Shares drop 0.58pc on rate hike fears

MUMBAI — Indian share prices slid 0.58 per cent in choppy trade yesterday on concerns that further monetary tightening could slow growth after the central bank moved to cut liquidity late on Tuesday, dealers said.

By (AFP)

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Published: Thu 15 Feb 2007, 11:06 PM

Last updated: Sat 4 Apr 2015, 9:55 PM

The Reserve Bank of India, for a second time in two weeks, announced a 50-basis-point hike — to 6.0 per cent from 5.5 per cent — in the cash reserve ratio (CRR) requirement for commercial banks in a bid to fight surging inflation.

Banking, construction and infrastructure stocks were hardest hit in a market which has tested successive record highs over the past few months.

The 30-share BSE Sensex index fell 2.02 per cent in early trade to a day’s low of 13,805.36 before recovering to close at 14,009.9, down 81.08 points.

The markets have now shed 4.38 per cent in four straight days, from a record close of 14,652.09 on February 8.

“The markets reacted to the monetary tightening but appear to be bottoming out at these levels. We should see a surge closer to the union budget,” said Hiten Mehta, fund manager with Fortune Financial Services.

India will unveil its budget for the fiscal year starting April 1 at the end of February.

Losers led gainers 1,461 to 1,012 on volume of 39.98 billion rupees ($906 million).

The rupee was flat against the dollar at 44.1 and weakened marginally against the euro to 57.5 from 57.2.

Housing lender HDFC Bank fell 39.7 rupees or 2.3 per cent to 1,682.9, while government-owned State Bank of India, the country’s largest, fell 71.45 rupees or 6.09 per cent to 1,101.25.

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