Sensex closes 203 pts down on likely RBI inaction, EU woes

The BSE Sensex and NSE Nifty tanked more than 1% on Thursday as rising inflation for May diminished hopes of aggressive monetary easing, and weak European markets also added fuel to the fire.

The BSE benchmark fell as much as 221 points intraday, before closing down 202.63 points at 16,677.88, which shot up more than 900 points in previous seven out of eight sessions. Meanwhile, the NSE benchmark slipped 66.70 points or 1.3% to 5,054.75.

Banks, capital goods, metals, auto and power stocks took a beating.

Inflation for May rose to 7.55% as against 7.23% in previous month that certainly dampened hopes of aggressive rate-cut by the Reserve Bank of India in its mid-quarter policy review on June 18, say experts. However, experts still feel the RBI may surprise on Monday.

CRISIL Research has revised its average inflation forecast for 2012-13 up to 7 per cent, from its previous expectation of 6.5% that reflects the higher-than-anticipated increase in food inflation, and the impact of the weak currency on imported component of inflation.

"Although overall inflationary pressures continue to remain high, the Reserve Bank of India could announce a rate cut in its mid-quarter monetary policy review on June 18, aimed at lowering cost of credit and reviving business sentiments in the scenario of weakening growth," says CRISIL.

SL Bansal, CMD of Oriental Bank Of Commerce feels the RBI can offer 25 bps cut in CRR and 25 bps cut in repo rate.

Country's largest lenders State Bank of India and ICICI Bank crashed 3-3.5% while their rival HDFC Bank was down 1.5%. PNB tumbled 5.5% as it traded ex-dividend today.

Housing finance company HDFC declined 1.6% after Macquarie downgraded the stock to underperform from outperform with a target price of Rs 550, which is a cut of 30%.

Top commercial vehicle maker Tata Motors topped the selling list among Sensex 30, losing 4.56% ahead of JLR release.

Engineering and construction major by sales Larsen & Toubro plunged 4% while state-owned capital goods company BHEL slipped 1.5%.

India's largest car maker Maruti Suzuki dropped 2.6% and top telecom operator Bharti Airtel was down 0.75%.

However, software services exporter Infosys outperformed, rising 1%. Shares of ITC, Cipla and Sterlite Industries too gained.

Declining shares outnumbered advancing by 1015 to 406 on the National Stock Exchange.

In the second line shares, Pantaloon Retail, Ashok Leyland, PFC, Educomp Solutions, IFCI and Reliance Power were down 3-5%.

Chambal Fertiliser lost 3% after cabinet deferred a proposal to hike urea prices.

European markets edged lower ahead of Greek auction over the weekend. Rising Spanish bond yields to record high also dampened mood. France's CAC, Germany's DAX and Britain's FTSE fell nearly 1%. Spain's 10-year bond yields hit a euro-era record of 7% mark for the first time.

At 11:46 hours IST: Nifty, Sensex drop 1%; Infosys, ITC outperform

The BSE Sensex and NSE Nifty fell 1% each in afternoon trade due to further fall in rate sensitives, after rising inflation trimmed rate-cut hopes.

The 30-share BSE benchmark tumbled 166.58 points to 16,713.93 and the 50-share NSE benchmark lost 57 points to 5,064.45.

The Indian rupee too was moving towards the 56 level that depreciated by 19 paise to 55.87 as against the US dollar.

Inflation rose to 7.55% for May as against 7.23% in previous month and economists say, even core inflation increased to 4.86% versus 4.77% month-on-month.

Today's number has diminished the chance of a rate cut, says Dipan Mehta, member BSE,NSE. He said the equity market will now react to Greece and other global actions. But HDFC Bank chief economist Abheek Barua believes a rate cut is coming. "A case for rate cut has been built on the back of GDP and IIP numbers as well. May inflation numbers just add to the case," he said.

The BSE Bank and Capital Goods indices dropped 2.5% each. State Bank of India and ICICI Bank, major lenders in India plunged 3% each.

Top commercial vehicle maker Tata Motors and engineering and construction major by sales L&T tanked 4%.

Shares of country's largest power producer NTPC crashed 3.6% while private power producer Tata Power was down nearly 3%.

Index heavyweight Reliance Industries and state-owned oil & gas producer ONGC went down 0.6% each.

However, software services exporter Infosys and cigarette major ITC rose 1% and 0.6%, respectively.

About two shares declined for every share rising on the National Stock Exchange.

On the global front, European markets too extended losses after initial flat trade. France's CAC, Germany's DAX and Britain's FTSE fell 0.7-1% ahead of an Italian bond auction of euro 4.5 billion today and Greek election over the weekend.

