The Bombay Stock Exchange benchmark Sensex tumbled by over 240 points in mid-session on Tuesday, after the Reserve Bank hiked inflation projection by this fiscal end in its second quarter monetary review.
With the selling pressure rising, the second wide-based National Stock Exchange index Nifty fell below the crucial 4,900 levels by losing 90.55 points at 4,880.45 at 1225 hrs.
The 30-share Sensex, which commenced the day on a weak note as investors took to cautious, trading, fell further to record a loss of 240.07 points at 16,500.43 at the same time.
The Reserve Bank of India today raised inflation projection to 6.5 per cent with an upside bias by this fiscal end from 5 per cent projected earlier.
Market sentiment also dampened as the RBI, in its quarterly policy review, ordered lenders to keep more cash in government bonds, signalling tighter monetary regime.
The index-linked ICICI Bank, the second-biggest lender, declined 4.06 per cent to Rs 854.50 and State Bank of India skid 3.88 per cent to Rs 2,216.20.
Canara bank fell by 5.22 per cent to Rs 344.05, Allahabad Bank by 4.30 per cent to Rs 122.30 and Federal Bank by 4.36 per cent to Rs 245.85.