It fell 2.2 percent to a 13-week low. Bombay Stock Exchange, Sensex, ended marginally lower at 17,870.53 after touching a high of 18,064.76 and CNP CNX Nifty ended near week's low, at 5,366.40 after hitting a high of 5421.15. Markets experienced losses for the second consecutive week.

The Reserve Bank of India (RBI) hiked repo rate and reverse repo rate by 25 basis points each to 7.5% and 6.5% respectively.

May inflation stood stubborn at 9.06%, despite the key policy rate hikes ten times since March 2010, the Reserve Bank on Friday said that the price spiral could be tamed by higher farm productivity and better technology and not through monetary measures alone.

RBI is expected to hike rates by 50 basis points in FY12.

Stock markets tend to react negatively to rising interest rates, because that increases the cost of borrowing and impact corporate bottom lines.

The sell-off was mainly high due to Foreign Institutional Investors (FIIs) who sold-off shares worth Rs 2263 crore according to the provisional data available from the Bombay Stock Exchange.

Overall investor sentiment was low amid the ongoing interest hike scenario and on concerns over a further growth slowdown.

Downward pressure was seen in IT and Oil & Gas side.

Amongst sectoral indices, BSE IT lost 4.5% where top losers were TCS, down 6.6%, Wipro fell 6.5% and Infosys lost 3.4% due to fear of Greek debt crisis and slowdown in U.S. and Europe.

BSE Oil & Gas index also decremented 4.8% as probe into RIL weighed on the sector, down 4.5%. Cairn India was down 3.3%, GAIL India was down 1.3% and ONGC was down 0.8%.

Shares of Reliance Industries have been under pressure since the Comptroller and Auditor General report said the Oil Ministry and its technical arm, the DGH, allegedly favoured Reliance Industries for its KG-D6 gas field. Investors dumped RIL shares in a bulk on the news.

RIL slipped to a 26-month low of Rs 868, the stock was down 8% on a weekly basis on reports possible dealings between energy companies and the oil ministry.

The only index ended in green was BSE FMCG index as it consisits all defensive stocks. It was up 0.2% on weekly basis. Top gainers were Marico, up 3.7%, Hindustan Unilever advanced 3.1% and Tata Global was up 2.7%.

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