Mumbai: The Sensex on Tuesday dropped by 92 points to end at three-week low of 32,941.87 points after retail inflation hitting a seven-month high in October dampened expectations of a rate cut by the Reserve Bank.
Besides, inflation at the wholesale level too rose to six-month high of 3.59 percent in October as the prices of food articles rose.
Lower trend at other Asian following a tepid lead from the Wall Street prompted participants to trim their holdings.
Sentiments suffered a jolt after retail inflation climbed to 7-month high in October, dampened hopes of a cut in interest rates by the Reserve Bank at its upcoming policy meet early next month, brokers said.
The BSE Sensex after a better start at 32,990.03, quickly regained the key 33,000-mark to hit a high of 33,126.55 on value-buying at select counters and recovery in the rupee at the outset.
However, emergence of selling at every rise wiped off initial gains and the index finally settled 91.69 points, or 0.28 percent down at 32,941.87, its weakest closing since October 26.
The broader 50-issue NSE Nifty dropped 38.35 points, or 0.38 percent, to close at 10,186.60 after shuttling between 10,248 and 10,175.55.
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