Sensex snaps three-day gain; falls 111 pts
A steep fall in auto and rate-sensitive stocks cut short the BSE benchmark Sensex's three-day gaining streak today, with the 30-share index shedding 111 points amid fears of an RBI rate hike tomorrow.business Updated: Jul 26, 2010 17:27 IST
A steep fall in auto and rate-sensitive stocks cut short the BSE benchmark Sensex's three-day gaining streak on Monday, with the 30-share index shedding 111 points amid fears of a probable RBI rate hike on Tuesday.
Nevertheless, the Bombay Stock Exchange barometer managed to end above the psychological 18,000-level at 18,020.05, down 110.93 points, or 0.61 per cent.
The wide-based 50-share Nifty index of the National Stock Exchange, too, finished 0.64 per cent down at 5,414.30.
Analysts said the disappointing results from Maruti and Jaiprakash Associates offset an upgrade of the country's sovereign currency rating by ratings agency Moody's in light of India's commitment to economic and fiscal reforms.
According to the analysts, the market sentiment was cautious ahead of the Reserve Bank's key policy meet on Tuesday, where the central bank is expected to announce a rate hike to tame inflationary pressure.
Ahead of its June quarter numbers, Reliance Industries, which carries the maximum weight in the Sensex, ended 0.76 per cent lower at Rs 1,052.05. Marketmen said RIL numbers and RBI action will define the market trend on Tuesday.
"In what was a rarity in recent memory, India was one of the few markets in Asia that closed in the red, while the rest of the region posted decent gains in the wake of the mostly positive outcome of bank stress tests in Europe and Friday's rally on Wall Street," IIFL V-P (Research) Amar Ambani said.
Maruti Suzuki plunged 12.31 per cent, the most in Sensex, to close at Rs 1,191.05, after it posted below expected profit for the June quarter.
"An unexpected increase in the royalty payment by Maruti led to a 20 per cent drop in June quarter profits to Rs 465 crore," brokerage firm PINC said in a note. The auto major has raised royalty and technology fees to its parent Suzuki from about 3.4 per cent to 5.1 per cent.
Other auto stocks also witnessed selling pressure. Hero Honda sank 7.46 per cent. Marketmen said investors dumped Hero Honda on apprehension that its Japanese JV partner, Honda, might sell a part of its stake in the two-wheeler major.