The BSE Sensex fell 71 points on Thursday to 17,059.40 on investor worries that a sharp rise in food inflation may lead to further hike in interest rates, amid reports that earnings of blue-chips will be hit by high borrowing costs.
Global cues were mixed and offered little support as investors remained cautious in view of the difficult economic environment world wide because of the lingering euro zone debt crisis and questions over the US recovery.
The Bombay Stock Exchange 30-share barometer opened weak on negative cues from Asian markets, after losses logged in by the US bourses yesterday, but recovered in afternoon to touch a high of 17,207.82 as European stocks opened higher.
However, Sensex fell back on profit-booking after the latest food inflation numbers triggered fears that the Reserve Bank may hike key rates further, putting more pressure on the profitability of companies.
Besides, brokers said that investor sentiment dipped following reports that a Citigroup analysis has lowered earnings estimates of Sensex companies this year on fears of rising borrowing costs in view of high inflation.
Food inflation jumped to 9.90 per cent for the week ended July 30 from 8.04 per cent in the preceding week.
Finally, the Sensex closed at 17,059.40, a fall of 71.11 points or 0.42 per cent. Yesterday, it had gained by 272.60 points or 1.62 per cent.
Selling in key index-based stocks like ICICI Bank, Bharti Airtel, Tata Power, L&T, SBI, Jindal Steel, Maruti Suzuki, ONGC, Bajaj Auto, TCS and Infosys Tech contributed to the Sensex fall.