At 13:55 hours IST: Sensex, Nifty at day's low; banks, cap goods extend losses

Indian equity benchmarks stayed lower due to fall in banks, capital goods, oil & gas and power stocks. European markets too were trading marginally lower on Thursday as Moody's downgraded Spain, ahead of an Italian bond action.

The BSE benchmark dropped 134 points to 16,746.43 and the NSE benchmark slipped 46.5 points to 5,075 amid choppy trade after rise in inflation to 7.55% for May as against 7.23% in previous month.

Experts feel the market was expecting fall in inflation that would be trigger for rate cut, but inflation both WPI and crore at higher level dampened hopes of further monetary easing by the Reserve Bank of India in its mid-quarter policy review on June 18.

However, experts immediately said the central bank might surprise like the previous policy.

Dipan Mehta, Member BSE and NSE said, "Certainly it's been a bit of a dampener, but RBI has its own thinking and sometimes they tend to surprise the market more often these days than before. So let's just keep our fingers crossed and hopefully there will be something positive on Monday."

Country's largest lenders ICICI Bank and State Bank of India extended losses, falling 2.66% and 3.66%, respectively while their rival HDFC Bank was down 0.7%.

Engineering and construction major by sales Larsen & Toubro and top power generation company NTPC were down 4% and 3%, respectively.

Top commercial vehicle maker Tata Motors tanked 3% and private power producer Tata Power slipped 2%.

However, country's largest software services exporter TCS and Infosys outperformed, rising 0.5-1%. Cigarette major ITC went up 1.4%.

France's CAC and Britain's FTSE fell 0.8% each with caution prevailing among investors as rating agency Moody's downgraded Spain by 3 notches to Baa3 from A3, ahead of an Italian bond auction of euro 4.5 billion in later part of the day today and the Greek election on June 17. Germany's DAX declined 0.4%.

At 12:27 hours IST: Sensex falls 100 pts as May inflation trims rate-cut hopes

The Sensex and Nifty extended losses amid volatility after inflation rose to 7.55% for May as against 7.23% in previous month that somewhat dampened hopes of rate cut. Even WPI inflation revised higher to 7.69% for March as against 6.89% (provisional).

Dipan Mehta, Member BSE and NSE feels today's number certainly diminished the chances of a rate cut. "Markets are expecting this inflation number to act as a bit of a trigger to take the benchmarks to higher level and perhaps consolidate this upmove, which we have seen over the past 8-10 trading sessions. So in that respect certainly it's been a bit of a dampener."

The BSE benchmark fell 59.06 points to 16821.45 after earlier losing as much as 112 points. Meanwhile, the NSE benchmark slipped 24 points to 5,097.55. The Indian rupee too depreciated by 9 paise to 55.77 as against the US dollar.

Country's largest lenders State Bank of India and ICICI Bank dropped 1.7% and 2.3%, respectively while their rival HDFC Bank was down 0.7%.

Engineering and construction major by sales Larsen & Toubro tumbled 2.6% and top commercial vehicle maker Tata Motors tumbled over 2%.

State-owned power generation company NTPC plunged 3%, falling for second consecutive session today after company started reducing capacity due to coal shortage.

Top telecom operator Bharti Airtel and state-owned capital goods company BHEL were down 0.9% each.

Oil & gas producers Reliance Industries and ONGC were marginally lower.

However, cigarette major ITC and software services exporter Infosys outperformed, rising 1% each.

At 11:45 hours IST: Volatile Sensex, Nifty flat; SBI, ICICI Bank most active

The BSE Sensex and NSE Nifty continued to hover around previous closing values since yesterday, even after Asian markets extended losses. Shanghai and Hang Seng fell 0.7% each. Nikkei and Straits Times dropped 0.3% each while Taiwan Weighted was down 0.2%.

The BSE benchmark was up 30.98 points at 16,911.49 and the NSE benchmark rose 4.4 points to 5,125.85. Even the Indian rupee was rangebound around 55.60-55.70.

Cigarette major ITC and country's second largest software services exporter Infosys rose 1% each.

Index heavyweight Reliance Industries was up 0.35% whereas its rival state-owned oil & gas producer ONGC slipped 0.3%.

Private sector lender HDFC Bank and housing finance company HDFC gained 0.4% each.

Top car maker Maruti Suzuki and country's largest two-wheeler major Hero Motocorp were up over 1%. Two-wheeler major Hero Motocorp moved up 0.8% while commercial vehicle manufacturer Tata Motors lost 0.9%.

