BSE Banking index plunges 4.61 per cent as markets react to RBI’s new liquidity tightening measures.

Stock indices fell on Wednesday as the Reserve Bank of India (RBI) announced another set of measures to curtail liquidity in the system to salvage the value of rupee against the dollar.

Sensex sheds 211 points

The S&P BSESensex lost 211.45 points or 1.04 per cent at 20090.68 as bank stocks tumbled by 4.61 per cent followed by consumer durables 3.13 per cent, capital goods 2.98 per cent, metal 2.09 per cent, PSUs 1.76 per cent, power 1.64 per cent and realty 1.31 per cent.

Except information technology stocks, which gained 1.03 per cent, and technology stocks, which were up 0.99 per cent, all other sectoral indices ended in the red.

On the National Stock Exchange (NSE), the 50-share Nifty closed at 5990.50 with a loss of 87.30 points or 1.44 per cent. “In addition to weak Asian markets, RBI’s further announcements aimed to curb rupee depreciation, proved fatal for the markets as Nifty lost nearly one-and-a half per cent after opening with downside gap,” said Jayant Manglik, President-Retail Distribution, Religare Securities Limited.

Bond yield rises

The yield on Government Securities (G-Secs) shot up to double digits following the measures announced by the central bank.

The RBI accepted an yield of 11.0031 per cent on three-month (91-days) Treasury Bills and 10.4649 per cent on one-year (364-days) Treasury Bill, the highest yields in the near period.

The RBI’s measures to shore up the value of the rupee against major currencies by tightening liquidity in the system started yielding results as the rupee gained on Wednesday against the dollar.

The rupee closed at 59.13/14 compared to its previous close of 59.76/77 a dollar. It strengthened to a high of 59.01 intra-day.

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