- Banking, realty stocks fall on rate hike fears, Union Bank, Yes Bank shares plunge over 8 pctSensex extends losses for second session, drops 363 pointsFinal US Federal Reserve tapering to be a non-event for Indian markets: Axis Mutual FundRBI panel to look into fin services of small biz
The surprise rate hike by the Reserve Bank of India (RBI) and the possibility of more hikes pulled the stock market and the rupee down for the second session in a row amid continued selling in rate-sensitive shares, especially in bank stocks.
With fears mounting over another rate hike in next monetary policy review in October, the Sensex opened more than 200 points lower, extending a 383-point fall on Friday, before ending at 19,900.96, a drop of 362.75 points or 1.79 per cent. It has declined 745.68 points, or 3.62 per cent, in the past two sessions.
The NSE CNX Nifty index closed at 5,889.75, losing 122.35 points or 2.04 per cent.
Expectations are that RBI Governor Raghuram Rajan could raise policy rates again as he seems willing to risk prolonging what is already the lowest economic growth in years in order to quash persistent inflation. The rupee depreciated by another 37 paise to close at 62.60 against the dollar following good month-end demand for the US currency from importers and a fall in the stock market due to rate hike concerns.
The rupee opened at 62.55 a dollar from the previous close of 62.23 at the interbank foreign exchange market. It moved in a range of 62.34 and 62.73 before ending at 62.60.
“All the major Asian currencies were seen trading weaker against the US dollar and global stock markets were down,” said Abhishek Goenka, CEO of India Forex Advisors.