The key benchmark indices suffered a severe setback, sliding for the fourth day in a row, on rising fears of an interest rate hike by the central bank at a policy review scheduled later this month to cool inflation. The barometer index BSE Sensex and the 50-unit Nifty tumbled to their lowest level in three weeks.
Indian markets continued to fall for the fourth day on Friday, nosedived 493 pts to Day`s low of 19,629.22 amid rising worries about hike in interest rates and the likely impact on economic growth and increasing inflation. Sectorally, metal, auto, consumer durables, IT, FMCG were hammered badly. The least affected was the banking space.
At the start, the Sensex was momentarily in the positive only to slip on back of weak global cues and selling pressure in auto stocks. Later, steep fall was seen during the last half hour of trading when the Sensex touched the day`s low of 19,644 from the opening.
At the close, the benchmark 30-share index, BSE Sensex declined 493 points or 2.44% at 19,691.81 with 29 components registering drop. Meanwhile, the broad based NSE Nifty fell by 143.65 points or 2.38% at 5,904.60 with 51 components posting drop.
The BSE Mid and small caps underperformed their larger counterparts declining -2.65% and -2.97% respectively.
The major losers in the BSE Midcap were Aban Offshore (3.74%), Core Projects and Technologies (3.7%), Alstom Projects India (3.64%), A I A Engineering (2.9%) and Ackruti City (2.65%).
The major losers in the BSE Smallcap were A B G Shipyard (5.35%), Aarti Industries (5.07%), Abhishek Industries (4.12%), INEOS ABS (India) (3.32%) and A B G Infralogistics (0.7%).
Market breadth was negative with 619 advances against 2,397 declines. NSE's volatility index, India VIX, surged to 20.82% from Thursday's (6 January 2011) close of 18.20%.
The market sentiment was weak as data showing a surge in food inflation in late December 2010 rekindled fears of interest rate hike by the Reserve Bank of India (RBI). Food inflation accelerated to the highest level in more than a year in late December 2010. The food price index rose 18.32% and the fuel price index climbed 11.63% in the year to 25 December 2010.
