The S&P BSE Sensex and NSE Nifty 50 indexes snapped their two-day winning streak on Thursday a day after the government data showed that consumer inflation peaked to highest rate in nearly six years in January while the industrial activity contracted in December. The S&P BSE Sensex fell as much as 228 points to hit an intraday low of 41,338 and the Nifty 50 index touched low of 12,140. However, late buying in information technology and pharma shares helped benchmarks pare some losses.
The Sensex ended 106 points or 0.3 per cent lower at 41,460 and Nifty 50 index declined 27 points or 0.2 per cent to settle at 12,175.
Consumer inflation came in at 7.59 per cent in January - the highest rate recorded since 8.33 per cent in May 2014, government data showed on Thursday. Separate data showed that factory output - gauged by the Index of Industrial Production (IIP) - contracted 0.3 per cent in December, following its first rise in three months in November.
With inflation staying above the Reserve Bank of India's medium term target of 4 per cent analysts expect the central bank to keep its interest rates on hold which led to selling in rate sensitive banking and financial services shares.
Six of 11 sector gauges compiled by the National Stock Exchange ended lower led by the Nifty Private Bank index's 1.3 per cent fall. Nifty Financial Services, Nifty Bank, Nifty Metal and Nifty Realty sector gauges also fell between 0.5-0.8 per cent each.
On the other hand, Nifty IT index was top gainer, up nearly 1 per cent.
Mid- and small-cap shares also witnessed selling pressure as the Nifty Midcap 100 index declined 0.2 per cent and Smallcap 100 index closed marginally lower.
IndusInd Bank was top loser in the Nifty 50 basket of shares, the stock fell 3.5 per cent to Rs 1,232. Tata Steel, NTPC, ICICI Bank, Kotak Mahindra Bank, HDFC, Coal India, Adani Ports and ONGC also fell between 1.2-1.8 per cent each.
On the flipside, Yes Bank surged 6.4 per cent to Rs 37.45 after the bank said it was in talks with potential investors for a cash infusion.
Dr. Reddy's Labs, Zee Entertainment, Titan, State Bank of India, Infosys, UPL, Bharti Infratel, Hindalco, Tech Mahindra and Sun Pharma were also among the gainers.
The overall market breadth was negative as 1,422 shares ended lower while 1,062 closed higher on the BSE.