Sensex tumbles 383 pts, Rs. dips 46 paise on Rajan’s punch

  • HT Correspondent, Hindustan Times, Mumbai
  • Updated: Sep 21, 2013 00:35 IST

After a Terrific Thursday, it was Funk-out Friday. Reserve Bank of India (RBI) governor Raghuram Rajan surprised markets with a bold decision to hike interest rates on fears of rising inflation, triggering sharp falls in the Sensex and the rupee. Speculation-driven markets were unimpressed by Rajan’s long-term stance.

Banking stocks were severely hit, dragging the benchmark down.The BSE Sensex, which fell 595 points to 20,051 immediately after the announcement, recovered some ground later to end the day with a fall of 383 points, or 1.9% — the most in three weeks — to 20,267. On Thursday, it had moved up 3.4%.

The broader NSE Nifty dipped 104 points, or 1.7%, to 6,012.

The rupee also extended losses, falling as much as 62.61 to a dollar, before suspected RBI intervention helped ease some of the losses. It closed at 62.23 against the US dollar versus 61.77 on Thursday.

The Indian currency, which fell around 20% to record lows in late August, recovered around 9% since Rajan took office on September 4.

“Markets were disappointed with the RBI’s monetary policy announcement,” said Sanjeev Zarbade, vice-president, private client research, Kotak Securities.

Twenty one of the 30-Sensex stocks ended lower led by ICICI Bank (4.8%), L&T (4.6%), Sesa Goa (3.9%), Hindustan Unilever (3.8%) and HDFC Bank (3.6%).

Among the sectoral indices, realty (down 6.5%), banking (down 4.2%) and capital goods (down 3.0%) fell on concerns that higher interest rates would make loans more expensive and reduce businesses. Around 1,432 stocks ended lower on the BSE, while 897 finished higher.

However, bonds yields, which signal interest rate mood, surged after RBI provided some reprieve by unwinding some of the cash-tightening steps undertaken since mid-July. The 10-year bond yield closed at 8.58%, up 39 basis points (100 basis points is 1 percentage point) against Thursday’s close.

Some experts said the fall was expected. “The markets were expecting too much from the RBI,” said Kishor P Ostwal, CMD, CNI Research.

From Around the Web
Sponsored by Revcontent

also read

What will Raghuram Rajan do today? Sensex opens lower, Re slips amid RBI rate cut...
Show comments

Steps to disable Ad Blocker on your browser


In order to serve content on our website, we rely on advertising revenue which helps us to ensure that we continue to serve high quality unbiased journalism. From our end, we will aim to show clean and unobtrusive ads to provide you with a great browsing experience.

Request to please follow the steps below and once done, please refresh your page.


For Chrome and Ad BlockPlus users

1.Press the ‘ABP’ icon in your toolbar at top right of this page

2. Click on ‘Enabled on this site’; this should now change to ‘Disabled on this site’


chrome



For Chrome and Ad Block users

1.Press the ‘AdBlock’ icon in your toolbar

2.Select the option ‘Don’t run on pages on this domain’ and then click ‘exclude’ on the pop up


chrome

Steps to disable Ad Blocker on your browser


In order to serve content on our website, we rely on advertising revenue which helps us to ensure that we continue to serve high quality unbiased journalism. From our end, we will aim to show clean and unobtrusive ads to provide you with a great browsing experience.

Request to please follow the steps below and once done, please refresh your page.


For Mozilla and AdBlock Plus (ABP) users

1.Press the ‘ABP’ icon in your toolbar

2.Select the option ‘Disable on hindustantimes.com’


chrome

Steps to disable Ad Blocker on your browser


In order to serve content on our website, we rely on advertising revenue which helps us to ensure that we continue to serve high quality unbiased journalism. From our end, we will aim to show clean and unobtrusive ads to provide you with a great browsing experience.

Request to please follow the steps below and once done, please refresh your page.


For Internet Explorer and AdBlock Plus users

1.Press the ‘AdBlock Plus’ icon in your status bar at the bottom of the screen

2.Select the option ‘Disable on hindustantimes.com’


chrome

Steps to disable Ad Blocker on your browser


In order to serve content on our website, we rely on advertising revenue which helps us to ensure that we continue to serve high quality unbiased journalism. From our end, we will aim to show clean and unobtrusive ads to provide you with a great browsing experience.

Request to please follow the steps below and once done, please refresh your page.


For Safari and AdBlock users

1.Press the ‘AdBlock’ icon in your toolbar

2.Select the option ‘Don't run pages on this domain’ and then click 'exclude'


chrome