The BSE Sensex dipped 186 points to 18,345 today following the steep rise in petrol prices, fuelling investor concerns that it would fan inflation and lead to further hike in interest rates that have already been hitting corporate margins.
Brokers said investors were also apprehensive that diesel rates, likely to be revised upwards within a few days, may be steep and add to inflationary pressures even more.
Although overall inflation slipped marginally during April, it is still high for comfort, they said.
Moderation in prices of food and manufactured items brought inflation marginally down to 8.66 per cent during the month, but experts have said that fuel rate hikes will impact overall prices in the near future.
Besides, brokers said FIIs continued to put pressure on the market amid weak global cues. FIIs sold shares nearly worth Rs 4,583 crore in the last two trading sessions.
The 30—share Bombay Stock Exchange index, Sensex, opened on a feeble note and remained in the negative terrain all through the day before ending at 18,345.03, a fall of 186.25 points or 1.01 per cent.
Similarly, NSE 50—issue index, Nifty, dropped by 45.75 points or 0.83 per cent to close at 5,499.00.
In all, 11 of the 13 sectoral indices closed in the red.
Realty, metal, banking, FMCG and refinery sectors were the major losers.
State—owned oil companies raised petrol prices by Rs 5 per litre with effect from Saturday midnight, the steepest hike since December 2008.
Meanwhile, Asian stock markets dipped after reports that Goldman Sachs downgraded Japanese and Korean shares. The key benchmark indices in Japan, South Korea, Taiwan, China, Hong Kong and Singapore settled down between 0.73 per cent and 1.36 per cent.
European stocks too were trading lower in afternoon deals. The CAC and DAX were down by about 1.4 per cent each, while the FTSE lost 0.9 per cent.
“The market players are worried that the petrol price hike and an imminent revision in diesel prices shortly will add to the inflationary pressures, triggering more rate hikes from the RBI. A weak trend across global markets also weighed on the sentiment on local bourses today,” said Amar Ambani, Head of Research (India Private Clients), IIFL.
“FII selling remains a cause for concern for the Indian market as well. The market has turned volatile of late and thus it calls for extra caution on the part of the market players,” Ambani added.
Overall, 26 out of 30 index—based counters finished with losses, while Hero Honda, Bharti Airtel, BHEL and TCS closed with gains.
The major losers were Jaipra Asso (3.20 pc), Bajaj Auto (2.72 pc), M&M (2.71 pc), Tata Steel (2.64 pc), DLF (2.58 pc), ONGC (2.36 pc), REL Infra (2.10 pc), HDFC (2.01 pc), Jindal Steel (1.87 pc), ITC (1.79 pc), ICICI Bank (1.70 pc), Hindalco (1.66 pc), REL Com (1.54 pc), SBI (1.20 pc), Infosys Tech (1.05 pc) and RIL (0.46 pc).
Among the sectoral indices, BSE—Realty dipped 1.47 per cent, Metal (1.45 pc), Bankex (1.18 pc), FMCG (1.02 pc) and Oil & Gas (0.97 pc).
The total BSE market breadth was negative with 1,713 stocks losing ground, while 1,052 finished with gains. The total turnover dropped to Rs 2,112.54 crore from Rs 2,840.44 crore last Friday.