Sensex dips 182 pts on rate hike,inflation; ends below 19k mark
Although in line with the market expectations, RBI's hike in key rates coupled with concerns over rising inflation and higher current account deficit (CAD) pulled down the BSE benchmark Sensex today by about 182 points to below the 19K-mark, at 18,969.45.
Although in line with the market expectations, RBI's hike in key rates coupled with concerns over rising inflation and higher current account deficit (CAD) pulled down the BSE benchmark Sensex today by about 182 points to below the 19K-mark, at 18,969.45.
RBI also revised upwards the inflation target to 7 % by the end of the current fiscal in March, fanning fears of further hike in interest rates to tame inflation.
Interest-rate related stocks like banking, Realty and Auto stocks, besides FMCG, were the among the worst hit.
Initially, the market absorbed the hike in RBI's short-term lending (repo) and borrowing (reverse repo) rates by 25 basis points each, to 6.50 % and 5.50 %, in its third quarter review of monetary policy, which was in line with the market expectations.
However, concerns shown by the central bank Governor Duvvuri Subbarao over the spillover of food inflation to general inflation, rising global crude oil prices and high CAD of 3.5 % of the GDP this fiscal, weighted down the market. Also, concerns over difference between bank deposits and the credit growth added to the selling sentiment.
The Bombay Stock Exchange 30-share bellwether index initially touched a high of 19,340.99, but fell back sharply on selling in the interest-rate related stocks to end at 18,969.45 -- a fall of 181.83 points or 0.95 %.
On Monday, it ended up by 143.75 points or 0.76 %.
Similarly, the 50-issue Nifty of the National Stock Exchange also dropped by 55.85 points or 0.97 % to 5,687.40.
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