Sensex drops 285 points on DMK pullout, RBI statement

MUMBAI Tue Mar 19, 2013 5:23pm IST

People walk pass the Bombay Stock Exchange (BSE) building displaying India's benchmark share index on its facade, in Mumbai September 30, 2009. REUTERS/Punit Paranjpe/Files

People walk pass the Bombay Stock Exchange (BSE) building displaying India's benchmark share index on its facade, in Mumbai September 30, 2009.

Credit: Reuters/Punit Paranjpe/Files

Related Topics

Stocks

   

MUMBAI (Reuters) - The BSE Sensex fell the most this month on Tuesday after the DMK's withdrawal from the ruling UPA coalition raised doubts about the fate of the government's reforms and the RBI stuck to a cautious stance on monetary policy.

The regional Dravida Munnetra Kazhagam (DMK) party pulled out of the ruling coalition on Tuesday, jeopardising Prime Minister Manmohan Singh's economic reforms but posing no immediate threat to the minority government, which can survive with the support of other parties. (Read full story here)

The political uncertainty came the day Reserve Bank of India cut interest rates by 25 basis points but stuck to a cautious tone on future rate cuts, disappointing investors. (Read full story here)

The RBI also left the cash reserve ratio, a key liquidity tool, unchanged, sending banking shares such as ICICI Bank Ltd (ICBK.NS) lower.

"The market does not like uncertainty and DMK provided that, which led to some correction," said IDBI Life Insurance CIO Aneesh Srivastava, who manages 30 billion rupees in capital markets.

"The only statement in the monetary policy which is disturbing is that further rate cuts are limited," Srivastava added.

The Sensex fell 1.48 percent, or 285.10 points, to 19,008.10, its lowest close since March 4 and biggest fall since Feb 28.

The Nifty fell 1.53 percent, or 89.30 points, to 5,745.95.

The uncertainty over the political and economic outlook comes as a radical bailout for Cyprus is roiling global markets, raising concerns about foreign investor inflows.

Foreign investors bought a net of around $24.37 billion in stocks last year, and about $9.8 billion so far this year, which makes them critical to stock markets.

Blue chips were widely hit, with Oil and Natural Gas Corporation Ltd (ONGC.NS) ending down 2.5 percent and Larsen & Toubro (LART.NS) down 2.6 percent.

Banking stocks were among the leading decliners, after the RBI left CRR unchanged, disappointing some investors, and raised doubts about future rate cuts.

ICICI Bank fell 1.8 percent and State Bank of India 2 percent.

Mahindra & Mahindra Ltd (MAHM.NS) dropped 3.85 percent. The company said after market hours that its Jaipur tractor plant would stop production for five days to align output with sales requirements.

Bharti Airtel Ltd (BRTI.NS) shares ended 4.6 percent lower after chairman Sunil Mittal was ordered on Tuesday to appear before a court on April 11 in a case over alleged corruption in allocating mobile phone bandwidth a decade ago. (Read full story here)

Shares in Sun TV Network Ltd (SUTV.NS) ended 5.74 percent lower after Citigroup downgraded the stock to "neutral" from "buy", citing its stronger performance compared with peers recently.

The shares extended losses after the DMK announcement, given that Sun TV Chairman Kalanithi Maran's brother is a lawmaker from the DMK party and a former minister.

(Additional Reporting by Abhishek Vishnoi; Editing by Anupama Dwivedi)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Market Eye

Sensex, Nifty rise to second consecutive record high

Sensex, Nifty rise to second consecutive record high

The BSE Sensex and Nifty on Friday rose to their second consecutive record highs. The 30-share Sensex surged as much as 1.52 percent to an all-time high of 27,762.13. The broader Nifty gained as much as 1.49 percent to a record of 8,291.65.  Full Article 

REUTERS SHOWCASE

Ban on E-Cigs?

Ban on E-Cigs?

Govt considers ban on e-cigarettes, sale of single smokes.  Full Article 

Commodities

Commodities

Silver futures in India hit four-year low on global cues.  Full Article 

BOJ Policy

BOJ Policy

BOJ shocks markets with surprise easing as inflation slows.  Full Article 

Cost Cutting

Cost Cutting

PM Narendra Modi boots officials out of the first class cabin  Full Article 

Leisure Riding

Leisure Riding

Harley-Davidson woos affluent young Indians with bike culture  Full Article 

Shadow Banking

Shadow Banking

China's shadow banking sector growing rapidly, third largest in world - FSB.  Full Article 

Moody's on India

Moody's on India

Moody's welcomes India's policy steps, but wants to see more.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage