Sensex erases gains on RBI rate hike, ends day 57 pts up

The Sensex erased early gains on Friday but still ended 57 points up as the Reserve Bank of India (RBI) raised key interest rate on expected lines, amid firm cues from global markets.

HOW THE MARKETS FARED

After rising to 17,122.54 points, the 30-share Bombay Stock Exchange index fell sharply after RBI hiked interest rate by 25 basis points to tame inflation. It ended at 16,933.83, still showing a gain of 57.29 points.

The broad-based National Stock Exchange index Nifty rose 8.55 points to 5,084.25, after hitting the day's high of 5,143.60.

Brokers said the hike in interest rate, 12th time since March last year, was widely expected but fanned apprehensions that slowing economic as well as industrial growth would hit corporate earnings.

The sentiment was also dented as oil marketing companies raised petrol prices by Rs 3.14 a litre, a move that would push up inflation further, they added.

However, a firm trend in the Asian region and higher openings in Europe helped the markets remain in the positive zone as the European Central Bank and other authorities decided to coordinate dollar loans to troubled banks.

IT stocks fell following a volatile rupee against the US dollar. About 85 per cent revenues of the Indian software exports come from the US and European markets.

In the 30-BSE stocks, 13 shares closed with gains, while 17 ended in the negative zone. The two most heaviest on the benchmark, with 20 per cent weight - Reliance Industries and Infosys closed with losses.