50-share Nifty lost 66.70 points or 1.30 per cent to close at 5054.75.

“We would not read too much into Thursday's market movement,” said Varun Goel, Head, Portfolio Management Services, Karvy Stock Broking. According to him, the WPI figures were more or less on expected lines. “The RBI should be comfortable in cutting rates. We would expect the RBI to cut the repo rate by 25 basis points on June 18 and boost liquidity by cutting cash reserve ratio,” Mr. Goel added.

“Markets opened on a flat note, on the backdrop of flattish global cues and inflation data,” said Shrikant Chouhan, Head of Technical Research, Kotak Securities.

“As markets were not able to trade above the 200-day moving average in the last couple of days in spite of good up move, this triggered profit booking. Inflation data further accelerated the selling, said Mr. Chouhan, adding, “The index gave up considerably during the second half and the Nifty tested the 5050 levels and closed the day on a negative note. European cues were also negative.”

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