Sensex down 210 points on RBI rate hike speculation

With markets expecting a rate hike when the Reserve Bank of India (RBI) reviews its monetary policy next week, the benchmark indices dipped again by around one per cent and the rupee closed lower against the dollar on Friday.

As the RBI Governor Raghuram Rajan indicated that he is not comfortable with the rising inflation, especially retail inflation, market participants believe that a rate hike is imminent despite fall in growth rate.

Rupee weak

The rupee closed at 62.13 a dollar on Friday compared to its previous close of 61.81 on Thursday. The rupee weakened to 62.28 intra-day.

The BSE 30-share Sensitive Index (Sensex) closed at 20715.58 with a loss of 210.03 or one per cent.

The rate sensitive bank stocks dragged down the indices by 2.25 per cent followed by power (2.22 per cent), realty (2.10 per cent), capital goods (1.86 per cent) and oil and gas (1.10 per cent).

Except information technology stocks all other sectoral indices ended in the red. On BSE, the mid-cap stocks hit the worst with 1.26 per cent while small cap stocks were down by 0.95 per cent.

Among the broader indices, BSE 100 and BSE 200 dipped by 1.16 per cent per cent each and BSE 500 was down by 1.15 per cent.

The 50-share Nifty of the National Stock Exchange (NSE) lost 68.65 points to close at 6168.40.

“On the last trading session of the week, the Nifty was seen struggling from the beginning and kept the negative bias intact till the end. It was seen as reaction to double whammy of contraction in IIP and surge in retail inflation,” said Jayant Manglik, President-retail distribution, Religare Securities.

“Due to successive declines in the last four sessions, we may see some technical rebound on Monday especially in oversold positions,” said Mr. Manglik.

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