Interest-rate sensitive bank, realty and auto stocks fell up to 11.5 per cent after RBI unexpectedly raised the policy rate by 0.25 per cent, triggering all-round selling in the stock market.
Realty stocks were the worst hit. Shares of DLF tanked 11.55 per cent, while HDIL lost 8.47 per cent and Indiabulls Real Estate slumped 7.01 per cent on the BSE.
Out of 13-listed realty stocks, ten ended the day with losses. Led by the losses in these stocks, the BSE realty index settled 6.53 per cent lower at 1,287.12, the worst performer among the 13 sectoral indices.
Analysts said that rate-sensitive sectors such as realty, banking and auto were hit hard the most after RBI announcement as a higher cost of credit would reduce their revenue.
Banking stocks also faced the heat, with Yes Bank plummeting 7.90 per cent, Union Bank (7.89 per cent), PNB (7.31 per cent), ICICI Bank (4.78 per cent), HDFC Bank (3.63 per cent) and SBI (3.44 per cent).
Following this, the BSE banking index closed the day with 4.18 per cent loss at 12,166.86.
"RBI's move came as a big negative surprise, as most of the investors and experts were expecting that status quo shall be maintained this time," said Rakesh Goyal, Senior Vice President, Bonanza Portfolio Limited.
"This impacted the markets adversely because at first place, expectations have not been met, and secondly, rising of repo rates will lead to slower demand in markets for realty and auto sectors, particularly. Even, banking sector has been adversely impacted due to tightening of liquidity," he said.
The auto index was down 1.58 per cent to 11,203.65.
RBI Governor Raghuram Rajan, in his maiden policy review, unexpectedly hiked the repo rate or the short term lending rate by 25 basis points to 7.5 per cent with immediate effect in a bid to control inflation.
In the broader market, the BSE benchmark Sensex ended the day at 20,263.71, down 382.93 points.