Sensex registers biggest fall in 4 weeks

The Sensex registered its sharpest decline in 4 weeks on Wednesday,plummeting by nearly 197 pts.

The BSE benchmark Sensex registered its sharpest decline in four weeks on Wednesday,nosediving by nearly 197 points as investors offloaded interest rate-sensitive stocks amid fears of an impending rate hike by the RBI.

Extending its losses for the second consecutive session,the 30-share index of the Bombay Stock Exchange fell by 197.62 points,or 0.96 per cent,to close at 20,301.10.

This is the Sensex’s biggest fall since December 9 last year,when the index registered a 255-point decline during intra-day trade.

In line with the bearish trend in the stock market,the National Stock Exchange’s broad-based Nifty index fell by 66.55 points,or 1.08 per cent,to end at 6,079.80.

Market observers said the decline was led by banking,realty and auto stocks as edgy investors offloaded their holdings in anticipation of a hike in key short-term interest rates by the Reserve Bank of India (RBI) at its forthcoming review of the monetary policy.

While the move is aimed at reining in inflation,it could impact economic growth prospects and the consumer sentiment as well,they said.

The psychological impact of the Rs 300 crore fraud unearthed at Citibank’s Gurgaon branch on the market sentiment also had a part to play in dragging down the market,the observers said.

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“Banking and Non-Banking Financial Companies’ (NBFCs) stocks were under pressure,primarily on rate hike fears and also in reaction to the Citibank fraud. Besides,

profit-booking by investors also dragged down the market,” Bonanza Portfolio Vice-President Avinash Gupta said.

Furthermore,mixed Asian cues with a downward bias and weakness in European stock markets also weighed on the sentiment at home,a broker said.

“Negative global cues coupled with concerns of an upward revision in the interest rates by the Reserve Bank later this month weighed heavily on the street,” Globe Capital PMS Head K K Mittal said.

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Among the thirteen sectoral indices on the BSE,banking,realty and auto stocks were the worst hit,while FMCG and IT were the only ones to end the day on a positive note.

The banking sector index was the worst-hit by the uncertainty over the RBI’s possible course of action. The index fell by 2.19 per cent to 12,833.69 after HDFC Ltd,the biggest mortgage lender,fell by 2.75 per cent to Rs 707.65 its lowest level in 11 months — after BNP Paribas downgraded its rating.

In addition,ICICI Bank,the second-largest private lender in the country,retreated for the third straight day,losing 3.08 per cent to Rs 1,070.10.