Nifty ends below 8,650 on inflation worries; Cipla rises 7%

Benchmark indices snapped a two-day winning streak, amid a volatile trading session, with Infosys among the top losers after its key client Royal Bank of Scotland cancelled a project. Further, higher-than-expected increase in July wholesale price inflation and weak global cues also dampened sentiment.

The wholesale price index- (WPI) based inflation rose by 3.35% in July up from 1.62% in June, pushed up by food prices such as vegetables and fruits. Consumer prices rose at a faster-than-expected pace to 6.07% last month from a year ago, up from June's 5.77% annual gain, government data showed on Friday. Economists surveyed by Reuters had expected retail inflation to come in at 5.90%.

Commenting on inflation numbers, Madan Sabnavis - Chief Economist, CARE Ratings said, "The rate came in much higher at 3.6% against our own expectation of 2.7%. We do expect this number to come down once the monsoon impact on kharif output is clear. With both WPI and CPI inflation coming in higher, a rate action may not be expected for some time".

The S&P BSE Sensex ended lower 88 points at 28,065 after breaking the 28,000 mark in intra-day trade and the Nifty50 slipped 30 points to settle at 8,643. Broader markets, however, outperformed the benchmark indices - BSE Midcap index inched up 0.5% while and the Smallcap index ended flat.   

 
In overseas stock markets, European stocks edged lower weighed down by industrial stocks after Swiss firm Schindler cut the top end of its revenue growth outlook for the full year. Most Asian stocks edged lower as the price of crude oil took a breather from a three-day rally.

Japanese stocks fell as the yen strengthened against the dollar. The Nikkei 225 Average ended 1.62% lower. A stronger yen hurts the competitiveness of Japanese exporters Japan's gross domestic product expanded an annualized 0.2% in the April-June quarter, weaker than a 2% expansion in the first three months of the year, Japan's government said yesterday.

Back home, shares of Infosys fell to its lowest level since December 9, 2015, to Rs 1,028 in intra-day trade after a key client Royal Bank of Scotland (RBS) scrapped a project to set up a separate bank in the United Kingdom, for which IT major was a key technology partner. The stock closed nearly 1% lower.

Sun Pharmaceutical slipped over 2% on reports that a foreign brokerage has downgraded the stock to neutral from buy citing increased competition for the company's US subsidiary.

Reliance Industries lost 1% on reports the petroleum ministry has slapped a penalty of nearly $250 million on the company to make good the government's loss of "profit petroleum" from the KG D-6 block.

Tata Motors might divest part of its stake in its subsidiary Tata Technologies. The stock slipped over 1%.

On the gaining side, Cipla surged almost 7% after the company announced an improvement of around 200 basis points in base business EBITDA (earnings before interest, depreciation and taxes) margin.

Adani Ports and Special Economic Zone (APSEZ) rallied over 6%, extending its past three trading days gain on the BSE after the company reported a good set of numbers for the quarter ended June 30, 2016 (Q1FY17).

State Bank of India rose over 1%, with the stock extending previous session's gains triggered by the state-run bank reporting a smaller-than-expected increase in bad loans in Q1 June 2016.

L&T gained over 1% after the company won a contract from the Maharashtra state government to convert Nagpur into an integrated smart city.

Power Grid Corporation of India gained around 0.5% after net profit rose 32.9% to Rs 1801.77 crore on 30.6% growth in total income to Rs 6259.30 crore in Q1 June 2016 over Q1 June 2015.

Hindalco Industries moved higher to its fresh 52-week high of Rs 154, up 5% on the BSE, after the company reported a standalone net profit of Rs 294 crore for the quarter-ended June 30, 2016 (Q1FY17).

Among other shares, drug firm Divi's Laboratories surged over 6% after the company posted a rise of 23% rise in net profit for the first quarter ended June 30.

Shares of Unitech slumped over 16% after the beleaguered real estate firm expressed its inability before the Supreme Court to refund money to the home buyers over its two delayed projects in Noida and Gurgaon.