The 30-share Sensex of the Bombay Stock Exchange (BSE) was down by 387.10 points or 2.31% to end the day at 16,353.40 points. The broader S&P CNX Nifty of the National Stock Exchange (NSE) lost 124.20 pints or 2.50% to close the day at 4,846.70 points.
Realty, metal, banking and consumer durables shares were battered and their indices closed sharply lower in the range of 3-6%.
Banking stocks on the bourses tumbled, as the RBI tightened statutory liquidity ratio (SLR) by 100 basis points to 25%. The SLR is the portion of deposits that banks are required to keep in government securities. ICICI Bank, the country largest private bank, was down by Rs 54.45 or 6.11% to Rs 836.25.
Realty shares bore the maximum brunt of selling as the central bank raised to 1% the requirements for banks to keep money aside while lending to commercial real estates to prevent NPAs increasing. The realty index was down by 6.24%.
Devesh Kumar, MD of Centrum Broking Private Limited, said, The quarterly policy was in line with market expectations; however for the next few days markets are likely to remain under pressure without any major cues. The market's reaction appears knee-jerk and I believe that it will soon be looking at improving GDP growth indicators and strong earnings progression for its next upward move, said Dinesh Thakkar, chairman & managing director of Angel Broking.
Dealers in the market said that there is enough liquidity in the market, and once it bottoms out, there will be more liquidity. According to the provisional figures provided by the Bombay Stock Exchange, foreign institutional investors were net sellers at Rs 548.77 crore, while domestic institutional investors bought stocks worth Rs 141.56 crore.