Sensex dips 151 pts on Wipro results, 'sticky' inflation
The BSE Sensex erased early gains today and dipped 151 points to 18,502 on across-the-board selling, partially triggered by weak Q1 results and guidance by IT major Wipro and interest rate hike worries after the government said inflation will remain sticky till December.business Updated: Jul 20, 2011 18:01 IST
The BSE Sensex erased early gains today and dipped 151 points to 18,502 on across-the-board selling, partially triggered by weak Q1 results and guidance by IT major Wipro and interest rate hike worries after the government said inflation will remain sticky till December.
Besides Wipro, which lost 4%, other Sensex heavyweights like RIL, ICICI Bank, HDFC Bank, TCS, Hindalco, Tata Power and Jaiprakash industries were all down.
In all, 12 of the 13 sectoral indices closed in the red, while only FMCG ended in the green due to rise in ITC. Power, pharma, capital goods, auto and banking were hit the most.
Brokers said that besides weak Wipro guidance, a Finance Ministry note saying that inflation will remain "sticky" till December signalled that RBI may be aggressive in hiking key rates at its monetary policy review next week, weighing down the market sentiment.
Inflation was 9.44% in June, much above RBI's comfort level of 5-6%.
The Bombay Stock Exchange 30-share index, Sensex, opened firm and touched a high of 18,765.60 on strong Asian trends.
However, selling after morning session pulled it down to close at 18,502.38, down 151.49 points or 0.81%. On Tuesday, it had gained 146.83 points or 0.79%.
The broader NSE 50-issue Nifty also dropped by 46.50 points or 0.83% to 5,567.05.
"Wipro's Q1 FY'12 results were marginally below expectations. The guidance of a 0-2% growth in organic revenues in Q2 was a negative surprise," said Kotak Securities senior vice president Dipen Shah.
CNI research head Kishor Ostwal said despite all positive signals from global markets, Dalal street ended in the negative territory on profit booking as Wipro's guidance was below expectation.
"Indian market today shrugged off the gains of the Asian and European market on worries over quarterly earnings," said Religare Securities head (Retail Research) Rajesh Jain.
He said that worries over 'sticky inflation' and high interest rate regime have been weighing on investor sentiment.
Asian markets, excepting China, closed with gains. The key benchmark indices in Hong Kong, Japan, Singapore, South Korea and Taiwan closed up between 0.46% and 2.13% while from China declined by 0.10%.
European stocks too were trading firm in their afternoon trade. A meeting of euro-zone leaders is scheduled tomorrow to finalise a bailout package for Greece.
Back home, FIIs, after slight selling on Monday, turned buyers and picked up shares worth Rs 293.29 crore yesterday as per provisional data.
In all, 26 out of 30 Sensex-based scrips finished with losses while others closed with gains. Wipro, the third largest software exporter of the country, was the top loser from the Sensex pack with a fall of 3.95% following muted 1% growth in bottom line in the first quarter.
It was followed by Hindalco, which dipped 2.71%, Jaiprakash Asso (2.51%), Tata power (1.98%), Hero Honda (1.90%), NTPC (1.83%), M&M (1.59%), HDFC Bank (1.56%), SBI (1.56%), ICICI Bank (1.55%), Tata Motor (1.55%), BHEL (1.28%), HDFC (1.03%) and Reliance Infra (1.01%).
From the sectoral indices, BSE-Power tumbled by 1.73%, Healthcare (1.71%), Capital Goods (1.45%), Auto (1.42%) and Bankex (1.34%).
The total market breadth at BSE turned negative as 1,696 stocks ended in the red, as against 1,195 that settled in the green. The turnover rose further to Rs 3,165.65 crore from Rs 2,863.12 crore on Tuesday.