The key Benchmark indices, which had snapped three sessions of decline to rise around two per cent yesterday, slumped after Reserve Bank's announcement of a repo rate rise, a first hike since March 2007. Weak global markets further marred the sentiments. The market will now eye the industrial production data for April 2008, which the government will release today. The market breadth was extremely weak. Rate sensitive realty and banking stocks tumbled.
Reserve Bank of India (RBI) on Wednesday, raised short-term lending rate viz the repo rate, by 25 basis points to 8 per cent to contain inflation expectations. Banks are likely to raise interest following a strong signal from RBI that banks' cost of funds is headed north. Higher interest rates will raise borrowing costs and hit bottom line of corporates.
At present the 30-share BSE Sensex further crashed by 376.08 points or 2.48 per cent at 14,809.24. At the day's low of 14,747.99, Sensex lost 437.32 points in early trade.
The broader-based S&P CNX Nifty index of National Stock Exchange (NSE) also quoted below 4,500 mark in mid-morning session and it plummeted by 102.20 points and touched a low at 4,421.40 points from it last close of 4,523.60 points. The index resumed flat at 4,524.40 points. It recorded the day's low at 4,392.00 points.
The BSE Mid-Cap index fell 1.83 per cent to 6,077.64 and BSE Small-Cap index down 1.42 per cent to 7,361.05. Both these indices outperformed Sensex.
India's largest private sector firm by market capitalisation and oil refiner Reliance Industries declined 1.99 per cent to Rs 2,215.
The Company will hold its annual general meeting today.
Rate sensitive banking and realty were the major losers from sectoral indices on BSE. BSE Bankex declined 3.77 per cent to 6,853.61 and BSE Realty index fell 5 per cent to 5,513.36.
DLF was down by 5.58 per cent to Rs 482.70, Unitech eased 4.42 per cent to Rs 179.85 and Indiabulls Real Estate dropped 4.13 per cent to Rs 365.15 edged lower from the realty pack.
HDFC Bank slipped by 4.86 per cent to Rs 1,127, ICICI Bank was down 3.76 per cent to Rs 713.80 and State Bank of India eased 2.94 per cent to Rs 1,271 edged lower from the banking space.
Banks are set to raise interest rates following the repo rate hike by RBI. State Bank of India Chairman O P Bhatt said on Thursday, the bank will review its interest rates on Friday, 13 June 2008.
HDFC Chairman Deepak Parekh today said HDFC will take a decision on raising interest rates on home loans by end of this month. He said there was upward pressure on interest rates.
India's largest tractor maker by sales Mahindra&Mahindra rose 0.35 per cent to Rs 576 and was the lone gainer from Sensex pack.
HDFC was down by 7.55 per cent to Rs 2,022 followed by Jaiprakash Associates by 4.1 per cent to Rs 175.65, Bharti Airtel by 3.23 per cent to Rs 780.85, NTPC by 2.72 per cent to Rs 160.80, Ranbaxy Laboratories by 3.37 per cent to Rs 541.90 edged lower from Sensex pack.
India's largest electrical equipment maker by sales Bharat Heavy electricals declined 3.05 per cent to Rs 1,437.20. It is reportedly close to receiving an order for 50 onshore oil rigs from west Asia worth about Rs 5,000 crore.
US stocks sank on June 11, 2008, with all the three indices viz the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite index - losing around 2 per cent, after oil prices shot back near their record high, stoking fears about inflation and its toll on consumers. More signs of trouble in the financial sector further soured the mood on Wall Street. The Financial Times said on Wednesday that Lehman Brothers may look to raise more capital, hammering shares of the investment bank.
Asian stocks fell today, hit by the steep oil price rise. Key Benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan were down by between 1.75 per cent to 3.25 per cent, which affected to downward trend at Indian bources.
Oil futures jumped almost USD 7 to an intra-day high above USD 138 a barrel on Wednesday, and settled at USD 136.38 a barrel on that day also contributed to downward trend in equity markets.