BSE Sensex crashes by 100 pts ;opens at 13,990.41

Mumbai, Feb 14: The Sensex today crashed by around 100 points and was quoted at 13,990.41 due to sustained heavy offloading in the Bombay Stocks Exchange(BSE) by Foreign Institutional Investors (FIIs) and Mutual funds following RBI's volatile announcement regarding hiking of the Cash Reserve Ratio (CRR) by 0.5 basic points.

The Sensex has been on a losing streak for the fourth straight day on heavy selling at the higher levels. The fall, which began on February 4, has progressed with time. A host of factors like rising inflation, interest rates, and the unwinding of positions in the derivatives market have been the key drivers for the drop.

The latest jolt came in the form of the surprise hike in the CRR by the Reserve Bank of India (RBI) yesterday after trading hours.

The move is likely to make corporate loans, home loans, auto loans and personal loans more expensive.

Later the BSE Sensex was down 200.20 points, at 13,891.10. It had opened lower at 13,990.41 and plunged to a low of 13,817.19 as selling continued. The market is highly volatile, swinging sharply either ways.

Banking stocks were impacted the most by the CRR hike. State-run SBI was the top loser, down 6.20 per cent to Rs 1097.10.

ICICI Bank (down 6 per cent to Rs 896.55) and HDFC Bank (down 3.89 per cent to Rs 1030.25) followed closely on the heels of the SBI debacle.

The S&P CNX Nifty index os NSE opened flat at 4044.90. It reached a high of 4048.85 and a low of 3965.20 during intra-day trading and is currently quoted at 4008.55 a loss of 0.89 per cent at 38 points.

Maruti Udyog (down 4.37 per cent to Rs 855), Grasim (down 3.89% to Rs 2645) and HLL (down 1.90 per cent to Rs 197) were the other eminent losers.

Index heavyweight Reliance Industries (RIL) was down marginally by 0.05 per cent, to Rs 1366.05.

Hindalco was the top gainer, up 0.65 per cent to Rs 142.90, on a volume of 7.06 lakh shares.

Cipla (up 0.60% to Rs 245) and Tata Steel (up 0.52 per cent to Rs 434.50), were the other gainers.

The Central Bank said the CRR will rise to 6 per cent from 5.5 per cent in two stages, the first on February 17 and the second on March 3, to rein in inflation and credit growth.

The latest CRR hike will suck out Rs 14000 crore from the banking system.

Data on last Friday showed annual inflation rose to a two-year high of 6.58 per cent in late January, above the Central Bank's target range of 5 - 5.5 per cent for the end of the fiscal year to March 2007.

At its quarterly policy review on January 31, 2007, the RBI had also raised its key short-term rate, the repo rate, by 25 basis points.

Fears of a further rise in domestic interest rates, and a large number of IPOs lined up for the next few weeks has been weighing heavy on the market sentiment of late. The Sensex had tanked 348 points on February 12 partly due to weak Asian markets, and partly on concerns about a further rise in interest rates. It had ended 100 points lower on February 13 in highly volatile trade.

US crude shed 19 cents to USD 58.87 a barrel on Wednesday after rising above USD 59 overnight as the International Energy Agency raised its 2007 demand forecast and said it expected oil market fundamentals to tighten.

UNI