March 17, 2011 / 17:51 IST
India's stock market washed out all the gains it made on Thursday, dragged down by financial, technology, auto, realty and select power companies' shares. Heavyweight Reliance Industries too added more pressure on the market due to profit booking.
Crude oil prices inched towards USD 100 per barrel on ongoing tension in the Middle East & North Africa (MENA). With the market expecting more rate hikes likely from the Reserve Bank of India going ahead and crude on the boil, shares came under pressure in the last couple of hours of trade.
Investors were jittery after the Reserve Bank of India (RBI) pointed out in its Credit Policy review that more rate hikes are on the cards by warning of inflationary pressures and emerging risks to growth.
The 30-share BSE Sensex tanked 208.82 points or 1.14%, to end at 18,149.87 and the 50-share NSE Nifty tumbled 64.50 points or 1.17%, to settle at 5,446.65.
The RBI said it was likely to maintain its anti-inflationary bias, reinforcing market expectations that further rate increases are in the pipeline, and raised its forecast for headline inflation at the end of March to 8%, from its earlier 7%.
"The underlying inflationary pressures have accentuated, even as risks to growth are emerging. Rising global commodity prices, particularly oil, are a major contributor to both developments," the central bank said in its mid-quarter policy review statement.
RBI has raised repo, reverse repo rates by 25 bps each - in line with expectations - to 6.75% & 5.75%, respectively - for the eighth time since last March, and left the CRR unchanged at 6%.
Raamdeo Agrawal, Joint MD Motilal Oswal Financial Services Ltd said RBI has acted on expected lines. "Problem of inflation is still on top of RBI
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
