Sensex down 190 pts on credit policy worries

Dalal Street fell 1.1 per cent on Monday as fraud charges against Goldman Sachs and expectations of a rate hike when the Reserve Bank announces policy on Tuesday marred the investor sentiment.

Dalal Street fell 1.1 per cent on Monday as fraud charges against Goldman Sachs and expectations of a rate hike when the Reserve Bank announces policy on Tuesday marred the investor sentiment. The 30-share BSE Sensex ended down 1.08 per cent,or 190.50 points,at 17,400.68 points,after sliding as much as 1.8 per cent during the day to its lowest level in more than a month. The broader 50-share NSE index closed down 1.1 per cent at 5,203.65 points.

T he sentiment was impacted by global markets nosediving on concerns that Goldman issue could see more skeletons of the financial crisis tumbling out on Wall Street. The Sensex was down 314 points at one stage on aggressive selling by funds. Analysts said the markets fall was due to profit taking after the benchmark touched its highest level in more than two years earlier this month. Goldman Sachs gave the markets a good reason to correct themselves. The concern over RBI rate hike coupled with the fears that US administration may further widen its scope of investigation to some other financial majors,pulled Indian markets down, said a dealer.

Goldman was charged last Friday with fraud by the US Securities and Exchange Commission over its marketing of a subprime mortgage product,rattling stock markets across the globe. All the markets globally are reacting to the charges against Goldman. Its more of a sentimental issue,which will have an impact on the market in the short term, said a fund manager.

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Interest rate sensitive sectors like realty,auto and banks tumbled. Realty sector stocks were hit the most. Energy major Reliance,which has the heaviest weightage in the benchmark index,ended down nearly 2 per cent at Rs 1,061.95,its lowest close in more than a month,amid waning risk appetite among institutional investors. DLF closed down 4.2 per cent and Unitech fell 1.3 per cent ahead of the expected interest rate increase on Tuesday,which may result in hike in mortgage costs,analysts said.

The rupee closed 41 paise lower at 44.73/74 against the US currency on good demand for dollar from banks and corporates. Dealers said good demand for dollar from banks amid weak stock markets influenced the rupee sentiments. The dollar and the yen posted sharp gains on Friday,prompting investors to seek refuge in both safe haven currencies.