Sensex feels the price pinch

Index dips 218 pts as wholesale inflation rises to four-year high; Nifty drops below 11,000

The Sensex fell 218 points, or 0.60 per cent, on Monday due to sell-off in banking, pharmaceuticals and metal stocks, as investors turned cautious after wholesale inflation surged to a fouryear high. The broader Nifty also ended below 11,000 after 35 of its constituents closed in the red, led by Dr Reddy’s, Tata Steel and Lupin.

Most of the Asian markets ended down after data showed a slowdown in growth in China's economy in the second quarter, amid concerns over the impact of the US-China 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. It also hit an intra-day low of 36,298.94. The Nifty settled down 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,” said Vinod Nair, research head, Geojit Financial Services.

Wholesale price index-based inflation rose to more than four-year high of 5.77 per cent in June on increasing prices of vegetables and fuel items. 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-toslowing growth environment could be detrimental for the economy,” said Abhijeet Dey, senior fund managerequities, BNP Paribas Mutual Fund.

Dr Reddy’s fell sharply by more than 9 per cent on both exchanges, 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.

Among the Sensex stocks, Tata Steel fell the most (6.96 per cent), along with Tata Motors (4.77 per cent).

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

Among sectoral indices, the BSE metal index suffered the most, dropping 3.70 per cent, followed by healthcare (down 3.26 per cent), realty (down 3.26 per cent) and telecom (down 2.80 per cent). The broader markets, too, succumbed to profit-booking, pulling down the small-cap index by 2.51 per cent and mid-cap by 2.45 per cent.