Sensex drops 120 pts; HUL, GAIL biggest losers

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The BSE consumer durables index ended down 2 per cent, FMCG index down 2 per cent, realty index shed 1.9 per cent and capital goods index lost a per cent.

Mumbai: The BSE Sensex dropped 120 points to end the day below the 20,000-mark after FMGC major Hindustan Unilever came out with a disappointing set of third quarter earnings. The NSE benchmark Nifty closed down 33.80 points at 6048.50. The BSE consumer durables index ended down 2 per cent, FMCG index down 2 per cent, realty index shed 1.9 per cent and capital goods index lost a per cent.

Cairn India lost nearly 2 per cent, after management issued guidance for a slower ramp-up in production from the Rajasthan block. But the biggest loser from the oil and gas space GAIL, down 4.5 per cent, on reports suggesting that billionaire Mukesh Ambani's Reliance Logistics (Relog) Infrastructure has complained to the petroleum and natural gas minister, Veerappa Moily for "being treated differently" by his ministry that was "applying different standards" for his private company vis-à-vis state-owned GAIL, which is India's leading gas pipeline construction and transmission company.

Shares of Hindustan Unilever, India's largest consumer goods maker, tanked 5 per cent after the firm reported a 16 per cent jump in third-quarter net profit, but low volume growth and a rise in royalty payments. Top Sensex gainers: Sun Pharma (1.55 per cent), NTPC (1.45 per cent), Jindal Steel (0.53 per cent), Bajaj Auto (0.37 per cent) and M&M (0.26 per cent)

Dollar demand from state-run banks erased most of the rupee's early gains. The rupee is at 53.64/65, pulling back from the day's high of 53.375 following the government's announcement of raising import duty on gold, a key source of dollar demand after oil in India. The pair had closed at 53.765/775 on Monday.

"Market went excessive short in the morning. So there is some covering up now," says a dealer with a foreign bank. India has raised the import tax on gold by 2 per centage points to 6 per cent to curb purchases and rein in a ballooning fiscal deficit, but industry officials expect only a moderate drop in demand.

However, the rupee has turned the corner and is seen on a strengthening trend following the recent fiscal and financial reforms undertaken by the government, dealers say.