Touching fresh lows post 1300 hrs, the markets were still under intense pressure due to hevy selling in rate-sensitive sectors. The Sensex plunged 321 points to 18,677, while the Nifty lost 96 points at 5,606.
Rate-sensitive stocks will conitnue to remain under pressure in the face of the 50 basis point hike announced by the Reserve Bank of India today. On the Sensex, Mahindra & Mahindra was the top loser down more than 5% at Rs 702, while infrastrcuture development firm Jaiprakash Associates slipped more than 4% at Rs 88 and Tata Motors shed 3.5% at Rs 1,185. Financial blue-chip State Bank of India declined more than 3% to Rs 2,602, and Bajaj Auto, Maruti Suzuki, ICICI Bank and Bharti Airtel let off 3% each.
Only three Sensex components were trading in the green, with Sterlite Industries at Rs 179 and Infosys at Rs 2,941, both up 1%, and BHEL at Rs 2,020 up 0.5%.
The broader markets moved in tandem with the benchmark, with both the indices shedding more than 1% each. The Mid-cap index was at 6,934, while the SMall-cap was at 8,499.
All the sectoral indices were in negative terrain, with the Bankex at the bottom of the table, plungng more than 3% at 12,411. Major losers in this space were Punjab National Bank at Rs 1,088 and Canara Bank at Rs 566, both down more than 5% each. InduInd Bank at Rs 242 and Bank of India at Rs 403 fell nearly 5% each. Axis Bank slipped 4%, while Yes Bank let off more than 3.5%. SBI, Bank of Baroda and ICICI Bank declined almost 3% each. Sensex heavyweight HDFC Bank fell 2.5%. ING Vysya says net interest margins of banks will see an erosion of approximately 11 basis points due to the rate hike.
The Auto counter also saw a major impact of the RBI's monetary tightening stance, with the index falling 3% to 9,167. Mahindra & Mahindra was the top loser on this counter off 5% at Rs 704, while Tata Motors shed 4% at Rs 1,183 and Amtek Auto slipped 3% to Rs 159. Maruti Suzuki and Ashok Leyland were down nearly 3% each.
Realty stocks were under selling pressure, with the index shedding 2% at 2,163.
With 724 advances versus 1,938 declines, the market breadth was extremely negative.