The Indian markets fell on Wednesday, erasing early gains, as November inflation numbers that came in line with expectations suggested it may not be prudent for the Reserve Bank of India to cut rates at its upcoming policy meeting coming Friday.
India's annual inflation fell to a one-year low in November but remained above 9 percent for the 12th consecutive month, government data released today showed, prompting analysts to scale back expectations of a CRR cut.
Nevertheless, the central bank is widely expected to hold rates steady after raising interest rates 13 times since early 2010 to check inflation. The apex bank said in its October meeting that more hikes might not be required, if the inflation trajectory conforms to projections.
The benchmark 30-share Sensex reversed early gains to finish the day down 121 points or 0.76 percent at 15,881, with 23 of its components retreating.
NTPC, Sterlite Industries, HDFC, Coal India, Mahindra & Mahindra, DLF, Tata Steel and Tata Power led the decliners in the Sensex pack, falling 2-4 percent, while Sun Pharma rose 1.7 percent, ITC gained 1.2 percent and Bharti Airtel added 0.7 percent.
The 50-share Nifty index fell 37 points or 0.78 percent to 4,763, while the BSE mid-cap and small-cap indexes ended down 0.9 percent and 0.8 percent, respectively.
With inflation moderating, India needs to turn its focus to reviving economic growth as quickly as possible, finance minister Pranab Mukherjee said. Echoing a similar view, Kaushik Basu, the nation's chief economic adviser, said growth must be the focus over the next few months. He expects food inflation to drop to 3 percent within a month.
ONGC lost 1.3 percent despite reports that the state-run oil explorer has struck gas deposits near Hortoki village in northwest Mizoram. BEML edged down 0.4 percent on a report that it plans to set up an assembling unit for mining equipment in Indonesia.
Reliance Capital plunged over 4 percent as a parliamentary panel rejected government proposal to hike the foreign direct investment limit in the insurance sector. Areva T&D India plummeted nearly 24 percent on demerger news.
Tata Teleservices closed 2.6 percent higher on reports that Japanese telecommunications company NTT DoCoMo may raise its stake in the Indian telecom firm to 35 percent from 26 percent in the next four months.
Dish TV India rallied 3.1 percent and Hathway Cable & Datacom posted a modest 0.3 percent gain after the Lok Sabha passed a bill aimed at digitizing the cable sector by December 31, 2014. Private-sector lender Kotak Mahindra Bank rose 0.4 percent after a unit of the bank said it raised Rs.523 crore from domestic investors to invest in residential projects.
Meanwhile, credit rating agency Moody's Investors Service said that the rupee's recent slump is exerting only a moderate impact on the Indian companies it rates.
On the global front, Asian and European stocks fell on Wednesday, commodities eased and the euro languished near a two-month low against the greenback, as euro zone debt worries escalated and the U.S. Federal Reserve refrained from offering new initiatives to help a slowly recovering U. S. economy
German Chancellor Angela Merkel told a meeting of her ruling party Tuesday that the nation will reject plans for increasing the upper limit of the European bailout fund, sparking fresh worries about Europe's still-unresolved sovereign debt crisis.
The Federal Reserve held its key benchmark lending target at 0.25 percent as expected, but refrained from announcing new measures to stimulate growth and offset the effects of worsening European debt crisis. A disappointing report on U.S. retail sales and mounting concerns over China's economy also prompted investors to shun riskier assets.
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Market Analysis
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.