Sensex Dives 275 Pts, RIL Down 3%
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The economy is likely to grow by between 7.25 per cent and 7.75 per cent in the fiscal year ending March, sharply lower than the original estimate of 9 per cent, a mid-year review of the economy tabled by the finance minister in parliament showed.
The 30-share BSE index fell 274.78 points to 16,213.46, with 27 of its components in the red. The benchmark fell as much as 2 per cent during the day. The index lost 3.76 per cent for the week.
Shares of index heavyweight Reliance Industries led the losses and fell nearly 3 per cent to end at Rs 755.70, their lowest close since Nov. 25.
Nomura downgraded the stock to "neutral" from "buy," citing diminishing exploration and production possibilities, and declining refining margins.
"The market has over-reacted to the mid-term review. The lower GDP projections were already known and there is nothing new that you can derive from the review," Kishor Ostwal, chairman and managing director, CNI Research, said.
"The market should bounce back next week before the RBI reviews its policy on Friday," Ostwal said, adding he saw 5,100 as next support level for the Nifty.
The Reserve Bank of India is widely expected to pause its rate tightening cycle next Friday at its monetary policy review as a slowing economy and a fragile global economic environment take centre stage.
Appetite for riskier assets was hit further after India's trade secretary Rahul Khullar said the country was facing a serious balance of trade problem.
Private lender ICICI Bank and HDFC Bank fell 1.77 and 2.2 per cent, respectively.
Brokerage Macquarie said it would continue to be bearish on the Indian banking sector because of deteriorating asset quality and a possible tightening of margins due to an increase in savings rate.
A slew of economic data, including industrial output and headline inflation, is expected next week and will influence stock market moves.