Sensex surrenders early gains,ends 10pts up as inflation bites

In a volatile session, the Sensex today wiped out over 350-point rise in early trade to end with a meagre 9.71 point rise as a pick-up in August wholesale inflation dashed hopes of RBI cutting rates later this week.

After climbing to 20,086.43 at the outset, the BSE benchmark was hit hard by profit-booking as costlier onion and other vegetables pushed up inflation for the third month in a row to 6.1 per cent in August.

The Sensex finally closed at 19,742.47, up just 9.71 points, or 0.05 per cent compared to Friday's closing value.

Traders said besides dashed rate cut hopes, concerns that the central bank may not wind down its liquidity-tightening measures also was a factor in investors selling off positions.

The broad-based National Stock Exchange index Nifty fell by 10.05 points, or 0.17 per cent to 5,840.55. The index moved 5,957.25 and 5,798.15. Also, SX40 index, the flagship index of MCX-SX, closed at 11,715.45, up 9.27 points or 0.08 per cent.

Brokers said selling pressure remained strong enough and domestic markets ignored a firming trend in the Asian region as well as a higher opening in Europe.

While banking, auto, FMCG and public sector undertaking stocks clocked gains, drop in Reliance Industries, Infosys and TCS dragged down the 30-share index.

In banking, ICICI and HDFC notched up good gains. ITC, Bharti Airtel and ONGC also rose.

In major movers, pharma major Ranbaxy, a Nifty stock, dropped by 30.27 per cent to Rs 318.85 as US Food and Drug Administration issued an import alert on drugs produced by the company at its Mohali plant in Punjab, for violation of current good manufacturing practices.

Global stocks rose on reports that former US Treasury Secretary Lawrence Summers, who was said to be in the race to replace Fed Chairman Ben Bernanke in January next year, has pulled out of the race for the top job.