Rising prices, which saw the Reserve Bank of India raise the FY23 inflation forecast to 6.7 percent from 5.7 percent, growth worries and an uptick in Covid-19 cases saw the equity benchmarks end more than 2 percent lower in the week ended June 10.
The Sensex corrected 1,466 points, or 2.63 percent, to 54,303.44, while the Nifty declined 382.5 points, or 2.3 percent, to 16,202 during the week.
The central bank’s moves, which included withdrawal of the so-called accommodative stance to strengthen the fight against inflation, high oil prices, relentless selling by foreign institutional investors, ECB's intention to hike interest rates in July and a higher US inflation reading for May weighed on the market.
"The focus of the domestic market shifted to global macros, which is anticipating a hawkish Fed policy, slated next week. The European Central Bank (ECB) in its policy meeting signalled to start rate hike," Vinod Nair, Head of Research at Geojit Financial Services said.
Most sectors, barring auto, energy and oil & gas, closed in red, with BSE bank, capital goods, consumer durables, FMCG, finance, IT and metal being top losers, falling 2-3 percent.
The broader space was also under pressure but not as much as the frontliners. The BSE midcap and smallcap indices declined 1.25 percent and 2 percent, respectively.
But in this subdued market, 28 smallcaps, including Mangalore Refinery and Petrochemicals (up 39 percent), Future Lifestyle Fashions (up 27.5 percent), Future Supply Chain Solutions (up 27 percent) and Future Enterprises (up 22 percent), registered double-digit gains.
Chennai Petroleum Corporation, Navkar Corporation, Mangalore Chemicals and Fertilisers, Titagarh Wagons, Thyrocare Technologies, PNB Housing Finance, TV18 Broadcast and Kamdhenu were among the stocks that gained between 10 percent and 19 percent.
In the midcaps, too, there were outperfomers. Oil India surged 20 percent, followed by RBL Bank, Biocon, TVS Motor Company, Oberoi Realty, Max Financial Services, Apollo Hospitals Enterprises and others that gained 2-7 percent.
Among the BSE pack, the country's largest car maker Maruti Suzuki was the top gainer, up 3 percent followed by Mahindra & Mahindra (up 0.86 percent), Dr Reddy's Laboratories (up 0.43 percent), and NTPC (up 0.1 percent).
FIIs' selling spree has continued for the eighth consecutive month. They have offloaded nearly Rs 19,000 crore worth of shares in June so far. Domestic institutional investors tried to offset the outflow by net buying more than Rs 13,000 crore worth of shares during the month.
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