Sensex drops 67 pts as bank, realty shares hit

The BSE benchmark index was pulled down by selling in Reliance Industries, ICICI Bank, Infosys, Tata Steel and L&T while the rupee weakening by 18 paise to 55.44 against the US dollar also added pressure, said brokers.

After a slow start mirroring the trend in global markets, the Sensex fell by 125 points intra-day as domestic issues over coal allocation haunted markets. The Sensex gained some ground in the last hour helped by gains ONGC, ITC and CIL, but still closed with a loss of 67.01 points, or 0.38 per cent compared to yesterday's close.

Brokers said the domestic sentiment remained bearish as the Reserve Bank in its FY12 annual report stated inflation remains the cornerstone of its monetary policy action.

They said a weakening trend in Asia and lower opening in Europe on signs of slower growth in the US and China and amid rising concerns of Eurozone crisis did not help the cause.

The interest-rate sensitive realty and banking stocks suffered the most on fears that unchanged borrowing cost might hurt home sales and lending business, said traders.

"Banking and power stocks faced most selling pressure today. RBI has hinted that it might not cut interest rates in near future...European markets also opened lower which underpinned the bearish sentiment," said Nidhi Sarswat, Senior Research Analyst, Bonanza Portfolio.

Pharma stocks Cipla and Dr Reddy's inched up in Sensex as they are being preferred as "defensive" plays, according to Nagji K Rita, CMD, Inventure Growth & Securities.

The 50-share National Stock Exchange index Nifty lost 28.65 points, or 0.53 per cent to close at 5,386.70.