The BSE benchmark Sensex today plunged the most in five weeks, shedding 353 points on selling of bank and interest rate-sensitive stocks as markets reacted to the RBI’s decision to raise key rates by 50 basis points.
Heavy losses by engineering giant L&T, the country’s leading banks SBI, ICICI Bank and HDFC, along with Sensex leader Reliance Industries contributed the most to the fall in the BSE’s bellwether index.
The Bombay Stock Exchange’s 30-share index, which had started on an upbeat note, tumbled within minutes of the Reserve Bank of India announcing a 50 basis points hike in interest rates, well above the market expectations.
The aggressive stance by the central bank to arrest a towering inflation pushed the 30-share Sensex down 353.07 points at 18,518.22, a level last witnessed on June 20. All its sectoral indices closed in the negative zone.
Brokers said markets were expecting a 25 basis points hike and had factored that in the last few sessions. They said investors, spooked by hike in interest rates by 50 basis points, sold interest rate-sensitive stocks.
Sensex has lost 9.4 per cent in the year so far as high inflation and hardening of rates continues to dent the corporate earnings and outlook.
Broad-based National Stock Exchange index Nifty fell 105.45 points to 5,574.85 after rising to 5,702.25 intra-day.