Political jitters hit reform hopes, Sensex sheds 120 pts

Banking, capital goods, realty and power stocks dropped the most also on reports that the Reserve Bank plans to tighten norms for loan restructuring of corporates. Under the impact of slowdown, several companies are knocking the doors of banks seeking recast of their debt burden.

The BSE benchmark index fell by 120.41 points, or 0.70 per cent to 17,158.44. Similarly, the 50-share National Stock Exchange index Nifty fell by 37.60 points to 5,205.10.

Brokers said investors became cautious following differences between the Congress and Agriculture Minister Sharad Pawar-led NCP which has raised questions over functioning of the government and the UPA coalition.

Markets had gained 176 points in the last three days on heightened expectations of speedier reforms after Presidential polls which were concluded yesterday. The sudden political developments, however, made investors jittery, analysts said. They added that it is only through reforms the market can be revived.

Traders said the mood was further hit after the Reserve Bank Working Group gave recommendations about prudential guidelines on restructuring of advances by banks and financial institutions. Bank stocks including ICICI Bank, HDFC Bank, HDFC and SBI ended lower.

In the 30-share Sensex, 24 stocks led by Dr Reddy's, BHEL, Sterlite and Hero MotoCorp fell while six scrips, including Bajaj Auto and TCS closed higher.

Maruti Suzuki, which tanked 9 per cent yesterday, held on to slim gains today even as the Manesar plant remained shut following violent incident on Wednesday.

However, RIL fell by nearly 0.9 per cent ahead of expectations of weak quarterly earnings later today while tech major Infosys slid by 1.13 per cent after gaining yesterday. (MORE)