Sensex pares losses, ends 148 pts lower

Although fag-end short-coverings helped the bellwether Sensex to pare more than half of its early losses, it still ended down by over 148points at 16,936.89 on steep rise in food inflation and weak global cues.

Interest rate sensitive stocks from realty, auto, banking and consumer durablesegments bore the brunt of selling on expectations of further hike in keyinterest rates by the apex bank after government's announcement of rise in foodinflation to 10.60 per cent for week ended October 8 from 9.32 per cent in theprevious week.

Experts said that sharp rise in food inflation is likely to put furtherpressure on the government and the Reserve Bank to tackle the situationpromptly, expecting another round of rate hike in the apex bank's secondquarterly review of the monetary policy on October 25.

The Bombay Stock Exchange 30-share barometer resumed down by 175 points at16,911.85 on bearish Asian trends due to fall on Wall Street on Wednesday onsigns of a split between Franceand Germanyover a complete plan to solve the euro zone debt problems in a weekend summit.

The situation aggravated further after steep rise in food inflation datafiltered in and the Sensex tumbled further to a low of 16,744.99, a fall ofover 340 points.

However, it rebounded at the fag-end on short-coverings by operators ahead ofthe expiry of derivatives contract on October 25 and finished at 16,936.89,still showing a loss of 148.45 points or 0.87 per cent. On Wednesday, it hadgained by 337.05 points or 2.01 per cent. .