However, engineering and construction major by sales Larsen & Toubro tanked nearly 2%, though it showed some recovery from day's low.

India's largest lenders State Bank of India and ICICI Bank were down 0.5% and 0.8%, respectively on the back of profit booking.

Top telecom operator Bharti Airtel slipped 0.5% and power generation company NTPC was down nearly 2%.

In the second line shares, Edelweiss Capital, Shree Global, National Fertiliser, Rashtriya Chemical and Parsvnath Developers rallied 3-6.5% whereas Bank of Maharashtra, Anant Raj Industries, United Bank, Educomp Solutions and Ipca Labs fell 2.6-3.6%.

Declining shares outnumbered advancing by 698 to 573 on the National Stock Exchange.

Glodyne Technoserve was among the top five most active shares on BSE with 3,48,075 shares. The stock shot up nearly 9%.

SBI, ICICI Bank, L&T, Tata Motors, Axis Bank and IRB Infra too were most active shares on exchanges.

At 10:22 hours IST: Sensex rangebound awaiting inflation data; L&T down over 2%

Indian equity benchmarks stayed rangebound after shooting up quite sharply since last week ahead of major event - RBI mid-quarter policy review on June 18. The market has been hoping for at least 50 basis points cut in repo rate or cash reserve ratio after looking at sluggish economic growth since last few months.

Experts feel the 25 basis points cut in repo already priced in by the market. However, they also believe that the market may fall sharply if the RBI won't cut repo rate by 50 basis points.

The market is closely watching inflation data that will be announced today. CNBC-TV18 poll sees inflation around 7.4% as against 7.23% for April.

The 30-share BSE Sensex fell 21.68 points to 16,858.83 and the 50-share NSE Nifty declined 10 points to 5,111.45.

Engineering and construction major by sales Larsen & Toubro tanked over 2% on profit booking as it had rallied on reports that Mitsubishi Heavy Industries may be buying stake in its subsidiary L&T Shipbuilding.

Country's largest lenders State Bank of India and ICICI Bank were down around 1% on profit taking while their rival HDFC Bank was down 0.4%.

Top commercial vehicle maker Tata Motors and state-owned oil & gas producer ONGC dropped 0.76% each. Top telecom operator slipped 1%.

India's largest power generation company NTPC lost 1.6%, falling for the second consecutive session after the company said it started reducing capacity due to coal shortage.

However, software services exporters Infosys and TCS gained 1% and 0.4%, respectively.

Index heavyweight Reliance Industries, and FMCG majors ITC and HUL were up around 0.5%.

Auto stocks barring Tata Motors bounced back - M&M and Maruti Suzuki rose 1% each. Largest two-wheeler majors Hero Motocorp and Bajaj Auto moved up 0.6% each.

At 9:20 hours IST: Sensex, Nifty flat for 2nd consecutive day; banks down

The BSE Sensex and NSE Nifty started off trade on a flat note for the second consecutive session after rising more than 5.5% since last week. The market has been in a consolidation mode ahead of big events like inflation today, Greece election on Sunday and RBI mid-quarter policy review on Monday.

The BSE benchmark rose just 17.33 points to 16,897.84 and the NSE benchmark was up 1.75 points at 5,123.20.

Banks were seeing profit booking after rallied since last week on rate cut hopes. PNB, SBI, Axis Bank, Bank of Baroda, ICICI Bank and Kotak Mahindra Bank were under pressure.

However, Coal India, Maruti, ITC, Tata Motors, M&M, ONGC, Tata Steel, Cairn India and Reliance Industries were on buyers' radar.

The broader markets were flat and the market breadth was neutral.

In the second line shares, RCF, NFL and Chambal Fertiliser were up 3.5-4.5% after CNBC-TV18 reported quoting sources that CCEA (in a meeting today) will consider proposal for urea price hike of 10%. Cormandel International rose 1.5%.

Hotel Leela was up 2% after The Financial Express reported that lenders allowed Hotel Leela to rejig Rs 4,300 crore debt.

Moser-Baer rallied 4.5% as the company is mulling restructuring of FCCBs in near future. FCCBs issued in 2007 are due for maturity on June 21.

UB Holdings continued to rally, rising 4.5% after gaining 20% yesterday.

Parsvnath Developers, Indiabulls Power, Sun TV, Great Offshore, IVRCL and Voltas gained 1-3%.

However, Canara Bank and Bank of Maharashtra were down 2-3%.

On the global front, Asian markets too were rangebound, even after ongoing eurozone concerns and weak US data yesterday. All eyes are on euro 4.5 billion Italian auction of longer dated paper today.