Markets ended marginally lower, amid a volatile trading session, as rising consumer price inflation dashed hopes of a rate cut by the central bank.
The 30-share Sensex provisionally ended down 48 points at 19,340 and the 50-share Nifty ended down 11 points at 5,881.
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(Updated at 14:24hrs)
Markets turned negative in late noon trades as investors shrugged off better-than-expected Oct IIP and booked profits as rising consumer price inflation dashed hopes of a rate cut by the central bank.
At 2:22PM the 30-share Sensex was down 21 points at 19,366 and the 50-share Nifty was down 11 points at 5,888.
Industrial production growth rate bounced back to a 16-month high of 8.2% in October on good performance of the manufacturing, power sector and higher output of capital as well as consumer goods, indicating sudden recovery in the economy. The factory output, as measured by the Index of Industrial Production (IIP), contracted by 5% in October last year. The IIP had expanded by 9.5% in June 2011.
Rising for the second consecutive month, retail inflation surged 9.90% in November driven mainly by rising prices of food items such as sugar, vegetables, edible oil and clothing. The retail inflation was 9.75% in October and 9.73% in September.
Asian stocks firmed up on the back of agreement on the US cliff and the US Fed would resort to more asset buying. The Shanghai Composite was up 0.4%, Hang Seng gained 0.8% and Straits Times was up 0.7%. The Nikkei ended up 0.6%.
European shares were trading mixed ahead of the US Fed's decision. The FTSE and CAC-40 were down 0.1% while CAC-40 was trading flat with positive bias.
Among the sectoral indices on the BSE, Capital GOods index was the top loser down 1.2% followed by power, metal, banks, oil and gas indices.
In the Sensex pack, mortgage lender HDFC was the top loser down over 2% after rising consumer price inflation dashed hopes of a rate cut by the central bank.
Larsen and Toubro was down 1.4% on profit taking after the stock rose from Rs 1,550 levels since Nov 20.
Hindustan Unilever was down 2.1% following concerns over increase in royalty payouts. Investors were jittery following announcement by parent Unilever that it was increasing royalty to 5% of sales from the current 3.5% in Indonesia.
Other Sensex shares which declined include, ONGC, ICICI Bank and BHEL.
Mahindra and Mahindra was up 2.2% tracking gains of its group company Tech Mahindra which rallied on reports that more than 7% of total equity of the company (Tech Mahindra) changed hands via bulk deals.
Two-wheeler majors Hero Honda and Bajaj Auto were up over 1.6% each on hopes that sales growth during the third quarter (Oct-Dec) would continue to remain strong on the back of demand during the festive season.
In the broader market, the BSE Mid-cap was trading flat with positive bias while the Small-cap index was up 0.1%.
Market breadth turned negative with 1,494 losers and 1,303 gainers on the BSE.