Sensex tanks 453 points as RBI hikes rates, projects lower growth
The Bombay Stock Exchange benchmark Sensex was trading over 400 points lower on panic selling by investors following the RBI`s move to raise key policy rates by 50 basis points.
Mumbai: The BSE Sensex plunged 463 points to 18,534 Tuesday as investors dumped interest-sensitive stock after RBI hiked key policy rates by 50 basis points to tame inflation, and projected low growth for this fiscal.
In its longest losing stint since November 2008, the 30-share Bombay Stock Exchange index, Sensex, which had lost 604 points in last six trading sessions, tanked another 463.33 points to close the day at 18,534.69.
The plunge was triggered by banking and other interest sensitive stock.
Similarly, the broad-based National Stock Exchange index Nifty dipped 136.05 points to 5,565.25 -- below psychological mark of 5,600.
After a weak start, the market tumbled as the Reserve Bank of India hiked short-term lending (repo) rate by 50 basis points to 7.25 per cent, while lowering the economic growth projection to 8 per cent for 2011-12.
The Sensex has declined 8.2 percent this year on fears that high inflation and interest rates to tame it will make borrowing costly, crimping corporate earnings.
The banking sector index plunged by 3.11 percent to 12,406.67, as State Bank of India lost 4.03 percent at Rs 2,583.10.
The auto sector index was the worst performer and dropped by 3.74 percent to 9,108.98 as on fears that high interest rates will hit
Tata Motors dropped 5.30 percent at Rs 1,163.45 and Mahindra and Mahindra fell 4.47 per cent to 707.85.
Another interest-linked realty sector index fell 2.91 percent to 2,140.90 as DLF, the biggest developer, slid 2.56 percent to Rs 220.80 and Jaiprakash Associates, a builder of dams, roads and bridges fell 8.05 percent to Rs 85.05.
The two most-heaviest on the Sensex, with 23 percent weightage - Reliance Industries and Infosys Technologies -- closed with losses.