Sensex drops 217 points on sell-off in banking, pharma stocks; Nifty closes below 11,000

Mumbai: The benchmark BSE Sensex dropped by around 218 points or 0.60 percent due to sell-off in banking, pharma, and metal stocks as investors turned cautious after wholesale inflation surged to a four-year high.

The broad-based Nifty cracked below the 11,000-mark as 35 of its constituents closed in the red, led by Dr Reddy's, Tata Steel and Lupin.

Most of the Asian markets were down as data showed growth in China's economy slowed in the second quarter amid concerns over the impact of heated China-US trade war.

The 30-share index opened on a positive note but gave in gains due to inflation concerns and closed at 36,323.77, down 217.86 points, or 0.60 percent. In the intra-day, it also hit a low of 36,298.94. The index had shed 6.78 points in the previous session on Friday after scaling a lifetime high of 36,740.07 (intra-day).

The 50-share NSE Nifty settled down by 82.05 points, or 0.74 percent, at 10,936.85. Intra-day, it touched a low of 10,926.25 and a high of 11,019.50.

"Surge in inflation and weak global cues influenced investors to book profit from the recent rally while IT index maintained the uptrend followed by earnings," Vinod Nair, Head of Research, Geojit Financial Services Ltd, said.

Wholesale price index-based shot up to more than four-year high of 5.77 percent in June on increasing prices of vegetables and fuel items. The WPI inflation stood at 4.43 percent in May and 0.90 percent in June last year.

 Sensex drops 217 points on sell-off in banking, pharma stocks; Nifty closes below 11,000

Represenational image. Reuters.

"A higher inflation rate in a flat to slowing growth environment can be detrimental for the economy," Abhijeet Dey, Senior Fund Manager-Equities, BNP Paribas Mutual Fund, said.

Dr Reddy's fell sharply by more than 9 percent on bourses following a District Court of New Jersey's decision with respect to further sale and commercialisation of its product in the US.

Sun Pharma dropped 4.96 percent.

In the Sensex pack, Tata Steel fell the most by 6.96 percent along with Tata Motors (4.77 percent).

Among banking stocks, ICICI Bank fell by 3.26 percent, SBI by 2.27 percent and HDFC Bank by 0.46 percent.

ICICI Bank said it has decided to postpone its annual general meeting by a month amidst independent enquiry conducted by Justice B N Srikrishna on alleged cases of impropriety against the bank's CEO Chanda Kochhar.

Other laggards that dragged the key indices include
Bharti Airtel 3.34 percent, Adani Ports 2.69 percent, Coal India 2.32 percent, Vedanta Ltd 2.28 percent, RIL 1.88 percent and Asian Paint 1.24 percent.

P C Jewellers plummeted about 26 percent to Rs 88.90 -- its 52-week low on the BSE after the company decided to withdraw the proposed buyback of shares worth Rs 424 crore because it did not get the approval from its bankers.

Infosys surged 1.83 percent even as the company posted lower-than-expected earnings for the quarter ended on June 30, 2018, cushioning the index from deeper losses.

NTPC, ITC and HDFC also rose up to 1.96 percent.

FMCG major Hindustan Unilever rose by 0.73 percent ahead of its results. HUL after the market hours reported a 19.17 percent increase in standalone net profit at Rs 1,529 crore for the first quarter ended June 30, 2018.

Among sectoral indices, the BSE metal index suffered the most by dropping 3.70 percent followed by healthcare 3.26 percent, realty 3.26 percent, telecom 2.80 percent, infrastructure 1.88 percent, auto 1.64 percent, PSU 1.53 percent, capital goods 1.50 percent, consumer durables 1.46 percent, oil&gas 1.07 percent and bankex 0.98 percent.

However, IT and teck indices rose up to 0.78 percent.

In tandem with overall trends, the broader markets too
succumbed to profit-booking by investors, pulling down the small-cap index by 2.51 percent and mid-cap index by 2.45 percent.

In Asian markets, Shanghai Composite Index fell 0.61 percent and Singapore down 0.65 percent. Hong Kong's Hang Seng, however, up 0.08 percent. Financial markets in Japan remained shut for a public holiday.

In Europe, most markets remained firm in their early
session. Frankfurt's DAX up 0.39 percent, while Paris CAC rose 0.45 percent in their early session. London's FTSE, however, was down 0.11 percent.

Updated Date: Jul 16, 2018 17:41:44 IST