Sensex nosedives 367 pts on RBI rate comment, euro zone
The Sensex of the BSE on Tuesday shed 367 points or 2.18% to touch 16,546.18 points following RBI's weak outlook on further interest rate reduction, combined with worries about the euro zone crisis worsening, and speculation of a diesel price increase.business Updated: May 08, 2012 23:03 IST
The 30-stock Sensex of the Bombay Stock Exchange (BSE) on Tuesday shed 367 points or 2.18% to touch 16,546.18 points following RBI's weak outlook on further interest rate reduction, combined with worries about the euro zone crisis worsening, and speculation of a diesel price increase.
The relief given by the government on the general anti-avoidance rule (GAAR) on Monday was short lived as the Sensex touched a four-month low the very next day.
"RBI's indication that there could be no further interest cut was the main reason for the Sensex's performance on Tuesday," said Alex Mathew, Head Technical and Derivatives Research, Geojit BNP Paribas Financial Services. "Apart from that Europe's debt and an indication from the government that diesel prices could be increased worked as a dampener."
Stocks of infotech and consumer durable companies shed around 3% on weak outlook for the sectors due to high inflation, troubles in the export market and slowing growth in the domestic market.
IT stocks were down by 3.09% while consumer durable stocks were down by 3.44% on Tuesday.
Meanwhile the Indian rupee also fell on Tuesday on continued currency outflows. The rupee touched Rs. 53.3 against the US dollar after gaining some strength on Monday.
Foreign investors sold a net of $195 million in domestic stocks on Monday and Tuesday.