The Bombay Stock Exchange sensitive index, Sensex, nosedived by 322 points and closed below the 19000-mark at 18860.44 on Friday against 19182.82 on Thursday as fears of an imminent rate hike by the Reserve Bank of India gained credence following a jump in December inflation, prompting investors to abandon interest rate-sensitive banking, realty and auto stocks.

In highly choppy trade, the barometer oscillated widely during intra-day, touching a high of 19447.82 in the early part of the session before sinking to a low of 18811.96.

The Sensex has lost nearly 674 points, or 3.44 per cent, the past two trading sessions. During January 10-14 trading week, the Sensex has fallen by 831.66 points, or 4.22 per cent, vis-a-vis the previous week's closing level.

In a similar fashion, the National Stock Exchange's wide-based Nifty index closed lower by 97.35 points at 5654.55 against 5,751.90 on Thursday.

Marketmen said investors were spooked by a rise in December inflation to 8.4 per cent, besides a slowdown in foreign institutional investor inflows and a weak opening on European bourses.

“December wholesale price index-based inflation at 8.4 per cent is in line with our expectation. However, the upward revision in October WPI to over 9 per cent is disconcerting. Consequently, we expect the RBI to resume policy tightening later this month with a 25 basis points hike and a cumulative hike of 100 basis points in 2011,” IIFL Economist Ashutosh Datar said.

Asian markets ended mixed, with China's Shanghai and Japan's Nikkei ending subdued, while Hong Kong's Hang Seng closed with modest gains. European bourses were also in the red in afternoon trade.

Rupee drops 12 paise

The rupee depreciated by 12 paise against the dollar on Friday and closed at 45.36/37 against 45.24/25 on Thursday due to increased capital inflows amid weak equity markets. In fairly active trade at the interbank foreign exchange market, the rupee opened higher at 45.20/21 and later moved in a range of 45.14 and 45.44 before ending the day at 45.36/37.

Keywords: BSESensex

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