RBI steps trigger market slide

RBI steps trigger market slide

Key benchmark indices on Wednesday edged lower in choppy trade consequent to the Reserve Bank of India's latest measures to squeeze liquidity from the banking system to stem rupee's decline rattled investor sentiment.

The market breadth, indicating the overall health of the market was weak.

The popular Sensex at BSE snapped a five-day winning streak this day as it fell from 30-month highs by losing over 211 points on heavy selling in banking stocks as new liquidity tightening steps unleashed by RBI to shore up rupee are likely to hike short-term interest rates. So was the 50-unit CNX Nifty at NSE settled at one-week closing low below the psychological 6,000 mark.

The local currency rupee posted its biggest single-day gain in a month on Wednesday as the RBI's renewed efforts to shore up the currency by tightening cash conditions began to yield results. It rebounded to a high of 59.01 before closing at 59.13, a rise of 63 paise or 1.05 per cent.

Apparently, markets seemed to ignore rupee strengthening by 1.2 per cent to over one-week high of 59.06 against dollar.

Apart from banking shares, rate-sensitive sectors like consumer durables, capital goods, realty and auto saw selling today. Sensex constituents including BHEL, Hero MotoCorp, Hindalco, Hindustan Unilever, Reliance Industries, Maruti Suzuki, Mahindra and Mahindra, Larsen and Toubro, Tata Power and Tata Steel were major losers. 
The 30-share barometer of BSE, which had gained 451 points in past 5 days to hit levels last seen on January 5, 2011, tumbled by 211.45 points, or 1.04 per cent to 20,090.65 points. 

The index fell 307.88 points at the day's low in early afternoon trade and declined 49.43 points at the day's high in morning trade.  In the process investor wealth dropped a whopping Rs 78,000 crore this day as six out every ten stocks fell on the BSE platform.

The 50-scrip National Stock Exchange index, Nifty dipped below 6,000 level by dropping 87.30 points, or 1.44 per cent to end at 5,990.50.

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