Mumbai: Falling for the second session, the benchmark Sensex and Nifty on Monday closed at their lowest levels in over ten days as the rupee weakened to the below 60-level and rising crude price added to concerns about inflation which surged to five-month highs.
The benchmark S&P BSE Sensex declined 37.69 points, or 0.15 percent, to end at 25,190.48 and the NSE CNX Nifty ended 8.55 points, or 0.11 percent, down at 7,533.55.
Rising tension in Iraq which drove oil prices to 9-month highs and increase in wholesale inflation weighed on stocks.
Costlier crude is a double whammy for the Indian economy, which imports 80 percent of oil supplies, as trade gap widens and threatens to push inflation higher. This will reduce room for RBI to lower lending rates in a bid to boost growth.
The Wholesale Price Index-based inflation accelerated to 6.01 percent in May from 5.20 percent in April.
Shares from capital goods, auto and banking suffered losses while realty, IT and consumer durable closed up.
Selling in bluechips like RIL, L&T, HDFC, ICICI Bank, Tata Motors, Axis Bank, M&M, SBI and Maruti Suzuki mainly contributed to the Sensex fall.
Jignesh Chaudhary, Head of Research, Veracity Broking Services said: "Equities closed weak as WPI rose. Adding to the data, already it has been declared that we may witness disappointing rains this season, which will add more burdens to the already higher food prices. Also, the tension in Iraq has already pushed up fuel prices".
The BSE 30-share barometer resumed nearly stable and moved erratically in negative terrain for most of the day before settling at 25,190.48, recording a fall of 37.69 points or 0.15 percent. This was its weakest closing since 25,019.51 on June 5.
Last Friday, it had plunged 348.04 points.
On the other hand, IT stocks caught buyers' fancy after the rupee dipped below the 60 mark against the dollar.
Bucking the overall negative trend, IT index gained 1.54 percent with all the three top IT stocks TCS, Infosys and Wipro ending higher.
Meanwhile, foreign portfolio investors (FPIs) bought shares worth a net Rs 1,099.92 crore last Friday, as per the provisional data from the stock exchanges.
Asian stocks closed mixed amid an escalation of violence in Iraq. Key benchmark indices in Hong Kong, Japan and Singapore closed in the red while from China, South Korea and Taiwan finished in the green.
European markets, however, were trading weak in their late morning deals. The CAC was down by 0.58 percent, the DAX by 0.30 percent and the FTSE by 0.12 percent.
Fifteen scrips out of the 30-share Sensex pack ended lower while remaining 15 finished higher.
"Concern over higher crude oil and rupee depreciation has dampened market sentiment. Inflation has also come on higher side which leave lower hopes for rate cut in near term," said Nidhi Saraswat, Senior Research Analyst, Bonanza Portfolio.
Prominent Sensex losers were Axis Bank (2.58 percent), M&M (2.34 percent), L&T (2.08 percent), RIL (1.61 percent), Tata Motors (1.58 percent), HDFC (1.48 percent), Maruti Suzuki (1.13 percent) and SBI (1.04 percent).
Gainers were Gail India 3.95 percent, followed by Sun Pharma 2.49 percent, Tata Power 1.69 percent, BHEL 1.43 percent and ONGC 1.11 percent.
Among the S&P BSE sectoral indices, Capital Goods fell by 1.16 percent and Auto 1.07 percent while Realty rose by 1.70 percent, IT by 1.54 percent and Teck 1.24 percent, among others.
Total market breadth remained negative as 1,576 stocks closed with losses while 1,377 finished with gains. Total turnover dropped to Rs 3,423.29 crore from Rs 5,272.07 crore yesterday.
