Sensex tumbles as RBI announces measures to arrest rupee's fall

Mumbai, July 16: The Reserve Bank of India's boldest attempt yet to curb the fall in rupee delivered only a modest lift in the currency but the stock markets tumbling on Tuesday. The BSE benchmark
sensex tumbles as rbi announces measures to...
PTI July 16, 2013 13:49 IST
Mumbai, July 16: The Reserve Bank of India's boldest attempt yet to curb the fall in rupee delivered only a modest lift in the currency but the stock markets tumbling on Tuesday. The BSE benchmark Sensex plunged heavily on Tuesday largely due to downfall in financial sector stocks, including ICICI Bank and HDFC, after the RBI raised lending rates for banks.



At 1:44 pm. the 30-share barometer slipped below the 20,000 points level by tumbling 233.37 points, or 1.16 per cent, to 19,801.11 with all the sectoral indices led by banking and realty, trading in red with losses up to 4.83 per cent.

The index had gained over 741 points in the past three sessions.  The wide-based National Stock Exchange index, Nifty dipped below the 5,800 level by falling 87.70 points, or 1.45 per cent to, 5,943.10.

Brokers said fresh spell of selling by participants dampened the trading sentiment. Late on Monday, the Reserve Bank of India raised short-term borrowing costs, restricted funds banks could access and said it would drain cash from the market via a $2 billion bond sale as it sought to create demand for the rupee, which hit a record low last week.

Under the measures announced, RBI raised lending rates to commercial banks 2 per cent to 10.25 per cent making the loans costlier.

They said, however, a firming trend in the Asian region following overnight gains on the US market, capped the losses on the domestic equity market.

The BSE banking index suffered the most by falling 4.83 per cent to 12,822.37 as stocks of SBI fell by 5.07 per cent to Rs 1,819, ICICI Bank by 5.25 per cent to Rs 1,007, HDFC Bank by 2.63 per cent to Rs 676.90 and Yes Bank by 8.21 per cent to Rs 459.40.

In the Asian region, Hong Kong's Hang Seng index traded higher by 0.14 per cent, while Japan's Nikkei Index up 0.61 per cent, in early trade.

The US Dow Jones Industrial Average ended 0.13 per cent higher in yesterday's trade.
 
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