Advertisement

HindustanTimes Sat,12 Jul 2014

Sensex tumbles 383 pts, Rs. dips 46 paise on Rajan’s punch

HT Correspondent, Hindustan Times  Mumbai, September 20, 2013
First Published: 09:23 IST(20/9/2013) | Last Updated: 00:35 IST(21/9/2013)

After a Terrific Thursday, it was Funk-out Friday. Reserve Bank of India (RBI) governor Raghuram Rajan surprised markets with a bold decision to hike interest rates on fears of rising inflation, triggering sharp falls in the Sensex and the rupee.  Speculation-driven markets were unimpressed by Rajan’s long-term stance.

Advertisement

Banking stocks were severely hit, dragging the benchmark down.The BSE Sensex, which fell 595 points to 20,051 immediately after the announcement, recovered some ground later to end the day with a fall of 383 points, or 1.9% — the most in three weeks — to 20,267. On Thursday, it had moved up 3.4%.

The broader NSE Nifty dipped 104 points, or 1.7%, to 6,012.

The rupee also extended losses, falling as much as 62.61 to a dollar, before suspected RBI intervention helped ease some of the losses. It closed at 62.23 against the US dollar versus 61.77 on Thursday.

The Indian currency, which fell around 20% to record lows in late August, recovered around 9% since Rajan took office on September 4.

“Markets were disappointed with the RBI’s monetary policy announcement,” said Sanjeev Zarbade, vice-president, private client research, Kotak Securities.

Twenty one of the 30-Sensex stocks ended lower led by ICICI Bank (4.8%), L&T (4.6%), Sesa Goa (3.9%), Hindustan Unilever (3.8%) and HDFC Bank (3.6%).

Among the sectoral indices, realty (down 6.5%), banking (down 4.2%) and capital goods (down 3.0%) fell on concerns that higher interest rates would make loans more expensive and reduce businesses. Around 1,432 stocks ended lower on the BSE, while 897 finished higher.

However, bonds yields, which signal interest rate mood, surged after RBI provided some reprieve by unwinding some of the cash-tightening steps undertaken since mid-July. The 10-year bond yield closed at 8.58%, up 39 basis points (100 basis points is 1 percentage point) against Thursday’s close.

Some experts said the fall was expected. “The markets were expecting too much from the RBI,” said Kishor P Ostwal, CMD, CNI Research.


Advertisement
more from Business

Doubling of tax on debt mutual funds to hit retirees

On Thursday, finance minister Arun Jaitley gave investors and the mutual fund industry a jolt by increasing the long-term capital gains tax on debt mutual funds to 20% from 10%. The definition of long-term has also been changed to 36 months for non-equity MFs from 12 months.
markets
Advertisement
Most Popular
Advertisement
Advertisement
Copyright © 2014 HT Media Limited. All Rights Reserved