Sensex falls 60 points; bank stocks decline on rate fears
Mumbai: The benchmark Sensex on Tuesday snapped five days of gains and slipped 60 points as bank stocks fell on expectations rising inflation would increase the chances of an interest rate hike.
The 30-share S&P BSE Sensex started on a positive note and rose to 20,759.58, the highest intra-day level since November 11, 2010. Brokers said the gains came after Reliance Industries posted better-than-expected second-quarter results.
However, the index then fell and ended at 20,547.62, a loss of 59.92 points or 0.29 percent. The gauge had gained 712 points in the previous five sessions.
The broader CNX Nifty index on the National Stock Exchange lost 23.65 points, or 0.39 percent, to 6,089.05.
Brokers said sentiment weakened as the wholesale inflation rate climbed to a seven-month high, raising concerns about a possible increase in the repo rate. With WPI inflation at 6.46 percent in September, analysts expect the Reserve Bank of India to hike the repo rate by 25 basis points.
They said cautious investors reduced positions in banking and interest rate-sensitive sectors as some of them fell from record highs.
Tata Motors retreated from a record, losing 0.45 percent to Rs 389.10. HDFC Bank fell 2.37 percent to Rs 651.40, State Bank of India dropped 2.09 percent to Rs 1,621.55 and ICICI Bank lost 1.98 percent to Rs 975.45.
The banking sector index declined the most, losing 2.59 percent, followed by the realty index which fell 1.6 percent. The consumer durables index lost 1.2 percent and capital goods 0.75 percent.
Of the 30 Sensex shares, 17 declined.