Sensex tanks 453 pts as RBI hikes rates, projects lower growth
The BSE Sensex plunged 463 points to 18,534 today as investors dumped interest-sensitive stock after RBI hiked key policy rates by 50 basis points to tame inflation, and projected low growth for this fiscal.business Updated: May 03, 2011 16:54 IST
The BSE Sensex plunged 463 points to 18,534 on Tuesday as investors dumped interest-sensitive stock after RBI hiked key policy rates by 50 basis points to tame inflation, and projected low growth for this fiscal.
In its longest losing stint since November 2008, the 30-share Bombay Stock Exchange index, Sensex, which had lost 604 points in last six trading sessions, tanked another 463.33 points to close the day at 18,534.69.
The plunge was triggered by banking and other interest sensitive stock.
Similarly, the broad-based National Stock Exchange index Nifty dipped 136.05 points to 5,565.25 -- below psychological mark of 5,600.
After a weak start, the market tumbled as the Reserve Bank of India hiked short-term lending (repo) rate by 50 basis points to 7.25 %, while lowering the economic growth projection to 8 % for 2011-12.
The Sensex has declined 8.2 % this year on fears that high inflation and interest rates to tame it will make borrowing costly, crimping corporate earnings.
The banking sector index plunged by 3.11 % to 12,406.67, as State Bank of India lost 4.03 % at Rs 2,583.10.
The auto sector index was the worst performer and dropped by 3.74 % to 9,108.98 as on fears that high interest rates will hit sales.
Tata Motors dropped 5.30 % at Rs 1,163.45 and Mahindra and Mahindra fell 4.47 % to 707.85.
Another interest-linked realty sector index fell 2.91 % to 2,140.90 as DLF, the biggest developer, slid 2.56 % to Rs 220.80 and Jaiprakash Associates, a builder of dams, roads and bridges fell 8.05 % to Rs 85.05.
The two most-heaviest on the Sensex, with 23 % weightage - Reliance Industries and Infosys Technologies -closed with losses.