Sensex tanks 322 pts to close below 19k over rate hike fears

Mumbai, Jan 14 (PTI) The BSE benchmark Sensex nosedivedby 322 points to close below the 19,000-mark today as fears ofan imminent rate hike by the RBI gained credence following ajump in December inflation, prompting investors to abandoninterest-rate sensitive banking, realty and auto stocks.

Extending its losses for a second session, the 30-shareindex of the Bombay Stock Exchange plummeted by 322.38 points,or 1.68 per cent, to settle at 18,860.44 today -- a level lastseen on September 9, 2010.

In highly choppy trade, the barometer oscillated widelyduring intra-day trade, touching a high of 19,447.82 in theearly part of the session before sinking to a low of 18,811.96points.

The Sensex has lost nearly 674 points, or 3.44 per cent,during the past two trading sessions. During the January 10-14trading week, the Sensex has fallen by 831.66 points, or 4.22per cent, vis-a-vis the previous week''s closing level.

In a similar fashion, the National Stock Exchange''s wide-based Nifty index closed at 5,654.55 today, down 97.35points, or 1.69 per cent, vis-a-vis the previous close.

Marketmen said investors were spooked by a rise inDecember inflation to 8.4 per cent, besides a slowdown in FIIinflows and a weak opening on European bourses.

"December WPI at 8.4 per cent is in line with ourexpectation. However, the upward revision in October WPI toover 9 per cent is disconcerting. Consequently, we expect theRBI to resume policy tightening later this month with a 25 bpshike and a cumulative hike of 100 bps in 2011," IIFL EconomistAshutosh Datar said.

With massive selling across the board, all 13 sectoralindices on the BSE ended in negative terrain today. Realty,banking and auto stocks were the worst hit over fears thatearnings of these companies were likely to take a beating inthe event that the RBI tightened the monetary policy by hikinginterest rates for borrowing and lending by banks.

"Dalal Street is grappling with a dearth of FII inflowsand inflation showing no signs of easing, which means a ratehike is on the cards soon," Bonanza Portfolio Vice-President(Research�Equity) Avinash Gupta said.

Mortgage lender HDFC, despite reporting a nearly 33 percent jump in third quarter net profit, closed 3.95 per centlower today. In addition, a 4.16 per cent fall in privatesector lender HDFC Bank''s scrip was instrumental in theSensex''s decline.

ICICI Bank and SBI fared no better during the day, withtheir counters plunging by 1.64 per cent and 2.28 per cent,respectively.

In the auto segment, Tata Motors was the major loser,shedding 4.62 per cent, while Bajaj Auto slipped by 3.09 percent. .

In the realty sector, Jai Prakash Associates and DLF were the worst-hit by the market turbulence, losing 2.4 per centand 2.3 per cent, respectively.

Of the 30 companies in the Sensex pack, just five --including Tata Power and Wipro -- managed to buck the trendand end with moderate gains.

While Tata Power surged by 2.11 per cent, Wipro rose by1.77 per cent.

Metal stocks also lost their lustre amid the vitiatedmarket sentiment, despite rising commodity prices, withSterlite Industries shedding 3.45 per cent and Tata Steeldipping by 2.47 per cent today.

Weakness in global markets also dampened the sentimentback home. Asian markets ended mixed today, with China''sShanghai and Japan''s Nikkei ending subdued, while Hong Kong''sHang Seng closed with modest gains.

European bourses were also in the red in afternoontrade.