The markets slumped on Thursday, with the Sensex shedding 203 points, as interest rate-sensitive sectors such as banks, realty and capital goods stocks came under intense selling after the inflation numbers for May dashed hopes of a widely anticipated rate cut by the Reserve Bank next week.
The 30-share index opened weak and ended the day at 16,677.9 points, down 203 points or 1.2 per cent. Across the Indian market, 1,700 stocks tanked, with investor wealth dropping by Rs 60,000 crore.
Brokers said sentiment was hit by a rise in May inflation, dampening hopes of a widely expected 25 basis point rate cut by RBI.
“The key issue before RBI is whether to support flagging growth momentum or tackle inflationary pressures,” said Sonal Varma, economist at Nomura India.
Among the 30-share Sensex, Tata Motors was the worst hit, down 4.6 per cent, followed by capital goods major L&T (3.3 per cent) and power producer NTPC (3.8 per cent). Bank counters, including ICICI Bank, SBI and HDFC Bank, lost 1.5-3.5 per cent. Auto majors Tata Motors, Maruti, Bajaj Auto, M&M and Hero MotoCorp also ended on the losing side.
The 50-share NSE Nifty fell 66.70 points, or 1.30 per cent, to 5,054.75. European and Asian indices traded lower in the one-two per cent range after Moody's cut its rating on Spanish government debt by three notches.