Sensex falls 218 pts, Nifty below 11k as WPI inflation races to 4-yr high

The benchmark BSE Sensex dropped by around 218 points or 0.60 per cent due to sell-off in banking, pharma, and metal stocks as investors turned cautious after wholesale inflation surged to a four-year high.

The broad-based Nifty cracked below the 11,000-mark as 35 of its constituents closed in the red, led by Dr Reddy's, Tata Steel and Lupin.

Most of the Asian markets were down as data showed growth in China's economy slowed in the second quarter amid concerns over the impact of heated China-US trade war.

The 30-share index opened on a positive note but gave in gains due to inflation concerns and closed at 36,323.77, down 217.86 points, or 0.60 per cent. In the intra-day, it also hit a low of 36,298.94. The index had shed 6.78 points in the previous session on Friday after scaling a life-time high of 36,740.07 (intra-day).

The 50-share NSE Nifty settled down by 82.05 points, or 0.74 per cent, at 10,936.85. Intra-day, it touched a low of 10,926.25 and a high of 11,019.50.

"Surge in inflation and weak global cues influenced investors to book profit from the recent rally while IT index maintained the uptrend followed by earnings," Vinod Nair, Head of Research, Geojit Financial Services Ltd, said.

Wholesale price index-based shot up to more than four-year high of 5.77 per cent in June on increasing prices of vegetables and fuel items. The WPI inflation stood at 4.43 per cent in May and 0.90 per cent in June last year.

"A higher inflation rate in a flat to slowing growth environment can be detrimental for the economy," Abhijeet Dey, Senior Fund Manager-Equities, BNP Paribas Mutual Fund, said.

Dr Reddy's fell sharply by more than 9 per cent on bourses following a District Court of New Jersey's decision with respect to further sale and commercialisation of its product in the US.

Sun Pharma dropped 4.96 per cent.

In the Sensex pack, Tata Steel fell the most by 6.96 per cent along with Tata Motors (4.77 per cent).

Among banking stocks, ICICI Bank fell by 3.26 per cent, SBI by 2.27 per cent and HDFC Bank by 0.46 per cent.

ICICI Bank said it has decided to postpone its annual general meeting by a month amidst independent enquiry conducted by Justice B N Srikrishna on alleged cases of impropriety against the bank's CEO Chanda Kochhar.

Other laggards that dragged the key indices include Bharti Airtel 3.34 per cent, Adani Ports 2.69 per cent, Coal India 2.32 per cent, Vedanta Ltd 2.28 per cent, RIL 1.88 per cent and Asian Paint 1.24 per cent.

P C Jewellers plummeted about 26 per cent to Rs 88.90 -- its 52-week low on the BSE after the company decided to withdraw the proposed buyback of shares worth Rs 424 crore because it did not get the approval from its bankers.

Infosys surged 1.83 per cent even as the company posted a lower-than-expected earnings for the quarter ended on June 30, 2018, cushioning the index from deeper losses.

NTPC, ITC and HDFC also rose up to 1.96 per cent.

FMCG major Hindustan Unilever rose by 0.73 per cent ahead of its results. HUL after the market hours reported a 19.17 per cent increase in standalone net profit at Rs 1,529 crore for the first quarter ended June 30, 2018.

Among sectoral indices, the BSE metal index suffered the most by dropping 3.70 per cent followed by healthcare 3.26 per cent, realty 3.26 per cent, telecom 2.80 per cent, infrastrcuture 1.88 per cent, auto 1.64 per cent, PSU 1.53 per cent, capital goods 1.50 per cent, consumer durables 1.46 per cent, oil&gas 1.07 per cent and bankex 0.98 per cent.

However, IT and teck indices rose up to 0.78 per cent.

In tandem with overall trends, the broader markets too succumbed to profit-booking by investors, pulling down the small-cap index by 2.51 per cent and mid-cap index by 2.45 per cent.

In Asian markets, Shanghai Composite Index fell 0.61 per cent and Singapore down 0.65 per cent. Hong Kong's Hang Seng, however, up 0.08 per cent. Financial markets in Japan remained shut for a public holiday.

In Europe, most markets remained firm in their early session. Frankfurt's DAX up 0.39 per cent, while Paris CAC rose 0.45 per cent in their early session. London's FTSE, however, was down 0.11 per cent.