Sensex plunges 205 to 5-week low
The BSE benchmark Sensex today plunged by 205 points to a five-week low as RBI not only held on to policy rates but also hiked provisioning norms and lowered growth projection, spooking investors who resorted to all-round selling, particularly in bank and realty stocks.
Apparently not enthused by RBI policy, Finance Minister P Chidambaram, who had yesterday announced fiscal consolidation roadmap, said growth is as much a challenge as containing inflation and government would "walk alone" if it comes to that. But market sentiment remained low as investors were left poorer by a staggering Rs 70,000 crore after the market slump.
The Sensex, which was trading 82 points higher on hopes of rate cut, shed its gains within minutes of RBI Governor D Subbarao unveiled the policy review and fresh decisions. With 22 scrips ending with losses, the 30-share Sensex closed 204.97 points, or 1.10 per cent, down at 18,430.85, levels last seen on September 20.
"As expected RBI cut CRR by 25 bps while the decision to keep policy rates unchanged seems to have disappointed markets given recent government actions," said Sandeep Nanda, Chief Investment Officer, Bharti AXA Life Insurance.
RBI maintained status quo on repo rate, cut GDP growth forecast for 2012-13 to 5.8 per cent from 6.5 per cent and increased inflation estimate to 7.5 per cent from 7 per cent.
Bank stocks invited investor wrath with the central bank raising the provision for restructured standard accounts to 2.75 per cent. SBI which fell a hefty 4.4 per
