Sensex down over 200 points; rate sensitives drag

Banks and Capital Goods scrips among the top losers in noon deals

Markets edged lower in noon deals with the benchmark indices down 1% each on fears of rate hike by the central bank next week after consumer price inflation in November remained in double digits. At 1410 hrs, the Sensex was down 192 points at 20,733 and the Nifty gave off 62 points to trade at 6,175.

In the broader markets, midcaps slipped over 1%, slipping further after managing to hold ground in early trades. The smallcap index was down 0.5%, and outperformed the Sensex.

The Index of Industrial Production (IIP), industrial growth in October 2013 reported contraction of 1.8% as compared to growth of 2.0% in the previous month and 8.4% in October 2012. The industrial production for October 2013 surprised negatively by coming in lower than market expectations of a 1.2% decline.

The retail price index-based inflation jumped to an all-time high of 11.24% in November, driven by high vegetable prices, official data showed today. The inflation stood at 10.09% in October, entering double digits for the first time in six months.

The Indian rupee fell and bonds yields surged on Friday after retail inflation spiked, raising bets of a rate hike at the RBI's policy meeting next week.

The rupee was trading at 62.08 to a dollar compared to its Thursday close of 61.81/82.

Asian markets were trading flat as investors remained cautious ahead of the US Fed's stance at its two-day meet next week. Shares in Japan firmed up after the yen weakened against the dollar. The benchmark Nikkei ended up 0.4% while Shanghai Composite was down 0.3%. Hang Seng and Straits Times were trading flat with marginal gains.

In Europe, CAC and DAX were up 0.1% each while FTSE was flat with a negative bias.

Back home, BSE Bankex and Capital Goods indices was the top loser among the sectoral indices on the BSE down nearly 2% followed by Realty, Power, Consumer Durables, Oil and Gas and Metal shares.

Bank shares were down on fears that the RBI might hike rates next week on the back of high consumer price inflation in November. ICICI Bank, HDFC Bank, SBI were down 0.5-3.3% each.

Capital goods shares lost ground after weaker-than-expected industrial production in October. L&T was down 1.7% and BHEL slipped 4% and was the top loser among Sensex-30.

Auto stocks were also among the top Sensex losers on concerns that high interest rate on vehicle loans could result in slowdown in sales growth going forward. Bajaj Auto, Hero MotoCorp, Maruti Suzuki was down 1.4-2.6% each.

Other Sensex losers include, Reliance Industries was down 0.6% and TCS dipped 1%.

Market breadth remained weak with 1,502 losers and 821 gainers on the BSE.