Sensex near 2-mth low, drops 162 pts

Weak trends in global markets on Eurozone debt worries and the rupee trading above 55-levels against the dollar also hit the sentiment. After a better start at 18,563.32, the Sensex erased early gains after selling in rate-sensitives gathered pace in the last half hour of trading.

The 30-share Sensex closed 162 points, or 0.88 per cent, lower at 18,309.37 -- a level last seen on September 20.

"At 7.45 per cent inflation is certainly quite high," RBI Governor D Subbarao told reporters on the sidelines of a function in Pune, adding the central bank is always on "high alert" on the inflation front.

After headline inflation fell to an 8-month low of 7.45 per cent in October, investors had hoped for a rate cut in December when RBI reviews the monetary policy, said traders.

ICICI Bank lead the 24 losers in 30-share Sensex, followed by Tata Motors, SBI, Bhel, Maruti and HDFC.

Analysts said the rupee falling against dollar and worries over slowing global growth further forced investors to sell holdings.

The mood also turned cautious ahead of the Winter session of Parliament which starts on November 22. The important economic agenda for the session includes amendment to the Insurance Bill to raise FDI cap from 26 to 49

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