Sensex falls 100 pts as May inflation trims rate-cut hopes

The Sensex and Nifty extended losses amid volatility after inflation rose to 7.55% for May as against 7.23% in previous month that somewhat dampened hopes of rate cut. Even WPI inflation revised higher to 7.69% for March as against 6.89% (provisional).

Dipan Mehta, Member BSE and NSE feels today's number certainly diminished the chances of a rate cut. "Markets are expecting this inflation number to act as a bit of a trigger to take the benchmarks to higher level and perhaps consolidate this upmove, which we have seen over the past 8-10 trading sessions. So in that respect certainly it’s been a bit of a dampener."

The BSE benchmark fell 59.06 points to 16821.45 after earlier losing as much as 112 points. Meanwhile, the NSE benchmark slipped 24 points to 5,097.55. The Indian rupee too depreciated by 9 paise to 55.77 as against the US dollar.

Country's largest lenders State Bank of India and ICICI Bank dropped 1.7% and 2.3%, respectively while their rival HDFC Bank was down 0.7%.

Engineering and construction major by sales Larsen & Toubro tumbled 2.6% and top commercial vehicle maker Tata Motors tumbled over 2%.

State-owned power generation company NTPC plunged 3%, falling for second consecutive session today after company started reducing capacity due to coal shortage.

Top telecom operator Bharti Airtel and state-owned capital goods company BHEL were down 0.9% each.

Oil & gas producers Reliance Industries and ONGC were marginally lower.

However, cigarette major ITC and software services exporter Infosys outperformed, rising 1% each.