The stock market benchmark Sensex plummeted by over 529 points at mid session on Monday, registering its biggest fall in two weeks, as funds sold heavily in blue-chip stocks led by banks after RBI announced a slew of measures to curb money flow.
The 30-share Sensex, dropped by 529.65 points, or 3.9 per cent, to 12,542.45 at 1330 hrs. All the 30 stocks declined and the key index itself slipped by the biggest margin since March 14. The National Stock Exchange index Nifty declined by 162.75 points at 3658.80.
The Bombay Stock Exchange's 16-stock banking index slumped 5.5 per cent to 6,178.90.
ICICI, the country's second-largest lender, dropped Rs 42.85, or 5.02 per cent, to Rs 810.25, State Bank of India, the biggest lender, fell Rs 58.10, or 5.8 per cent, to Rs 934 and HDFC Bank Ltd., the third-biggest, declined Rs 40.40, or 4.3 per cent to Rs 909.
The Housing Development Finance Corporation Ltd. was also in negative zone by losing Rs 65.35, 4.3 per cent to Rs 1,455.
On Friday, the Reserve Bank of India increased its overnight lending rate by a quarter percentage point to a four-and-half year high of 7.75 per cent. It also raised banks' reserve requirements for the third time since December to curb loans growth and curb inflation from 6.46 per cent.
Fears of a fall in auto sales also influenced trading sentiment to some extent as Maruti Udyog fell Rs 42.70, or 5.2 per cent to Rs 777, Tata Motors by Rs 55.25, or 7.6 per cent to Rs 672.50.
A rise in housing finance interest rate pulled down developer company stocks. Unitech slid Rs 19.350, or 5 per cent to Rs 368, Indiabulls Real Estate by Rs 17.50, or 5.9 per cent to Rs 280.60.