In a volatile session, the BSE Sensex today failed to build on early gains and closed 90 points down at six-week low as rate-sensitive sectors like auto and banks saw selling pressure ahead of RBI policy review, amid sustained weakness in rupee that tumbled below 57-mark.
Taking a U-turn in second half after gaining 192 points, the Sensex saw profit-booking as global investors also adopted a cautious stance ahead of US jobs data, said traders. Auto stocks including M&M, Maruti and Tata Motors fell in 1.5-2.3 per cent range. Among banks, ICICI, HDFC and SBI ended lower.
Sensex ended at at nearly six-week low of 19,429.23, a fall of 90.26 points or 0.46 per cent. It was second day of losses after the index declined by 48.73 points yesterday.
Ahead of its mid-quarter policy on June 17, RBI today said its monetary actions in the coming months will be determined by the "monsoon outlook" and ensuing impact on inflation. This triggered selling by investors, who were betting on a rate cut by RBI this month, said experts.
The broader NSE 50-issue CNX Nifty dropped by 40.40 points, or 0.68 per cent, to end below 5,900-mark at 5,881.00 -- a level not seen since April 26, 2013. Also, MCX-SX flagship index, SX40, ended down by 67.62 points at 11,528.7.
Weak Asian trends amid selling by foreign institutional investors (FIIs) weighed on the market. Fall in RIL, Bharti Airtel, L&T, ONGC, HDFC, and NTPC meant the market was under pressure at the fag-end, said dealers.
Bucking the overall gloomy trend, IT scrips like TCS, Wipro and Infosys saw demand after rupee's plunging below 57-mark raised hopes of a solid revenue boost for exporters.
However, a weak rupee poses problems for corporates as it has a negative impact on dollar-denominated liabilities.
"For the week also, weakness in rupee, subdued global markets and concerns over interest rate movements resulted in a near 2 per cent fall in benchmark indices. Going ahead, monsoons, economic data and RBI policy will be the domestic factors to watch out for," said Dipen Shah, Head of Private Client Group Research, Kotak Securities.
"Nifty after attempting a splendid start gave up all its gains by the time the session ended to close decisively below 5900 mark. The trend continues to remain down and the next leg of decline could begin towards 5800 if the support of 5865 is breached over short term," said Shubham Agarwal, Associate VP and Sr. Technical Equities Analyst, Motilal Oswal Securities.
In global markets, Asian stocks ended lower as gains in yen weighed on Japanese shares. Key indices in China, Hong Kong, Japan, Singapore and South Korea shed upto 1.80 percent.
European stocks were trading narrowly mixed. Indices in France and UK moved up by 0.13 per cent each while Germany's DAX was quoting 0.09 per cent lower.
Turning back to the domestic market, 22 scrips out of the Sensex pack ended lower while 8 others finished with gains.
Major losers from the Sensex pack were Bharti Airtel (2.40 pc), M&M (2.27 pc), NTPC (2.12 pc), Maruti Suzuki (2.04 pc), Jindal Steel (1.91 pc), Sterlite (1.91 pc), Tata Motors (1.58 pc), ONGC (1.27 pc), BHEL (1.25 pc), Gail India (1.18 pc), Tata Steel (1.10 pc), L&T (1.09 pc), Coal India (1.08 pc) and ICICI Bank (1.05 pc).
However, TCS rose by 3.48 per cent, followed by Dr Reddy's Lab (2.82 pc), Wipro (1.67 pc) and Infosys (0.80 pc).
Among the sectoral indices, S&P BSE-Auto dropped by 1.39 per cent, followed by S&P BSE-Realty (1.36 pc), S&P BSE-Bankex (1.34 pc), S&P BSE-Power (1.32 pc), S&P BSE-PSU (1.26 pc) and S&P BSE-Metal (1.18 pc). However, S&P BSE-IT rose by 1.59 per cent and S&P BSE-Teck by 0.72 per cent.
Market breadth remained negative as 1,328 stocks ended lower while 1,029 stocks finished higher. Total turnover rose to Rs 2,283.17 crore from Rs 1,688.62 crore yesterday.
"Lack of other data points, has resulted in USD/INR taking centre-seat in determining direction of stock markets," said Nagji K Rita, CMD, Inventure Growth & Securities.
Meanwhile, FIIs sold shares worth a net Rs 270.47 crore yesterday, as per provisional data from the stock exchanges, also impacted negatively on the market sentiment.
