Inflation trips mkt, Sensex closes at 12,430.40

Mumbai, Mar 16: The Sensex today plunged by 113.45 points on the Bombay Stock Exchange to end in the red at 12,430.40 after official data revealed a surge in inflation at 6.46 per cent, reigniting worries of further rise in interest rates.

''The market would have edged much lower than its intra-day low of 12,316.10 points, had it not been for the recovery staged by index heavyweight Reliance Industries and some IT pivotals,'' marketmen pointed out.

''Caution on the global bourses, ahead of key US inflation data, also weighed on the sentiment,'' analysts said.

Among the broader markets, the Nifty Index also slipped by 35.05 points on the National Stock Exchange (NSE) to settle at a low of 3608.55 from its previous close of 3643.60 points.

Official data released today showed that the wholesale price index rose 6.46 per cent in the 12 months to March 3 this year, up from the previous week's annual increase of 6.10 per cent due to higher edible oil and naphtha prices. The figure was higher than an expected 6.31 per cent.

Union Finance Minister P Chidambaram today said the government had asked the central bank to take monetary steps necessary to maintain price stability.

The Lok Sabha today passed the Banking Regulation (Amendment) Bill, 2007. The Bill is aimed at allowing more operational flexibility to the Reserve Bank of India in the conduct of monetary policy. The bill seeks to amend Section 24 of the Banking Regulation Act, 1949 to enable the RBI to specify the statutory liquidity ratio without any floor rate. At present banks are required to invest a minimum of 25 per cent of their deposits in government securities, as dictated by the statutory liquidity ratio (SLR).

On the other hand, European markets edged lower ahead of a key US data on consumer price index, which will be unveiled later in the day.

The Benchmark indices in London, Germany and France were down 0.2 - 0.4 per cent.

Stocks in China slipped into the red and Japanese stocks ended the day weak. Japan's Nikkei 225 average ended 0.69 per cent in the red and China's Shanghai Composite Index ended down 0.7 per cent.

UNI