Mumbai: The BSE benchmark Sensex Wednesday fell for the first time in three days by slipping 169 points to 19,817.63, dragged down by auto, banking and realty stocks as rate cut hopes were dented by RBI Governor D Subbarao's view that inflation is "still high".
The 30-share Sensex fell by 169.19 points, or 0.85 percent to settle at 19,817.63. Rallying 324 points in previous three sessions, index had crossed 20,000-mark after two years in Tuesday's trade on the back of rate cut hopes, signs of corporate earnings and postponement of GAAR.
The broad-based NSE index Nifty also ended 54.75 points, 0.90 percent, lower at 6,001.85.
"When growth is slowing down you can stimulate the economy either by monetary easing or by fiscal stimulus, but both monetary and fiscal side have no room for stimulus... Inflation has come down, (it is) still high," Subbarao said while addressing students last evening in Lucknow.
RBI will meet on January 29 to review monetary policy.
With rate cut hopes dashed, ICICI Bank and SBI closed around 2 percent lower. Auto majors Tata Motors, M&M and Maruti Suzuki shed around 3 percent each in heavy selling.
Overall, 12 out of 13 sectoral BSE indices closed lower.
"Statement from RBI Governor D Subbarao indicating that inflation is still towards higher range dampened hopes of rate cuts and led to selling pressure in all major sectors," said Nidhi Sarswat, Senior Research Analyst, Bonanza Portfolio.
Among realty stocks, DLF shed 1.5 percent while Sobha Developers, Unitech and Anant Raj lost 3.7-4.5 percent in the BSE Realty index. Metal pack was also under pressure with Hindalco, which lost over 4.3 percent, the worst performer in Sensex. Tata Steel and Jindal Steel also closed lower.
Besides, a weakening trend in the Asian region and lower opening in European markets also triggered selling in Indian stocks. Shares of Infosys, which had been in the limelight in the past few sessions, succumbed to profit booking. However, TCS rose 1.03 percent.
On the global front, Asian markets, excepting Singapore which closed higher, finished with losses up to 2.56 percent.
European shares were also trading weak in their afternoon deals on lower Asian cues. The CAC was down by 0.31 percent, the DAX by 0.30 percent and the FTSE by 0.55 percent.
Back home, 24 of the 30 Sensex-based scrips closed with losses while others finished with gains.
Hindalco was the top loser from Sensex pack with a fall of 4.38 percent, followed by Maruti Suzuki (3.43 percent), Tata Motors (3.24 percent), Jindal Steel (3.11 percent), M&M (2.95 percent), SBI (2.25 percent), Tata Steel (2.16 percent) and Bajaj Auto (2.00 percent). ICICI Bank (1.98 percent), BHEL (1.61 percent), Tata Power (1.58 percent), Sun Pharma (1.35 percent), HDFC Bank (1.20 percent), ONGC (1.08 percent), HUL (1.08 percent) and L&T (1.03 percent) also witnessed losses.
However, RIL rose by 1.72 percent, followed by Dr Reddy's Lab (1.43 percent) and TCS (1.03 percent) among winners.
Among major losers in sectoral indices, the BSE-Auto dipped by 2.40 percent, BSE-Metal by 2.10 percent, BSE Bankex by 1.66 percent, BSE-Realty by 1.37 percent, BSE-CG by 1.17 percent and BSE-PSU by 1.17 percent.
The total market breadth was sharply negative with 2,001 stocks losing ground against 938 finishing with losses. The total turnover was slightly up at Rs 2,462.41 crore from Rs 2,450.40 crore on Tuesday.
Foreign institutional investors (FIIs) bought shares worth a net Rs 1,077.54 crore on Tuesday as per provisional data from the stock exchanges.