Moving in a 400-point range, the Sensex which hit a high of 17,109.95 received a severe jolt as the RBI kept interest rates unchanged in its mid-term policy review, choosing to check inflation over growth. Brokers said investors were expecting at least a 25 basis point cut in short-term lending rate and that led to a huge sell-off in banks like SBI that fell 4.36 per cent, ICICI Bank (3.34 pc) and HDFC Bank (2.71 pc). Counters including real estate, capital goods and FMCG fell in the 1-5 per cent range. Across the market, investor wealth dropped by a staggering USD 13.4 billion.
Sentiments were further hit as the rupee too surrendered its early strength and weakened against dollar to 55.84 levels tracking weakness in stocks. "Against the expectations of the market, the RBI has kept the policy rate and CRR unchanged, which has been taken negatively by the market participants," said Sunil Jain, Head - Equity Research (Retail), Nirmal Bang Securities.
On similar lines, the 50-share National Stock Exchange index Nifty dropped by 74.80 points, or 1.46 per cent to 5,064.25, after touching the day`s high of 5,190.20. Among indices, the BSE-Bankex lost 3.16 per cent, followed by BSE-Realty index which dropped by 2.78 per cent led bty DLF that lost 4.57 per cent.