RBI turns stance, gently
Even as Reserve Bank of India (RBI) kept its policy rates unchanged, the Sensex at the Bombay Stock Exchange fell by 2.3 per cent or 387 points, in line with the Asian markets that fell sharply after a weak closing of US markets on Monday, reports HT Correspondent.business Updated: Oct 27, 2009 23:32 IST
Even as Reserve Bank of India (RBI) kept its policy rates unchanged, the Sensex at the Bombay Stock Exchange fell by 2.3 per cent or 387 points, in line with the Asian markets that fell sharply after a weak closing of US markets on Monday.
The Sensex fell by 387 points to close at 16,391, the lowest closing value after September 15 and the biggest fall in over 2 months.
While the fall in sensex was in line with the Asian markets, the sectors that led the fall in India were impacted by RBI move to curb liquidity.
The real estate stock fell the most by 6.8 per cent amidst the RBI monetary policy statement that proposes to increase the provisioning requirement (by banks) for lending to the commercial real estate sector from 0.4 per cent now to 1 per cent.
“This will reduce the liquidity for commercial real estate projects and will also have an impact on the cost of funding for such projects as the liquidity is squeezed,” said a senior official at a rating agency who did not wish to be named.
The banking sector that also saw RBI making a move to tighten liquidity by increasing the statutory liquidity ratio (per cent of net demand and time liabilities of banks to be kept with RBI as cash or gold or approved securities) for banks from 24 per cent to 25 per cent, witnessed a correction of 3.6 per cent at the BSE.