Mumbai: Equities took a beating of 300 points Friday to fall to a one-week low as investors saw odds of an early rate cut receding after inflation hardened in April amid fears that Sebi's move to tighten P-Note norms would hit foreign fund inflows.
Domestic shares, however, logged their first weekly gain in three on the back of quarterly earnings, which were so far in line with expectations, as Sensex rose 261.07 points or 1.03 percent and Nifty climbed 81.45 points or 1.05 percent in five days.
In a double whammy, government data yesterday showed that industrial production plunged to 0.1 percent in March, while retail inflation jumped to 5.39 percent in April.
"Weak inflation numbers caused speculation that Reserve Bank would hold off on cutting interest rates at its policy review next month, thus dampening investor sentiment," said Shreyash Devalkar, Fund Manager ? Equities, BNP Paribas MF.
This send the banking shares sharply lower with SBI, ICICI Bank, Axis Bank and HDFC Bank down by up to 2.29 percent.
Meanwhile, acting upon recommendations of an SIT on black money, Sebi is planning to tighten due diligence requirements for issuance and transfer of P-Notes and put the onus on investors to ensure compliance with anti-money laundering law.
The BSE Sensex stayed in the negative zone through out the day and touched a low of 25,400.27 before winding up 300.65 points or 1.17 percent down at 25,489.57, its weakest closing since May 6.
The 50-issue Nifty broke below the 7,900-mark by plunging 85.50 points or 1.08 percent to close at 7,814.90. Intra-day, it hovered between 7,784.20 and 7,881.00.
Broader markets too showed a downward trend with mid-cap and small-cap indices falling 0.58 percent and 0.25 percent, respectively.
In stock specific action, Dr Reddy's lost 2.08 percent to Rs 2,912.10 after the firm reported a 85.6 percent decline in consolidated profit to Rs 74.6 crore for the fourth quarter.
Shares of Eicher Motors fell nearly 4 percent after the company said two of its promoters and Eicher Goodearth Trust sold 4.2 percent stake in it for Rs 2,100 crore.
Overseas, Japan led decline in Asian equities after a disappointing earnings season while Europe edged lower as oil snapped a three-day rally.
Key indices in China, Hong Kong, Japan, Singapore, South Korea and Taiwan moved down by 0.31 percent to 1.41 percent.
France, Germany and the UK based shares dropped between 0.58 percent and 0.67 percent. In the domestic market, 27 scrips out of the 30-share Sensex ended lower.
Adani Ports was the biggest loser with a fall of 3.48 percent followed by HUL 2.58 percent, BHEL 2.50 percent, HDFC 2.45 percent, Tata Steel 2.36 percent, L&T 2.31 percent, ICICI Bank 2.29 percent, GAIL 2.15 percent, Dr Reddy's 2.08 percent and Bharti Airtel 1.84 percent.
However, Asian Paints rose 1.70 percent, Tata Motors gained 0.72 percent and ITC jumped 0.09 percent.
Among BSE sectoral indices, realty dropped 2.07 percent, followed by metal 2.04 percent, capital goods 1.57 percent, consumer durables 1.43 percent, bankex 1.25 percent and finance 1.25 percent.
The market breadth turned negative as 1,498 stocks closed lower, 1,050 finished higher and 174 ruled steady.
The total turnover fell to Rs 2,507.83 crore from Rs 2,650.92 crore yesterday.