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Sensex Melts 350 Pts, Nifty Down 100 Pts

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Erasing early gains, the BSE benchmark Sensex plunged below the 19,000-level by falling over 350 points in late morning trade even as RBI cut its key policy rate by 0.25 per cent.

The 30-share index, which opened in positive zone, fell by 350.32 points, or 1.82 per cent to trade at 18,942.88 at 1130 hrs after RBI left cash reserve ration (CRR) unchanged at 4 per cent and announced a cut in short-term lending, repo, rate by 0.25 per cent to 7.5 per cent.

All the sectoral indices, led by oil and gas and banking, were trading in negative, with losses of up to 2.47 per cent.

The index touched the day's high of 19,378.61, following interest rate cut announcement, but fell below the 19,000 level to touch a low of 18,942.88 as the RBI kept the cash reserve ratio unchanged at 4 per cent.

On similar lines, the National Stock Exchange Nifty index Nifty fell bellow 5,800 level by declining 100.65 points, or 1.72 per cent, to 5,734.60 points.

Brokers said a cut in short-term lending rate by 0.25 per cent to 7.75 per cent after a gap of nine months, and reducing Cash Reserve Ratio (CRR) by 0.25 per cent to 4 per cent by the Reserve Bank brought cheer to the market as the move would reduce the cost of home, auto and corporate loans and improve liquidity in the market.

The fall was mostly led by interest rate sensitive stocks such as banking after the Reserve Bank did not cut the cash reserve ratio (CRR), they added.

They said a cut in CRR would have benefited banks by easing liquidity.

The BSE banking index fell by 1.97 per cent to 13,209.95 as stocks of state-run State Bank of India fell 1.98 per cent to Rs 2,204, ICICI Bank by 1.36 per cent to Rs 1,036.85, HDFC Bank by 2.09 per cent to Rs 630.10 and Axis Bank by 1.78 per cent to Rs 1,301.25.