Sensex tumbles 546 points on rising oil prices and inflation

The BSE benchmark Sensex today plunged over 618 points before recovering a little to close at 17,632.41, on all-round selling as investors dumped stocks on worries over rising oil prices, inflation and interest rates.

Sensex ended the day with a loss of about 546 points -steepest single day fall in 18 months.

Weak global cues because of political turmoil in West Asia and nearby region impacting oil supplies, as well as expiry of monthly derivatives contracts, worsened the trading sentiment.

The Bombay Stock Exchange benchmark index Sensex, which had lost over 260 points in last two trading sessions, rolled down further by 545.92 points to close at 17,632.41.

It touched the day's low of 17,559.70. The gauge has suffered such a whopping fall after August 2009.

In similar fashion, the broad- based National Stock Exchange index Nifty broke two crucial levels of 5,400 and 5,300 mark level to close with a hefty loss of 174.65 to 5,262.70, after touching the day's low of 5,242.50.

The melting stocks received a further jolt, following reports of some big-wigs coming under the scanner of investigating agency in the 2G spectrum allocation scam.

Food inflation rose to 11.49% for the week ended February 12, from 11.05% the previous week.

The gauge has lost 8.2% since the RBI hiked interest rates for the seventh time on January 25 and revised upwards its inflation estimate.

Brokers said a rise in food inflation and surging global crude oil prices raised concerns that the Reserve Bank of India might soon jack up interest rate for eighth time.

They said unrest in Libya and West Asia, the leading oil suppliers might hamper global economic growth. The markets might be in jittery mood until the presentation of the Union budget next week, they added.

The financial stocks suffered the most on fears that rising interest rates might reduce demand for loans.  The banking index dropped by 3.97% to 11,616.59 followed by consumer durable by 3.89% to 5,601.78.

The heavy machinery stocks were down as any slow down in the economic growth would directly effect the sector. The segment index dropped by 3.77% to 12,386.74.

The auto sector was battered on both counts - shooting oil prices as well as interest rate hikes. The auto sector index fell by 3.52% to 8,189.39 as Tata Motors, Mahindra and Mahindra and Hero Honda fell sharply.

With the selling pressure spreading over a wide-front, midcap sector index dropped by 2.91 per cent to 6,367.79 and smallcap index by 2.77% to 7,814.04.