Sensex dips below 19k on hike in RBI key rates; down 182 pts

Mumbai, Jan 25 (PTI) Trading sentiment turned bearish andthe Bombay Stock Exchange benchmark Sensex fell 181.83 pointsto 18,969.45 on heavy selling in pivotals led by banks afterthe RBI increased key policy rates to a two-year high andrevised upwards its inflation forecast.

Besides, investors unwound their pending positions in thederivatives segments ahead of the current month settlementexpiry, and a weakening global trend.

Opening on a higher note, the gauge climbed to 19,340.99before ending with losses as the Reserve Bank of India (RBI)raised the key lending and borrowing rates by 0.25 percentagepoints and forecast inflation at 7 per cent by March 31,higher than the earlier prediction of 5.5 per cent.

Similarly, the broad-based National Stock Exchange indexNifty lost 55.85 points to 5,687.40, after touching the day''shigh of 5,801.55, as the market remained under pressurefollowing the seventh time hike in interest rates in a rowwithin a year.

Barring Japan''s Nikkei, Asian stock markets closed lowerand a weak opening in Europe further dampened tradingsentiment here.

Retail investors and funds indulged in squaring up theirpending positions before the end of January settlement in thederivatives segment.

The banking sector index suffered the most by losing 2.34per cent to 12,349.75 with most of the big lenders like StateBank of India, ICICI Bank and HDFC banks closed with lossesdespite their better performance in the third quarter.

Fast Moving Consumer Goods sector was the second worstperformer losing 1.67 per cent to 3,487.72 as HindustanUnilever, the largest household products maker, plunged 5.45per cent to Rs 281.65, its steepest drop since July 2009 afterits Q3 profit fell as higher input costs reduced operatingmargins.

With the general weakening trend, the heaviest weightedReliance Industries dropped by Rs 12.50 to Rs 958.55 andsecond-heavy Infosys Technologies by Rs 24.10 to Rs 3,254.10.

A rise in stocks of Consumer Durables, Capital Goods andPower Sector, cushioned the market from a major fall.

The market will be closed tomorrow, the Republic Day. PTIRS SUN DP KPS SA