The BSE benchmark Sensex fell to its three-week low on Thursday, closing 146 points down to below the 18,000 mark as FIIs sold stocks on fears that 25 bps hike by the RBI to tame a strident inflation will hit the growth of an economy, already showing signs of a slow down.Weak global cues further dampened the sentiment. The Bombay Stock Exchange key index, Sensex, dropped by 146.36 points, or 0.81 percent to 17,985.88, a level last seen on 25th May, after the Reserve Bank of India hiked lending rates by 25 basis points for the tenth time since March 2010.
BSE data showed that overseas investors sold a net Rs 3.73 billion of stocks on Wednesday, turning net sellers of the equities this year for the first time since 1st June.Fall in Emerging-market stocks dragged the Sensex to a three-month low, amid concerns that increased efforts to cool inflation in India and China will curb economic growth amid a worsening debt crisis in Europe.Broad-based National Stock Exchange index Nifty lost 50.75 points, or 0.93 percent to 5,396.75 level.On the BSE, Reliance Industries (RIL) and Infosys that carry the maximum weight on the 30-share gauge, Sensex, also declined. RIL fell to a two-year low at Rs 888 a piece, after it was downgraded by HSBC Holdings.IT bellwether Infosy fell by Rs 33.35 to Rs 2,800.55 following a weak trend in the US markets.
The software exporter gets more than 50 percent of its revenue from the US and European markets.Interest-rate sensitive banking stocks also suffered. Market leaders like HDFC Bank and ICICI Bank dropped by Rs 29.50 to Rs 2,342.90 and Rs 4.55 to Rs 1,028.50, respectively.Heavy machinery stocks led by Larsen and Toubro fell on concern that higher borrowing costs will hurt profit margins.Larsen lost Rs 34.25 to Rs 1,679.70, Siemens India by Rs 3.50 to Rs 872.30 and ABB Ltd by Rs 9.50 to Rs 841.50.