Markets fall as inflation rises; banking shares hit

The benchmark Sensex on the Bombay Stock Exchange today closed with a moderate gain of over 20 points after an onslaught of selling — triggered by a rising inflation — in banking, FMCG and consumer durable counters in the fag-end of the session erased the early gains.

The 30-share index rose by a sharp over 150 points in early trade after reports came in that Abu Dhabi agreed to give $10 billion to Dubai to help tide over a crisis of an immediate payment by troubled Dubai World's realty arm Nakheel, whose Islamic bond is maturing today.

However, the index ended at 17,097.55, up by just 21.48 points or 0.13% from its last close as profit-booking emerged at existing levels.

Marksmen said profit-booking emerged after inflation trebled to 4.78% in November. Investors fear Reserve Bank in its attempt to arrest rising prices might adopt tight monetary measures which could lead to higher interest rates.

"Market was expecting an inflation of 4.1-4.2%. But the inflation numbers came as a shock and the banking stocks plunged sharply," said Ashika Stock Brokers Research Head Paras Bothra.

OBC, IDBI Bank, Canara Bank, YES Bank, BoI, Allahabad Bank, HDFC Bank and ICICI Bank were the major losers.

Last week, a promising 10.3% in October has failed to enthuse marekts, marketmen noted.

IT stocks escaped selling amid hopes that there would be spurt in outsourcing developed economies in the wake recovery signs. Wipro and Infosys made gains of 2.23% and 1.76% respectively.

"IT stock remained positive as rupee slipped against dollar. Cement stocks too gave the markets support due to rising demand and a possible rise in cement prices," Geojit BNP Paribas Financial Services Research head Alex Mathews said.

The NSE 50-Share Nifty also dropped by 11.60 points or 0.23% to close at 5,105.70 from its last weekend's close of 5,117.30.

Asian stocks rebounded positive Dubai news. The key benchmark indices in China, Hong Kong, Taiwan, South Korea and Singapor rose by between 0.31% to 1.71% while indices in Japan and Indonesia were down by between 0.02% and 0.72%.

European shares extended their wining streak today to three-sessions. The indices in France,Germany and UK rose by between 0.89% and 1.13%.

Major Sensex losers were Bharti Airtel at 3.47%, Hind Unilever at 1.76%, HDFC Bank at 1.53%, ITC at 1.49% and ICICI Bank at 1.49%.

However, ACC rose by 5.33%, Grasim by 2.84%, Wipro by 2.23%, BHEL by 1.94%, Infosys Tech by 1.76% and Maruti Suzuki by 1.06%.

The market breadth was negative as 1,670 shares ended with losses and 1,167 finished with gains at BSE.