Sensex dips over 91 pts on fading rate cut hopes

Under pressure for the second straight session, the BSE Sensex fell over 91 points to crack below the 28,000-mark with investors adopting cautious stance after the appointment of Urjit Patel as the next RBI chief, who is very unlikely to cut rates in view of high inflation.

Besides, a weaker sentiment among Asian and European investors amid rising prospects for a rate hike by US Federal Reserve was also a reason behind the volatile domestic bourses. The rupee depreciating by 19 paise to trade at a fresh three-week low of 67.24 (intra-day) too negatively impacted market’s mood.

The government on last Saturday announced the appointment of Urjit Patel as the next Reserve Bank Governor with effect from September 4.

Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services Ltd, said, “The Market fell, rupee weakened and bond yield rose amid the announcement of the new RBI Governor. The market believes that the prospect for a rate cut in the near-term is unlikely as the priority will be to contain inflation.”

“Global market was volatile on concern over interest rate hike due to contradictory statement from the FED officials and the minutes,” he added.

Beginning on a higher note at 28,088.07, the Sensex touched the day’s high of 28,143.28 following selective buying by participants in bluechip stocks amid sustained foreign fund inflows.

However, the index later slipped into a negative terrain to slip below the 28,000-mark and touched a low of 27,918.05 before winding up at 27,985.54, a fall of 91.46 points or 0.33 per cent. This is the lowest closing since August 11.

The gauge had lost 46.44 points in the previous session on Friday after investors locked-in gains.

The NSE Nifty too remained under pressure for the better part of the session and finished 37.75 points, or 0.44 per cent, down at 8,629.15. Intra-day, it shuttled between 8,684.85 and 8,614.

Out of the 30-share Sensex pack, 19 scrips ended lower.