Sensex falls for 2nd day; rupee dashes rate-cut hopes

The BSE Sensex fell for a second consecutive session on Wednesday to its lowest close since April 18 as lenders such as Axis Bank lost ground after high retail inflation in May was seen virtually ruling out a rate cut next week.

The annual consumer price inflation slowed for the third straight month in May to 9.31 per cent, government data showed on Wednesday, but still remained well above the Reserve Bank of India's (RBI's) comfort level.

At the same time, April factory data showed industrial output grew less than expected at two per cent, but not slow enough to spur the RBI to cut rates at its policy review on June 17.

Though foreign institutional investors (FIIs) have remained net buyers of Indian shares of Rs 962 crore so far in June, a closer look reveals the pace of flows has slowed if compared to the average monthly buying of Rs 166.41 crore seen in 2013 till May-end.

"I think the simple expectation out of the market is that since it's an oversold market, it will probably carry the tendency of bouncing back in between on any positive news," said Deven Choksey, managing director of K R Choksey Securities in Mumbai.

"Currently, though the bias is on the downside, you could expect some upside on positive news."

The BSE Sensex fell 0.53 per cent, or 101.87 points, to 19,041.13.

The broader Nifty lost 0.49 per cent, or 28.60 points, to 5,760.20.

Lenders lost ground as high retail inflation in May was seen virtually shutting the door on a rate cut next week, specially after a sliding rupee has reignited current account deficit concerns.

Axis Bank skid 3.65 per cent, while Housing Development Finance Corporation Ltd closed down 1.25 per cent.

Blue chips such as ITC fell as the rupee's recent weakness continued to stoke fears that foreign investors may pare positions, dealers said.

FIIs provisionally sold Rs 8.85 crore of Indian stocks on Tuesday, marking their biggest single-day sale since February 28, exchange data showed.

IT stocks fell after India said it was considering measures to stabilise the rupee after the local currency hit an all-time low on Tuesday.

Infosys closed down 2.19 per cent after rising as much as 2.1 per cent earlier in the session. Tata Consultancy Services ended 2.23 per cent lower.

Titan Industries Ltd (TITN.NS) slumped 13.76 percent as brokerages downgraded the jewellery maker over concerns about profit after recent measures to curb gold imports.

Wockhardt Ltd (WCKH.NS) fell 4.35 percent after the health ministry suspended the sale and distribution of Dextyropropoxyphene, a pain-relieving drug.

However, among stocks that gained, Jindal Steel and Power Ltd (JNSP.NS) rose 4.16 percent, after Tuesday's fall of 15.38 percent on the CBI case filing was seen as over done.