Across-the-board selling on Friday on mounting speculation that the RBI will hike interest rate and the US Fed will trim its economic stimulus next week shaved off over 210 points of benchmark Sensex, which posted its biggest weekly loss in five.
Investor wealth fell by Rs 75,000 crore as overall 1,575 stocks slid out of the 2,610 traded on the BSE. In its fourth straight fall after hitting its lifetime peak on Monday, the Sensex closed at 20,715.58, down 210.03 points or 1%.
ICICI Bank, BHEL and Tata Power were the biggest losers in the 24 stocks that fell in 30-share index.
In 4 days, the Sensex has lost 611 points, eroding almost all the gains logged in the recent state election-fuelled rally.
For the week, the barometer shed 280.95 points, the biggest loss since week ended November 8.
Eleven out of the twelve sectoral indices closed in red.
Banking, capital goods and realty shares were among the worst hit after government data yesterday showed retail inflation soared to a nine-month high of 11.24% and factory output shrank 1.8%.
"While growth is stabilising, it remains soft. However, the main concern for the RBI will be inflation, which may well compel it to raise the policy rate again next week by 25 bps," said HSBC Global Research said.
The 50-share NSE index Nifty fell by 68.65 points, or 1.10%, to 6,168.40 as 43 constituents slipped. Also, SX40 index of MCX-SX shed 117.37 points to end at 12,315.20.
Mirroring the fall in stocks, the rupee fell over 35 paise to 62.19 versus US dollar in late trade today.
Global markets were nervous as investors prepared for the US Federal Reserve's decision next week on whether to reduce its USD 85-billion-a-month monetary stimulus.
Strong US retail sales and signs of an imminent budget agreement in Congress have cemented fears that the Federal Open Market Committee meeting on December 17-18 might decide to start reducing its monthly financial asset purchases.
Sectorally, the BSE Banking sector index suffered the most by losing 2.25%, followed by BSE Power index by 2.22%, BSE Realty index by 2.10% and BSE Capital goods index by 1.86%.