Sensex at 6-week low as rate cut hopes dim, weak rupee hurts

In a volatile session, the BSE Sensex today failed to build on early gains and closed 90 points down at six-week low as rate-sensitive sectors like auto and banks saw selling pressure ahead of RBI policy review, amid sustained weakness in rupee that tumbled below 57-mark.
Taking a U-turn in second half after gaining 192 points, the Sensex saw profit-booking as global investors also adopted a cautious stance ahead of US jobs data, said traders. Auto stocks including M&M, Maruti and Tata Motors fell in 1.5-2.3 per cent range. Among banks, ICICI, HDFC and SBI ended lower.
Sensex ended at at nearly six-week low of 19,429.23, a fall of 90.26 points or 0.46 per cent. It was second day of losses after the index declined by 48.73 points yesterday.

Ahead of its mid-quarter policy on June 17, RBI today said its monetary actions in the coming months will be determined by the "monsoon outlook" and ensuing impact on inflation. This triggered selling by investors, who were betting on a rate cut by RBI this month, said experts.
The broader NSE 50-issue CNX Nifty dropped by 40.40 points, or 0.68 per cent, to end below 5,900-mark at 5,881.00 -- a level not seen since April 26, 2013. Also, MCX-SX flagship index, SX40, ended down by 67.62 points at 11,528.7.
Weak Asian trends amid selling by foreign institutional investors (FIIs) weighed on the market. Fall in RIL, Bharti Airtel, L&T, ONGC, HDFC, and NTPC meant the market was under pressure at the fag-end, said dealers.

Bucking the overall gloomy trend, IT scrips like TCS, Wipro and Infosys saw demand after rupee's plunging below 57-mark raised hopes of a solid revenue boost for exporters.
However, a weak rupee poses problems for corporates as it has a negative impact on dollar-denominated liabilities.
"For the week also, weakness in rupee, subdued global markets and concerns over interest rate movements resulted in a near 2 per cent fall in benchmark indices. Going ahead, monsoons, economic data and RBI policy will be the domestic factors to watch out for," said Dipen Shah, Head of Private Client Group Research, Kotak Securities.