Mumbai: Stocks extended losses for the second session, with the benchmark S&P BSE Sensex Monday plunging 363 points to end below the 20,000 mark, on concern RBI Governor Raghuram Rajan would increase rates further to curb inflation.
The banking and realty sectors, which are sensitive to interest rates, were the biggest losers. Mortgage lender HDFC, ICICI Bank and HDFC Bank dragged the Sensex lower by about 155 points.
The 30-share Sensex opened more than 200 points lower, extending a 383-point fall on Friday, when the RBI unexpectedly raised the repo rate to 7.5 percent from 7.25 percent, saying inflation had to be lowered to more tolerable levels.
The index traded between 19,826.30 and 20,199.81 before ending at 19,900.96, a drop of 362.75 points or 1.79 percent. It has declined 745.68 points, or 3.62 percent, in the past two sessions.
The CNX Nifty index on the National Stock Exchange closed at 5,889.75, losing 122.35 points or 2.04 percent. The SX40 index on the MCX Stock Exchange fell 206.17 points to 11,820.24.
IT stocks Wipro, Infosys and TCS gained as the rupee weakened. The local currency traded at 62.6 against the dollar in the afternoon compared with Friday's close of 62.23.
British lender Standard Chartered said it expects the RBI to increase the repo rate to 8 percent by the end of 2013 as it focuses more on inflation than growth, while Japanese brokerage Nomura said it expects a 0.50 percent hike in the rate this fiscal.
Credit Suisse said there may be one or two more repo rate increases from the RBI in the next few months, without quantifying the expected increases.
However, Amar Ambani, head of research at IIFL, said, "Considering deepening slowdown and heightened risks to growth, we do not envisage RBI to further hike repo rate in FY14."
Key indices in China, South Korea and Taiwan rose after a preliminary measure of Chinese manufacturing jumped more than forecast in September, while indices in Hong Kong and Singapore declined.
In Europe, indices in Germany and UK moved down while France's CAC was quoted higher.
In the domestic markets, 22 Sensex shares finished lower, led by State Bank of India (5.39 percent), ONGC (4.86 percent), ICICI Bank (4.39 percent), Maruti Suzuki (4.37 percent) and Larsen and Toubro (4.2 percent).
Gainers on the index included Sesa Goa (3.14 percent), Hindalco Industries (1.84 percent) and Wipro (1.75 percent).
Among the sectoral indices, S&P BSE-Bankex dropped 4.41 percent, followed by S&P BSE-Realty 4.33 percent, S&P BSE-Capital Goods 3.28 percent, S&P BSE-PSU 2.56 percent and S&P BSE-Power 2.26 percent, while S&P BSE-CD rose 2.36 percent and S&P BSE-IT moved up 0.91 percent.
The market breadth remained negative as 1,314 stocks ended lower and 1,000 finished higher.
Foreign institutional investors bought shares worth a net Rs 1,336.80 crore on Friday, according to data from the Securities and Exchange Board of India.
First Published: Monday, September 23, 2013, 16:42