Sensex falls below 21000 ahead of inflation data

The BSE Sensex slipped below the key 21,000 levels on Thursday, while the broader Nifty came close to breaching the 6,250 levels. Traders blamed profit-taking after recent gains and caution ahead of inflation data behind the weakness in the markets.

Rate sensitive stocks fell. ICICI Bank traded down 1.2 per cent, while Bajaj Auto fell 1.3 per cent. Tata Motors declined 3.14 per cent and was the top Nifty loser. Tata Motors shares have fallen 6.7 per cent (as of Wednesday's close) after hitting a record high of Rs 405 on November 28.

Consumer prices were forecast to have risen an 10 per cent annually last month, a Reuters poll showed, barely changed from the 10.09 per cent clocked in October.

Weakness in global markets also weighed on sentiments. Asian shares slipped to a 2-1/2 month low on Thursday on heightened expectations that the Federal Reserve may act sooner than later to unwind its stimulus after a provisional budget deal in Washington eased some of the fiscal drag on the US economy.

Profit taking:

The recent rally was attributed to the BJP's strong show in the recently held state polls, which bolstered views that the main opposition party, seen as more business friendly, could form a government after general elections due by May 2014.

Sajiv Dhawan of JV Capital Services told NDTV that sentiments had changed because of an event that may happen six months later i.e. a change in government, but fundamentals have not changed.

"It's better to take profits, lighten up positions and keep cash in hands. Valuations are not cheap," he added.

As of 12.26 p.m., the Sensex traded 155 points lower at 21,017, while the Nifty traded 45 points down at 6,263.

(With inputs from Reuters)