Profit booking after a rally in the previous session dragged the Indian market sharply lower on Thursday. Weakness in global markets along with rising inflationary pressures also weighed on the market.
India's annual food inflation rose by 17.56% in the week ended January 23, up from 17.40% in the previous week, data released on Thursday showed. The inflation figures strengthened the case for rate hikes and more fiscal steps in the forthcoming budget. Analysts said decontrolling of fuel prices if implemented as suggested by a government panel would further drive the inflation rate.
After a flat opening, the benchmark Sensex fell to a low of 16,189 before finishing at 16,225, down 271 points or 1.64% and the Nifty dropped 86 points or 1.75% to 4,845.
The BSE mid-cap and the small-cap indexes fell by 1.95% and 1.61%, respectively, after showing some resilience in early trading. The market breadth on the BSE was extremely negative, as decliners outnumbered gainers by 2002 to 836. Sector-wise, rate-sensitive realty and commodity-driven metal stocks bore the brunt of the selling followed by auto, IT and telecom stocks.
Defensive stocks like Hindustan Unilever, Tata Tea and Colgate Palmolive also ended in the red, but diversified business conglomerate ITC and two-wheeler maker Hero Honda Motors closed in positive territory with modest gains.
State-run oil firms closed mixed after the Kirit Parekh committee submitted its much-awaited report to the oil ministry on Wednesday. BPCL edged up 0.35%, IOC rose 0.16%, ONGC gained 0.56% and GAIL India advanced 3.14%, but HPCL slipped 0.84% and Oil India declined 0.98%
In the metal pack, Hindalco, Hindustan Zinc, Ispat Industries, NALCO, Tata Steel and Sterlite Industries fell by 4%-6%, taking cues from weak base metal prices.
In the banking space, SBI fell 2.45%, ICICI Bank declined 1.06%, HDFC Bank slipped 0.19% and Axis Bank shed 2.14%.
Among auto stocks, Tata Motors tumbled 4.36%, Mahindra & Mahindra fell 3.30%, Bajaj Auto declined 1.56% and Maruti Suzuki eased 1.24%, while Ashok Leyland rose 0.67% after posting a 222% jump in January sales.
India's largest mobile-phone operator Bharti Airtel fell 1.56% on news no decision had been made on the timing of the 3G auction yet. Reliance Communication tumbled 3.60%, Idea Cellular declined over 2% and Tata Teleservices ended down nearly 3%.
State-run power producer NTPC fell 1.07% after its follow-on public offering received weaker-than-expected investor response. Cement giant ACC, which recommended a final dividend of Rs.13 per share, ended down 2.90%.
Export revenues for the Indian IT-BPO sector would grow by 5.5 percent this year before rising by 13-15 percent in the next fiscal year, industry association Nasscom said. Infosys fell around 2%, TCS declined 1.51% and Wipro shed 2.55%.
Dalmia Cement (Bharat) fell 1.24% after it raised its stake in OCL India to 45.4 percent. SEAMEC slipped 1.31% after it decided to set up a wholly-owned subsidiary in Dubai Airport Free Zone.
Advanta India soared 4.35% after its American unit acquired the assets and business of U.S.-based Crosbyton Seed Company for an undisclosed amount. Aurobindo Pharma advanced 1.79% after receiving the U.S. FDA approval for an anti-allergic drug.
Elsewhere, most Asian stocks fell on Thursday after commodity prices declined, Australian retail sales unexpectedly fell in December, and New Zealand's Q4 jobless rate jumped to a 10 1/2 year high.
The key benchmark indexes in China, Japan, Australia and Hong Kong ended down by between 0.28% and 1.84%, while South Korea's KOSPI ended flat with a positive bias.
After a positive start, the European markets turned negative in early trading ahead of interest rate decision from the European Central Bank and the Bank of England along with factory orders data from Germany later in the day, and trading in U.S index futures now indicate that the Dow could fall 63 points at the opening bell on Wall Street Thursday morning.
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