In spite of higher IIP data, the BSE benchmark Sensex continued its downward march for the third consecutive week, slipping 446 points on persistent selling pressure on worries over corporate growth in view of rising inflation and global economic crisis.
Investors are worried over higher interest rates that will crimp corporate profit growth. Realty stocks fell on worries over higher interest rates.
IT sector suffered the most on likely economic slowdown in the US and Europe, the two biggest markets for Indian infotech firms.
Industrial growth (IIP) in the country revived moderately to 8.8 per cent in June this year on the back of a smart recovery in the manufacturing sector and better offtake of capital goods.
Selling by foreign institutional investors (FIIs) and growing fears of another recession in US, the world’s biggest economy, pushed the 30-share Sensex down by 466.24 points or 2.69 per cent to end at a 14-month closing low of 16,839.63.
The S&P CNX Nifty also dropped by 138.30 points or 2.65 per cent to settle at 5,072.95.
An unprecedented downgrade of the US credit rating by Standard & Poor’s on August 5 led investors to reduce the exposure to risky assets.
A broad-based rebound was witnessed on the domestic bourses on Wednesday as US Federal Reserve’s decision on Tuesday to keep US interest rates ultra-low for two more years raised expectations of increase in fund inflows.
However, the Sensex continued its downward march as an increase in food inflation raised concerns that the central bank will stick to its tight monetary policy.
Food inflation surged to a four-and-half month high of 9.90 per cent during the week ended July 30 against the 8.04 per cent in the previous week.
Bank stocks fell on concerns over higher interest rates which may crimp loan growth.
Among the major indices, the BSE-IT fell 8.32 per cent, the BSE-Teck 7.49 per cent, the BSE-Metal 5.83 per cent, the BSE-Realty 4.3 per cent and the BSE-Oil & Gas dropped by 2.54 per cent.
However, bucking the negative trend, the BSE-Auto index shot up by 2.67 per cent.
From the Sensex pack, Tata Power fell 11.81 per cent, Tata Steel 10.61 per cent, Tata Motors 9.93 per cent, TCS 9.98 per cent, Hindalco Ind 7.37 per cent, Sterlite Ind 5.64 per cent and Jindal Power lost 3.19 per cent.
However, Mahindra & Mahindra shot up by 13.02 per cent, Hero Motocorp 5.99 per cent, Maruti Suzuki 4.50 per cent, Bajaj Auto 4.07 per cent, NTPC 1.89 per cent, Jaiprakash Associates 1.81 per cent and ONGC rose 1.16 per cent.
The total turnover on the BSE and NSE moved up to Rs 14,283.61 crore and Rs 62,643.64 crore, respectively against the last week-end level of Rs 13,786.23 crore and Rs 55,270.44 crore.