ADVERTISEMENT

Sensex on course for 6th straight fall, Nifty below 6150

The BSE Sensex turned lower in the last hour of trade on Tuesday and is now on track for a sixth straight day of fall. The Sensex traded 0.16 per cent lower, down over 150 points from the day's high as of 2.50 p.m., while the 50-share Nifty traded below the 6,150 levels.

Banking stocks were the worst hit amid concerns of another rate hike on Wednesday. The Bank Nifty on the NSE traded 1.6 per cent lower. Rate sensitive realty stocks were down 0.7 per cent.

HDFC Bank was the top Nifty loser, down 4.2 per cent at Rs 655.75. It's promoter mortgage lender HDFC fell over 2 per cent to Rs 781.95. (Read more)

State Bank of India, the country's biggest lender, fell 1 per cent to Rs 1,714.90.

Most analysts expect the Reserve Bank of India to hike policy rates by at least 25 basis points tomorrow after headline inflation in November surged to a 14-month high. Though India's inflation is driven by high food prices, the RBI has persisted with raising rates in the past. Raising rates have had little impact on food inflation, but they have definitely impacted India's growth, which is now below 5 per cent.
 
High inflation "means the RBI has to hike rates or lose credibility," Dariusz Kowalczyk, senior economist for Asia ex-Japan at Credit Agricole in Hong Kong told Reuters last week.

"Rate hikes will not correct food prices," he added. "The hawkish intention is a mistake, in our view, and will lead to slower growth."

Jyotivardhan Jaipuria, Head of Research, Bank of America Merrill Lynch told NDTV today that markets have gained sharply over the last 3-4 months, but a correction is in the offing because of what the RBI and the US Fed may do.

"We are looking at 7-8 per cent corection in markets," he said.

Another factor weighing on sentiments is the momentous US Federal Reserve policy decision later this week. Investors are on tenterhooks over when the Fed will start to reduce its $85 billion-a-month bond-buying programme, a major driver of global risk assets in recent years.

A majority of economists polled by Reuters expect the taper to happen in March, but a recent run of upbeat economic data has steadily shortened the odds on an announcement at this week's two-day meeting concluding on Wednesday - or in January.