The Bombay Stock Exchange sensitive index, Sensex, on Tuesday tumbled by over 380 points on frenzied selling triggered by the Reserve Bank’s quarterly monetary policy review, which investors viewed as hawkish even though key policy rates were kept unchanged.
The Sensex was bearish in the opening and came under intense selling pressure after the unveiling of credit policy, which asked banks to park more money in government securities and raised inflation forecast.
Realty, metal, banking and consumer durables shares were battered and their indices closed sharply lower in the range of 3-6 per cent.
The BSE 30-share index closed at 16353.40, a steep fall of 387.10 points or 2.31 per cent from its last close.
Experts said this move was pre-empt any kind of asset bubbling in real estate. However, marketmen termed the move as hawkish and said it would cripple credit flow to the sector.
Brokers said banking shares were another big casualty of credit policy as many fear RBI’s move to tighten credit flow to the real estate sector would have an adverse impact on bank shares as well. The 50-share Nifty of the National Stock Exchange fell by 124.20 points or 2.50 per cent to close at 4846.70.
Rupee down 27 paise
The fell by 27 paise to 46.91/92 against the dollar on Tuesday impacted by a sharp slide in local equities and the Reserve Bank of India’s decision to raise the amount parked by banks in Government securities.
It breached the 47-level and fell to 47.01 against the dollar. In active trade at the inter-bank foreign exchange market, the rupee moved in a wide range of 46.75 and 47.01 during the day after resuming weak at 46.89/90 a dollar from its last close of 46.64/65.