Sensex, rupee hit by DMK pullout, RBI statement

MUMBAI (Reuters) - The BSE Sensex fell the most this month on Tuesday after the withdrawal of the DMK from the ruling UPA coalition raised doubts about the fate of the government's reforms and after the RBI stuck to a cautious stance on monetary policy.

Banking stocks fell after Reserve Bank of India cut interest rates by 25 basis points but left the cash reserve ratio, a key liquidity tool, unchanged. The RBI also stuck to a cautious tone on future rate cuts.

ICICI Bank provisionally fell 2 percent, while State Bank of India retreated 1.9 percent.

The Sensex provisionally fell 1.45 percent, its biggest daily percentage fall since February 28, while the 50-share Nifty ended down 1.5 percent.

 

(Reporting by Manoj Dharra; Editing by Rafael Nam)