Sensex crashes 660 points; interest sensitive stocks hit (Roundup)

A less-than-expected easing of the monetary policy by the Reserve Bank Of India and the hawkish outlook given by it, subdued investor sentiments and led a barometer index of the Indian equities markets to crash 660 points on Tuesday.

The wider 50-scrip Nifty of the National Stock Exchange (NSE) also closed deep in the red, going down by 197 points or 2.34 percent at 8,236.45 points.

The Sensex of the S&P Bombay Stock Exchange (BSE), which opened at 27,890.73 points, closed the day's trade at 27,188.38 points, down 660.61 points or 2.37 percent from the previous day's close at 27,848.99 points.

The Sensex touched a high of 27,902.53 points and a low of 27,146.68 points in the intra-day trade.

As soon as the Reserve Bank of India (RBI) statement was updated at 11 a.m., the BSE Sensex took a dip of over 200 points. At that point, the intra-day fall was as much as 450 points. Nearly an hour thereafter, the index lost around 500 points.

During Tuesday's trade, all the sector-based indices of the BSE ended lower. Heavy selling was observed in interest sensitive stocks like banking, automobile, capital goods, healthcare, fast moving consumer goods (FMCG) and metals stocks.

The S&P BSE bank index plunged by 740.15 points, automobile index sank 395.35 points, capital goods index tanked by 298.44 points, healthcare index dropped by 259.25 points, FMCG index dwindled by 224.19 points and metals index receded by 204.76 points.

Around 11 a.m., the RBI lowered its short-term lending rate by 25 basis points in a move that could potentially reduce the cost of borrowings on personal and corporate loans.

Market analysts said that the 25 basis points cut was factored-in by the market and that it was hoping for a 50 basis points cut. Even a cash reserve ratio (CRR) cut was also expected.

"A 50 basis points cut would have stabilised the markets and given it an upward push after the initial downtrend that took place due to the Greece crises," Devendra Nevgi, chief executive of ZyFin Advisors, told IANS.

Sanjay Kumar, head of investments with PNB MetLife, said that the sell-off seen in the market was due to worries regarding sub-normal monsoon and Greece negotiations.

Dipen Shah, head of private client group research with Kotak Securities, said that the recent rise in oil prices and passage of the constitutional amendment bill for GST (Goods and Services Tax) as well as further progress on land acquisition bill would be key triggers for the markets.

There was only one major Sensex gainer on Tuesday out of 30-scrip: Bharti Airtel, up 0.40 percent at Rs.417.95.

The major losers were: State Bank of India, down 4.28 percent at Rs.266.25; Axis Bank, down 4.20 percent at Rs.554.15; Hindalco Inds, down 3.97 percent at Rs.123.30; ITC, down 3.95 percent at Rs.318.90; and Hero MotoCorp, down 3.76 percent at Rs.2,607.85.

Among the Asian markets, Japan's Nikkei closed marginally lower by 0.13 percent. China's Shanghai Composite Index was higher by 1.72 percent, while Hong Kong's Hang Seng decreased by 0.47 percent.

In Europe, London's FTSE 100 was lower by 0.18 percent. France's CAC 40 was marginally higher by 0.03 percent, whereas Germany's DAX Index dropped by 0.71 percent at the closing bell here.