Inflation worries pull down markets;Sensex shaves off 114 pts

The record industrial production numbers could not help the market build on from Thursday's rally beyond the opening, and soon went on a downslide due to fresh selling mainly in key blue-chip counters on lack of direction as well as absence of FIIs who are waiting for some trigger from the budget.

The barometer Sensex opened 74.45 points up on investment buying in high beta stocks, and touched a high of 16227.04, but could not maintain the positive territory following high inflation data and closed 114.24 points, or 0.71 per cent down at 16,038.35 after touching a low of 16,011.82 points.

The biggest drag was the Sensex heavy-weight Bharti Airtel, as it plunged a hefty 9.22 per cent following its bid to takeover the Kuwaiti Telco Zain's African operations for a massive USD 10.7 billion reported all cash deal.Interestingly, when it bid for the South African telco MTN last year also, the market reacted very adversely to the news.

Marketmen said investors are fearing a rollback of fiscal stimulus in the budget due to record IIP data, besides worried about the rising inflation which would force RBI to further tighten money supply weighed on the bourses.
Wholesale price-based inflation rose to 8.56 per cent in January from 7.31 per cent in December, shooting past the RBI forecast of 8.5 per cent for March.

Analysts are of the opinion that the markets would remain directionless till the budget, as FIIs are waiting from some clear trigger from the official annual economic exercise."The markets will continue to remain volatile till the budget,"said Angel Broking research head Hitesh Aggarwal.

Marketmen said another reason for the poor show was mixed cues from Asia and the lingering debt crisis in Greece and Dubai. China further tightening money supply also weighed.
However, despite the Greek crisis, key European markets opened on a strong footing. The CAC rose 0.67 per cent, DAX 0.64 per cent and FTSE 0.83 per cent in their opening trade.
The broader 50-issue Nifty of the NSE also turned negative and lost 24.90 points or 0.52 per cent to 4,801.95.
Among the BSE sectoral losers, barring healthcare, IT and metal indices, all other sectoral indices ended in the red. Consumer durables index dipped by 60.17 points or 1.49 per cent, the Tech by 41.40 points or 1.30 per cent and the oil & gas by 91.85 points or 0.94 per cent.

From the Sensex pack, other losers were RCom 2.92percent, Sterlite 2.91 per cent, Tata Power 1.99 per cent, RelInfra 1.74pc, Maruti 1.47 per cent, HUL 1.26pc and SBI 1.25pc.
However, Hindalco rose by 1.81 per cent, BHEL by 1.41 per cent, HDFC Bank by 1.11 per cent and Tata Steel by 0.72 pct.
The market breadth turned negative as 1,634 shares closed with losses against 1,158 that ended with gains on the BSE.
Trading volume declined to Rs 3,428.15 crore from Rs 3,970.92 crore on last Thursday. Syncom Health, listed today, was the most active share with a turnover of Rs 247.38 crore, followed by Bharti Airtel (Rs 146.85 crore), and Tata Steel (Rs 96.75 crore).