Share prices extended losses on Monday on concerns measures by the Reserve Bank of India and the government to boost growth are not likely to yield the desired results.
The benchmark Sensex (sensitive index) of the Bombay Stock Exchange fell 191.51, or 2.2 percent, to 8,509.56, the lowest level since November 2005. The Sensex, however, erased over 800 points of losses. The S&P CNX Nifty Index on the National Stock Exchange fell 59.80, or 2.3 per cent, to 2,524.20.
The banking system again turned short of funds after about a week of abundant liquidity, following Rs 1,00,000 crore of infusion through 250 basis points reduction in cash reserve ratio from October 11. Banks borrowed over Rs 42,500 crore of funds for two days from the Reserve Bank of India, as individuals and companies withdrew money for the Diwali festival.
Shares of State Bank of India, the largest lender, fell to 1,052.75 rupees, the lowest since July 1, 2008, as the bank said it has provided Rs 911 crore for bad loans in the second quarter ended September 30, 2008 against a write back of Rs 16 crore a year earlier.
ICICI Bank, the second-largest bank, rose Rs 7.60 to Rs 316.10, as its bad loans were seen steadying.
Tata Power, the largest private sector electricity generator, fell to Rs 567.25, its lowest since April 20, 2007, on expectation it would report a fall in its profit for th quarter ended September 30, 2008.
Foreign institutional investors (FIIs) sold a net of Rs 347 crore ($69 million) of equities on October 23, adding to outflows from stocks this year to more than $12.1 billion.