The Reserve Bank of India’s decision to hold rates, lower growth forecast and the rupee’s decline below the sensitive 60 per dollar mark spooked stocks markets on Tuesday with the S&P BSE benchmark Sensex plunging 245 points, or 1.3%, to 19,348.
Falling for the fifth straight session, the broader NSE Nifty also ended down 76 points, or 1.3%, to 5,755, wiping out all gains made so far this month.
As many as 12 out of 13 sectoral indices closed down while only BSE-IT closed up following the weakness in the rupee. With almost 60% of stocks ending down, investors became poorer by Rs. 1 lakh crore.
“The overall market sentiment is very bad especially given the RBI policy on Tuesday,” said Sachin Shah, fund manager, Emkay.
Oil marketing companies including Hindustan Petroleum Corp fell 11.1%, while Bharat Petroleum Corp declined 8.4% and Indian Oil Corp slumped 8.3% following the rupee’s plunge.
Lenders slumped with Yes Bank falling 4% and Axis Bank declining 0.6%.
The rupee fell below the key psychological level of 60 to the dollar to a three-week low on Tuesday, posting its biggest fall in a month, and ended at 60.5 against the US dollar against Monday’s close of 59.4. The Indian currency fell 1.8% during the session, its biggest single-day fall since June 26.