Mumbai: Stocks plummeted for the second straight trade after the RBI surprised the markets with a bold decision to hike interest rates on fears of rising inflation dampening investors' confidence.
The 50-share CNX benchmark Nifty slumped by a hefty 122.35 points, or 2.04 percent, to close at 5,889.75 on the National Stock Exchange (NSE).
Traders definitely got a dose of fear last week after the RBI governor Raghuram Rajan raised repo rate by 25 basis points to 7.5 percent at his first policy review meeting since taking the reins.
Financial stocks remained under intense sell-off on concerns over of high interest rates and rise in non-performing assets. Other rate sensitive counters like realty, auto, fmcg, capital goods and healthcare also witnessed profit taking. Technology stocks, however withstood the panic selling due to depreciating rupee.
After a big gap-down opening, bourses continued to reel under selling pressure throughout the session with the key index breaking down all support levels. Implied volatility ahead of the September derivatives contract expiry, further added pressure.
In fact, the market had surrendered all its Thursday's gains made on the back of Fed-fuelled rally.
The monetary policy review did not go down well with the market that was expecting a status quo from the apex bank as the move will raise funding costs for the corporates, that are already facing a growth slowdown, trader commented.
Bank of Baroda, DLF, Axis Bank, Indusind Bank, PNB, SBIN, JP Associates, IDFC, Maruti and HDFC were among the prominent frontline index losers.
Key gainers included Sesa Goa, HCL Tech, Hero Motoco, Hindalco, Dr Reddy, Coal India, Infosys, Ranbaxy, TCS and Cairn.
Turnover in the cash segment dropped to Rs 10,943.22 crore from 18,303.13 crore last Friday. A total of 5,441.49 lakh shares changed hands in 59,93,546 trades. The market capitalisation stood at Rs 62,93,258 crore.
First Published: Monday, September 23, 2013, 20:40