The BSE benchmark Sensex today erased initial gains to end nearly 167 points down at a 3-week low as banks, capital goods and consumer durable shares slipped on fears of further rate hikes after RBI Governor Raghuram Rajan's comment that inflation in still high.
After rising 87 points in early trade, the Sensex saw continued selling and closed by 166.58 points, or 0.84 per cent, to 19,727.27 -- the lowest level since 19,270.06 on September 6, 2013.
Similarly, the broad-based NSE index Nifty fell by 49.05 points, or 0.83 per cent, to end at 5,833.20.
Asked about RBI's policy stance, Rajan in Frankfurt said: "At this point we are neutral, we will see how things develop."
"Unfortunately there is still some inflation when you strip out the effects of food and energy. Therefore, it is not just food, it's other factors also which are driving inflation," the RBI Governor said.
The RBI in the last monteary policy review had unexpectedly hiked repo rate by 25 basis point to 7.50 per cent to arrest rising inflation.
In 30-share Sensex, 24 stocks declined led by SBI, ICICI Bank, HDFC Bank, HDFC Ltd., Larsen and Toubro, NTPC, BHEL, Bharti Airtel, Maruti, Dr Reddy, Hindalco, Tata Motors and Tata Power.
Sectorally, the BSE Banking sector index suffered the most by losing 1.83 per cent, followed by Metal index (1.61 per cent), Realty index (1.48 per cent) and Capital goods index (1.42 per cent).
Brokers said buying activity slowed also down as investors turned cautious ahead of the current account deficit data on Monday and a weak trend in the global stock markets.
The Sensex ended the week on a negative note losing 536.44 points, or 2.65 per cent -- the first drop in five weeks.
