Sensex down 55 points on interest rate worries, weak global markets

The Bombay Stock Exchange (BSE) Sensex fell 55 points today to 18,507, as investors sold auto, IT, pharmaceuticals and refinery stocks. They did so on concerns that interest rates might soon go up further in view of high inflation, besides weak cues from global markets on continuing euro zone and US debt worries.

Gains in HDFC Bank, HDFC, BHEL, Hindalco and Tata Power were offset by falls in L&T, ICICI Bank, TCS, RIL, Tata Motors and Infosys. However, the overall market breadth was positive on good retail buying in second-line stocks.

After having closed 56 points down on Friday, the BSE 30-share barometer resumed stronger and touched a high of 18,622.56 in the morning trade. But selling in blue chips pulled it down by 54.88 points, or 0.30 per cent, to settle at 18,507.04. Similarly, the broad-based National Stock Exchange 50-issue Nifty eased 14.05 points, or 0.25 per cent, to 5,567.05.

Brokers said worries over high inflation kept the markets under pressure, as investors expected another round of key interest rate increases by the Reserve Bank of India at the first quarter review of the monetary policy on July 26. The inflation rate rose to 9.44 per cent in June from 9.06 per cent in the previous month. Meanwhile, Asian stock markets finished lower today on lingering concerns over the European debt situation as well as warnings by credit ratings agencies that they might cut the US rating.