Sensex dips by 183 pts; banks slump on RBI moves, rupee gains
The BSE Sensex fell 183 points, to 19,851 on Tuesday, snapping a three-day winning streak, as banking stocks slumped after the Reserve Bank of India (RBI) raised short-term interest rates to check the rupee's slide.business Updated: Jul 16, 2013 22:26 IST
The BSE Sensex fell 183 points, or 1%, to 19,851 on Tuesday, snapping a three-day winning streak, as banking stocks slumped after the Reserve Bank of India (RBI) raised short-term interest rates to check the rupee's slide, turning the heat on banks to check lending for speculation. The broader NSE Nifty also fell 76 points, or 1%, to 5,955.
RBI had the previous night come out with measures aimed at restoring stability in the foreign exchange market, including curbing borrowing by banks, and drained off Rs 12,000 crore.
Following RBI's cue, the rupee gained 68 paise to 59.21 against the dollar in intra-day trade, before closing at 59.31 against Monday's close of 59.89.
Bank stocks slumped on concern that the RBI's latest measures would spark an interest rate increase, besides making it costlier for lenders and financial companies to raise short-term funds.
While Yes Bank slumped 9.9%, IndusInd Bank ended 7.9% lower. ICICI Bank fell 5.4% and HDFC Bank lost 2.4%.
Shares in financial firms also slumped including IDFC (-7.2%) and HDFC (-3.8%).
Rate-sensitive auto, realty and capital goods stocks also declined.
Foreign institutional investors sold a net Rs 357 crore of shares, according to the BSE website.