More rate rise fears trip Sensex 182 pts
MUMBAI: The benchmark index of the Bombay Stock Exchange (BSE) Sensex fell nearly 1% on Tuesday on fears of a quick-succession rate increase by the central bank, following its quarter-point hike in key rates, as it fights sticky inflation.
The Reserve Bank of India (RBI) raised interest rates by 25 basis points, as expected, to clamp down on resurgent inflation, warning higher food prices could become entrenched if steps to boost output are not taken.
Clearly, the RBI stance indicates that there are more tightening on the way, said Sujan Hajra, chief economist at brokerage Anand Rathi . And our sense is that in the current financial year we will see another 25-bp hike, and perhaps in the first quarter of FY12 another 25 bps.
Interest rate sensitives BSE banking index, BSE realty index and BSE auto index dropped between 1.1% and 2.3%. The 30-share BSE index shed 0.95%, or 181.83 points, to 18969.45, with 19 components closing in the red. Foreign funds have pulled out around $892 million from Indian equities so far this year, with the main index declining 7.5%. Leading lenders SBI , ICICI Bank and HDFC Bank declined between 0.5% and 4.2%.
Automobile majors Maruti Suzuki , M&M , Bajaj Auto, and Tata Motors shed between 0.2% and 2.3%. Top-listed real estate firm DLF dropped 0.7%. Separately, HSBC Securities downgraded DLF to neutral from overweight. Hindustan Unilever, a unit of Anglo-Dutch Unilever, dropped 5.5% to Rs 281.65, its lowest close in more than four months, after it said its quarterly net profit slipped as mounting costs weighed on margins.
Declining shares outpaced advancing ones in a ratio of 1.4:1 on a low volume of 259 million shares. The 50-share NSE index Nifty shed nea! rly 1% t o 5687.40 points.
World equities as measured by the MSCI All-Country World Index was down 0.2% by 1036 GMT, while the emerging markets index slipped 0.1%. Indian markets will be closed on Wednesday for a public holiday.
The Reserve Bank of India (RBI) raised interest rates by 25 basis points, as expected, to clamp down on resurgent inflation, warning higher food prices could become entrenched if steps to boost output are not taken.
Clearly, the RBI stance indicates that there are more tightening on the way, said Sujan Hajra, chief economist at brokerage Anand Rathi . And our sense is that in the current financial year we will see another 25-bp hike, and perhaps in the first quarter of FY12 another 25 bps.
Interest rate sensitives BSE banking index, BSE realty index and BSE auto index dropped between 1.1% and 2.3%. The 30-share BSE index shed 0.95%, or 181.83 points, to 18969.45, with 19 components closing in the red. Foreign funds have pulled out around $892 million from Indian equities so far this year, with the main index declining 7.5%. Leading lenders SBI , ICICI Bank and HDFC Bank declined between 0.5% and 4.2%.
Automobile majors Maruti Suzuki , M&M , Bajaj Auto, and Tata Motors shed between 0.2% and 2.3%. Top-listed real estate firm DLF dropped 0.7%. Separately, HSBC Securities downgraded DLF to neutral from overweight. Hindustan Unilever, a unit of Anglo-Dutch Unilever, dropped 5.5% to Rs 281.65, its lowest close in more than four months, after it said its quarterly net profit slipped as mounting costs weighed on margins.
Declining shares outpaced advancing ones in a ratio of 1.4:1 on a low volume of 259 million shares. The 50-share NSE index Nifty shed nea! rly 1% t o 5687.40 points.
World equities as measured by the MSCI All-Country World Index was down 0.2% by 1036 GMT, while the emerging markets index slipped 0.1%. Indian markets will be closed on Wednesday for a public holiday.
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