Sensex tanks 264 points on rate hike concerns, political worries

| | Updated on: Mar 07, 2011
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The Bombay Stock Exchange benchmark Sensex on Monday slumped by about 264 points as fresh political concerns at New Delhi and fears of another hike in interest rates amid soaring crude prices triggered intense selling, particularly in the auto sector.

The 30-share index closed at 18,222.67 points, down by 263.78 points, or 1.43 per cent. During the day, the barometer fell by a hectic 428 points. All the sectoral indices lost between 0.19 per cent and 2.55 per cent.

The National Stock Exchange’s 50-share Nifty tumbled by 75.60 points, or 1.36 per cent, to 5,463.15 points.

Brokers said investors resorted to selling as the Dravida Munnettra Kazhagam, a key ally of the Congress-led UPA government, said that it was pulling out of the government, which raised fresh political concerns.

“After cheering the Budget, the Indian market resumed their southbound journey amid fresh trouble for the UPA II regime,” IIFL Head of Research (India Private Clients) Mr Amar Ambani said.

Analysts said investors also feared another hike in key rates by the RBI in its next policy meeting on March 17. Interest rate sensitive auto, realty and banking stocks were battered.

“Sentiment was also hit by a fresh spike in crude oil amid continued violence in Libya and other parts of the Middle East,” Mr Amar Ambani said.

Global crude oil, which crossed USD 106 a barrel mark to about 29-month high also worried market participants as they expected another round of rise in oil prices by the government, which could stoke inflation.

The BSE Auto index fell the most among sectoral indices losing 2.55 per cent. The country’s largest car maker, Maruti Suzuki, dropped by 3.73 per cent, while homegrown auto major Tata Motors fell by 3.64 per cent.

The BSE Capital Goods index dipped by 2.36 per cent after heavyweights power equipment maker BHEL and engineering giant Larsen& Toubro declined. BHEL lost 3.21 per cent and Larsen & Toubro dropped by 2.69 per cent.

The BSE-Realty fell by 1.66 per cent, the Bankex by 1.60 per cent, the BSE-Metal by 1.43 per cent and the BSE-CD by 1.35 per cent

Published on March 07, 2011

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