Sensex ends 90 pts down as RBI measures fail to cheer mkt

The BSE Sensex reversed its gains in last hour of trade as less than expected measures announced by the Reserve Bank of India to curb rupee's slide have played a spoilsport on Monday. Even globally investors looked cautious ahead of a critical European Union summit later this week.

The BSE benchmark shed 249 points from day's high of 17,131.15, before closing at 16,882.16, down 90.35 points due to fall in banks, technology, auto and capital goods stocks. The NSE benchmark fell 31.40 points or 0.61% to 5,114.65.

The Indian rupee came off day's high to trade at 56.86 at 15:30 hour IST, a rise of 26 paise over previous closing value. It touched an intraday high of 56.42 a dollar as compared to a record closing low of (on Friday) 57.15 a dollar.

Finance ministry's measures (that were in consultation with RBI) to curb rupee's slide could not met street expectations today.

The Reserve Bank of India (RBI) hiked the limit of external commercial borrowing (ECB) to USD 10 billion. Moreover, the regulator also increased the limit of overseas investment in government bonds by USD 5 billion to USD 20 billion. These measures were not enough to give a boost to markets or curb rupee's fall as the street had expected some reduction in withholding tax, new NRI bond, rate cut by the RBI etc.

The BSE Bankex fell over 1% as banks stocks, which were strong in early trade on hopes of measures, turned lower. Country's largest lender State Bank of India tanked 2% while its rivals ICICI Bank and HDFC Bank were down 0.55% and 1.15%, respectively.

Top software services exporter TCS and Infosys slipped 1.5% and 0.65%, respectively. Telecom major Bharti Airtel too lost nearly 1%.

Engineering and construction major by sales Larsen & Toubro was down 0.5% and state-owned capital goods company BHEL fell 1.6%.

State-owned oil & gas producer ONGC tanked 2.3% whereas Reliance Industries rose 0.7%.

Among metals and mining stocks, Hindalco, Tata Steel and Jindal Steel slipped 1-2%; Coal India and Sterlite Industries were down 0.5% each.

However, housing finance company HDFC rose 0.5% and top car maker Maruti went up 1%.

The broader indices too erased all gains as the market breadth turned neutral.

European markets fell while Spanish borrowing costs rose today as persistent fears about Europe's debt crisis and fresh concerns about global economic growth soured investors' appetite for risk. France's CAC and Germany's DAX dropped 1.5% each while Britain's FTSE was down 81 points. Even the Dow Jones futures lost 88 points.

The euro weakened broadly on investor scepticism that a June 28-29 European Union summit would make any substantial progress towards tackling the debt crisis, now in its third year and buffeting Spain, the region's fourth largest economy.

Investors worry that Europe's debt problems are adding to the slowdown in world economic growth, especially after a flurry of data last Thursday showed weakness in global manufacturing.

(With inputs from Reuters)