Mumbai: The BSE benchmark Sensex dropped by 205 points to end at 18,326.09 despite hectic short-coverings on the last day of the week ahead of the expiry of May contract coupled with strong results from Larsen and Toubro.

Steep hike in petrol prices and fears of rise in diesel prices next week are expected to stoke up the inflation further which weighed on the market sentiment, resulting the 30-share index to fell to an 8-week low at 18,020.79.

It resumed lower at 18,492.68 and dropped further to 18,020.79 before settling the week at 18,326.09, showing at net loss of 205.19 points or 1.11 per cent from its last weekend's level.

Sustained selling by foreign funds and fears of high interest rates which may affect corporate profitability mainly affected the market sentiments.

Highs and Lows

Gloomy earnings by the banking major State Bank of India (SBI) also led to the fall in the value of share prices.     

The country's largest lender SBI's net profit tumbled to Rs 20.88 crore for the Q4 ended March 11, against Rs 1,866.60 crore in the same quarter last fiscal due to higher provision
for bad loans and operating expenses.

Sensex recovered by 184 points on the last day of the week following strong results from Larsen & Toubro.

The NSE 50-share Nifty also dropped by 58.40 points or 1.05 per cent to end at 5,486.35.

Heavy sell-off from Foreign institutional investors (FII's) to the tune of Rs 7,612.70 crore during the current month till May 19 also affected the market sentiments.

Share of Larsen and Toubro (L&T) on Saturday rose by 8.05 per cent as company reported a 17.25 per cent growth in standalone net profit to Rs 1,686.21 crore for the quarter ended March 31, 2011.

Food inflation in the country slipped further to 7.47 per cent for the week ended May 7, on the back of cheaper pulses, vegetables and wheat.

SBI, Reliance major loser

Major sufferers from the Sensex pack were the State Bank Of India (12.13 pc), Reliance Communication (7.70 pc), Reliance Infra (6.96 pc), Jaiprakash Associates (6.51 pc), Tata Motor (3.47 pc), Hindalco (3.08 pc), ICICI Bank (2.92 pc) and Reliance Ind (2.87 pc).

However, TCS shot up by 4.36 pc, Cipla 2.91 pc, HDFC Bank 2.73 pc, BHEL 2.10 pc, ITC 1.95 pc, Bharti Airtel 1.77 pc and HDFC 1.75 pc.

The total tunrover at BSE and NSE were Rs 12,734.20 cr and Rs 49,242.26 cr, respectively, as compared to Rs 13,055.61 cr and Rs 46,687.71 cr previously.

India's largest oil exploration firm by sales OIL and Natural Gas Corporation (ONGC) declined by 10.06 per cent on reports that government has hiked the contribution of upstream oil companies towards fuel subsidies for revenue losses suffered by oil retailers.

Rupee continues sliding

The Indian rupee continued its downward spiral against the American currency for the third straight week due to persistent dollar demand from banks and importers amid sustained capital outflows and weak equity market.

At the Interbank foreign exchange (FOREX) market the rupee resumed lower at 45.03/05 per dollar as against the last weekend's level of 44.86/87 per dollar and hovered in the
range of 44.85 per dollar and 45.18 per dollar before ending the week at 45.01/02 per dollar, displaying a fall of 15 paise.

Forex dealers attributed the late fall in the rupee value to buying of dollar by importers, mainly oil refiners, to meet their monthly requirements.

Rupee traded strong in the second half of the week and managed to erase the dollar gain and made a high of 44.85 on the last trading day of the week, he added.

The rupee moved down against the pound to 73.03/05 from 72.95/97 previously, while the euro looked up to 64.01/03 from 64.05/07 previously.

It also firmed up further against the Japanese Yen to 55.09/11 per 100 yen from 55.57/59 previously.

The rupee premium for the forward dollar ended sharply lower due to sustained receivings by exporters.