Mumbai: An expected rise in inflation dented investors' risk-taking appetite on Monday and pulled the Indian equity market deep into the red, with both indices registering their highest fall in the last six months, analyst said.
Investors feared that high petrol and diesel prices and a weak rupee would pump up the retail and wholesale inflation rates, thereby mitigating chances of a rate cut by the Reserve Bank of India in the near term.
The data on retail inflation rate, the Consumer Price Index is scheduled to be released on Wednesday.
Index-wise, the Nifty50 of the National Stock Exchange (NSE) closed at 11,438.10 points, lower by 151 points or 1.30 per cent from its previous close of 11,589.10 points.
The benchmark S&P BSE Sensex, which had opened at 38,348.39 points, closed at 37,922.17 points, lower by 467.65 points or 1.22 per cent from the previous close of 38,389.82 points.
It touched an intra-day high of 38,354.52 points and a low of 37,882.83 points.
In the broader markets, the S&P BSE Mid-cap declined by 1.68 per cent and the S&P BSE Small-cap ended 1.07 per cent lower from its previous close.
The BSE market breadth was bearish with 1,691 declines against 1,041 advances. The total number of stocks traded on the exchange are 2,927 and 195 scrips ended unchanged.
"Markets slid as fears of escalating US-China trade war dented the confidence," said Vinod Nair, Head of Research, Geojit Financial Services.
He said: "As a direct impact of rising crude oil price, widened current account deficit and strengthening dollar on account of a strong US job data, the rupee succumbed to a new low and 10-year yield rose further."
The depreciation of the rupee to a fresh low also affected market sentiments as it bolstered inflation concerns, Deepak Jasani, Head of Retail Research at HDFC Securities, told IANS.
The Indian rupee earlier in the day touched a fresh low of 72.67 per dollar. It, however, recovered to settle at 72.45, its lowest closing level against the US dollar, weaker by 72 paise than its previous close of 71.73 per greenback.
Investment-wise, provisional data with exchanges showed that foreign institutional investors sold scrips worth Rs 841.68 crore and domestic institutional investors sold stocks worth Rs 289.66 crore.
Sector-wise, only the S&P BSE IT index rose, by just 3.16 points.
As for declines, the S&P BSE auto index fell 431.80 points, the banking index declined by 317.15 points and the healthcare index slipped 245.01 points from its previous close.
The gainers on the Sensex were Axis Bank, up 0.99 per cent at Rs 651.55; Wipro, up 0.26 per cent at Rs 324.90; Yes Bank, up 0.09 per cent at Rs 323.75; Tata Consultancy Services, up 0.07 per cent at Rs 2,081.20 per share.
The majors losers were Sun Pharma, down 3.72 per cent at Rs 639.50; Mahindra and Mahindra, down 3.64 per cent at Rs 938; Vedanta, up 3.44 per cent at Rs 223.10; IndusInd Bank, down 2.54 per cent at Rs 1,828.60; and State Bank of India, down 2.35 per cent at Rs 285 per share.