Sensex falls sharply, rate hike feared (Second Lead)

June 15th, 2011 - 4:41 pm ICT by IANS  

Sensex Mumbai, June 15 (IANS) Indian equities markets were in the red Wednesday afternoon with traders fearing another rate hike by the country’s central bank when it takes up the mid-quarter monetary policy review on June 16.

Analysts are largely of the view that the Reserve Bank of India will raise interest rates by 25 basis points on Thursday as inflation continues to reign high.

Latest data released Tuesday by the commerce and industry ministry showed inflation, as measured by the wholesale price index, at 9.06 percent in May, much higher than 8.66 percent in the previous month. The inflation figures for March were revised upwards to 9.68 percent from the previously estimated 9.04 percent.

The RBI has hiked interest rates nine times since March 2010 and said that it would not shy away from more tightening in the coming months if inflation does not come down.

The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE), which opened at 18,298.59 points, slipped to an intra-day low of 18,111.21 points — down over 197 points or 1.07 percent from its previous close at 18,308.66 points.

The 50-scrip S&P; CNX Nifty of the National Stock Exchange was also trading in the red at 5,440.35 points, down 1.09 percent.

Broader markets were also weak, with the BSE midcap index down 0.53 percent and the BSE smallcap index trading 0.62 percent lower.

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