MUMBAI: Equity benchmark indices Sensex and Nifty slumped in early trade on Friday amid profit-taking after a three-day rally and anticipation of a policy rate hike by the RBI next month after retail inflation surged to 6.09 per cent in October.
The 30-share BSE Sensex tumbled 460 points to 81,441.17 in early trade. The 50-share NSE Nifty fell 179.05 points to 25,119.50.
In the 30 Sensex firms, Mahindra & Mahindra, HDFC Bank, InterGlobe Aviation, Trent, Bharat Electronics and Bajaj Finserv were among the major laggards.
Tech Mahindra, Sun Pharma, HCL Tech and Hindustan Unilever were among the winners.
Retail inflation surged to 6.09 per cent in October, breaching the Reserve Bank of India's upper tolerance limit for the first time in two years and prompting economists to anticipate a policy rate hike by the central bank next month.
The consumer price index (CPI) based retail inflation rose to 5.54 per cent in September, as a sustained uptick in food & beverages (F&B), restaurant services and transport inflation played a key role in pushing up the October headline number.
Data released by the Ministry of Statistics & Programme Implementation showed that food inflation spiked to 8.94 per cent in October from 7.74 per cent in the previous month.
"India's retail inflation rose to 6.09 per cent in October from 5.54 per cent in September, its highest level in two years and above the RBI’s 6 per cent upper tolerance limit, with food inflation climbing to 8.94 per cent. The data keeps the rate outlook hawkish ahead of the RBI's December 4 policy meeting and leaves the market vulnerable to consolidation after its sharp recovery," Ponmudi R, CEO of Enrich Money, an online trading and wealth-tech firm, said.
Meanwhile, Foreign Institutional Investors (FIIs) bought equities worth Rs 7,830.60 crore on Thursday, according to exchange data.
Brent crude, the global oil benchmark, traded 0.44 per cent lower at USD 95.40 per barrel.
In Asian markets, South Korea's Kospi and Hong Kong's Hang Seng index traded lower, while Japan's Nikkei 225 index and Shanghai's SSE Composite index quoted in positive territory.
The US equity markets ended lower on Thursday.
On Thursday, the Sensex advanced 31.61 points, or 0.04 per cent, to settle at 81,911.01. The Nifty was up 44.30 points, or 0.18 per cent, to end at 25,299.35.
