Equities took a beating of 300 points today to fall to a one-week low as investors saw odds of an early rate cut receding after inflation hardened in April amid fears that Sebi's move to tighten P-Note norms would hit foreign fund inflows.
Domestic shares, however, logged their first weekly gain in three on the back of quarterly earnings, which were so far in line with expectations, as Sensex rose 261.07 points or 1.03 per cent and Nifty climbed 81.45 points or 1.05 per cent in five days.
In a double whammy, government data yesterday showed that industrial production plunged to 0.1 per cent in March, while retail inflation jumped to 5.39 per cent in April.
"Weak inflation numbers caused speculation that Reserve Bank would hold off on cutting interest rates at its policy review next month, thus dampening investor sentiment," said Shreyash Devalkar, Fund Manager - Equities, BNP Paribas MF.
This send the banking shares sharply lower with SBI, ICICI Bank, Axis Bank and HDFC Bank down by up to 2.29 per cent.
Meanwhile, acting upon recommendations of an SIT on black money, Sebi is planning to tighten due diligence requirements for issuance and transfer of P-Notes and put the onus on investors to ensure compliance with anti-money laundering law.
The BSE Sensex stayed in the negative zone through out the day and touched a low of 25,400.27 before winding up 300.65 points or 1.17 per cent down at 25,489.57, its weakest closing since May 6.
The 50-issue Nifty broke below the 7,900-mark by plunging 85.50 points or 1.08 per cent to close at 7,814.90. Intra-day, it hovered between 7,784.20 and 7,881.00.
Broader markets too showed a downward trend with mid-cap and small-cap indices falling 0.58 per cent and 0.25 per cent, respectively.
In stock specific action, Dr Reddy's lost 2.08 per cent to Rs 2,912.10 after the firm reported a 85.6 per cent decline in consolidated profit to Rs 74.6 crore for the fourth quarter.
Shares of Eicher Motors fell nearly 4 per cent after the company said two of its promoters and Eicher Goodearth Trust sold 4.2 per cent stake in it for Rs 2,100 crore.
Overseas, Japan led decline in Asian equities after a disappointing earnings season while Europe edged lower as oil snapped a three-day rally.
Key indices in China, Hong Kong, Japan, Singapore, South Korea and Taiwan moved down by 0.31 per cent to 1.41 per cent.
France, Germany and the UK based shares dropped between 0.58 per cent and 0.67 per cent.
Back home, out of the 30-share Sensex pack, 21 scrips
ended lower.
Major losers included Tata Motors 2.83 per cent, Bhel (2.67 pct), Bharti Airtel (2.52 pct), ONGC (2.16 pct), SBI (1.94 pct), HDFC (1.91 pct), Axis Bank (1.80 pct), NTPC (1.59 pct), Larsen (1.49 pct), Cipla (1.48 pct) and M&M (1.26 pct).
However, Lupin rose by 1.12 per cent followed by Dr Reddy's (0.70 pct), Sun Pharma (0.60 pct) and GAIL (0.49 pct).
Among the BSE sectoral indices, realty fell by 1.32 per cent followed by infra 1.31 per cent, banking 1.29 per cent, capital goods 1.17 per cent, power 1.17 per cent, metal 1.09 per cent and auto 0.96 per cent
The market breadth remained negative as 1,474 stocks ended lower, 1,108 closed higher while 162 ruled steady.
Meanwhile, Foreign portfolio investors bought shares worth net Rs 201.32 crore last Friday, as per provisional data.
The total turnover rose to around Rs 2,617 crore from Rs 2,370.40 crore on last Friday.
