Markets snap two-week winning spree, Sensex drops 198 points

Mumbai, (PTI) Despite a tail-end recovery, markets snapped their two-week winning spree as the S&P BSE Sensex dropped by 198 points to 28,599.03 and the NSE Nifty slipped by 87 points to 8,779.85 due to selling pressure from operators in view of a rise in inflation and lower industrial output in July coupled with fresh foreign capital outflows.

Wholesale inflation soared to a two-year high of 3.74 per cent in August. However, the consumer inflation eased to a five-month low of 5.05 per cent in August, mainly because of a slower rate of price increase in vegetables as well as food and beverages.

Industrial output contracted by 2.4 per cent in July, reflecting the worst performance in 8 months, mainly due to decline in output in manufacturing and capital goods sectors.

The Sensex resumed lower at 28,481.09 and dropped to 28,251.31 due to heavy selling pressure on fears of rising interest by Federal Reserve. However, the 30-share index recovered afterwards to 28,778.64 on fresh buying on receding fears of hike in the US interest rates before ending at 28,599.03, showing a loss of 198.22 points, or 0.69 per cent.

The BSE barometer had gained 1,015 points, or 3.65 per cent, in the previous two weeks. 

The NSE Nifty dropped by 86.85 points, or 0.98 per cent, to 8,779.85. The 50-share index had gained 294.15 points, or
3.43 per cent, in the last two weeks.

Meanwhile, Finance Minister Arun Jaitley expressed hope that RBI will keep in mind the decline in retail inflation
while deciding on interest rates at its policy review meeting on October 4.