Inflation, rupee pull sensex down

Mumbai: A slew of factors — Moody's downgrades of leading banks, financial institutions and Reliance Industries, fears of Greece exiting Euro, higher-than expected inflation numbers and weakness of the rupee — weighed on Dalal Street on Monday to pull the sensex down by 77 points to 16,216, near its fourmonth closing low. To make matters worse, there was a technical glitch in NSE's derivatives trading software that also unnerved traders, and the market fell despite buying by foreign funds, brokers and dealers said. 

    On Monday, global ratings major Moody's downgraded LIC, Axis Bank, HDFC Bank, and ICICI Bank because of changes in its rating methodology, seemingly a technical downgrade. It also lowered its rating on Reliance Industries to 'credit negative' on concern of falling gas production. Index heavyweight RIL closed 2.3% lower at Rs 681, while HDFC Bank lost 2% to Rs 501, ICICI Bank was down 1.7% at Rs 799 and Axis Bank lost 0.7% at Rs 994. 

    The day's trading was also impacted by a higher-than-estimated reading of the Wholesale Price Index (WPI) at 7.23%, mainly due to sharp increases in the prices of primary articles. Market was expecting the WPI to come in at around 6.7%. The inflation data also spooked expectations that the RBI could cut rates in its next policy review meeting to boost the currently weakening growth. 

    The Street also felt the jitters from Europe where concerns about Greece existing the Euro monetary union escalated, which in turn pulled European markets down in the opening trades. 

    The weakness of the rupee, which closed at an alltime low of 53.96 to a dollar, also spooked market players. 

Greece triggers global stock selloff 

    Global stocks slid and the euro fell to a four-month low on Monday as a political impasse in Greece heralded a potential exit for the country from the Eurozone, while a move to prop up lending in China and poor European data pointed to slower world growth. Safe-haven currencies, including the dollar and the Japanese yen, rose and government debt gained as coalition talks in Greece on Sunday proved fruitless, increasing the chance of another election in mid-June. 

    European shares sank about 2% to their lowest levels in more than four months on the Greek crisis and signs a struggling Chinese economy. Stocks on Wall Street opened almost 1% lower. The Dow Jones industrial average was down 0.78%, at 12,720. The Standard & Poor's 500 Index was down 0.9%, at 1,341. The Nasdaq Composite Index was down 0.8%, at 2,909. 

    Oil fell to extend heavy losses as the mounting uncertainty over Greece and the prospect for slower growth in China weighed on the demand outlook. Brent crude was down by $1.84 to $110.42 a barrel. US crude fell $2.12 to $94.01 a barrel. AGENCIES