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Sensex Posts Biggest Fall In 7 Months; Banks Hit

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In a bad day for investors, Indian stocks plunged to this year's lowest levels, wiping out over Rs 1.1 lakh crore wealth, while gold prices tanked to a seven-month low in a knee-jerk reaction to global sell-off.

Hit by heavy dollar demand, rupee also tanked by 40 paise to end at 54.47, its weakest level in over a month. Dollar demand from banks and importers during the day on the back of higher dollar in the overseas market affected the rupee value.

Combined market capitalisation of Indian stocks fell by Rs 1.12 lakh crore from Rs 68.58 lakh crore yesterday to Rs 67.46 lakh crore today.

Prices of the precious metal fell below Rs 30,000 level in New Delhi for the first time in seven months due to hectic selling by stockists. Prices in Mumbai, Kolkata and Chennai markets fell in Rs 200-600 per 10 gram range.

The BSE Sensex posted its biggest fall since July 2012 as banking stocks such as ICICI Bank fell a day after RBI data showed loan growth was still a concern and on weakness in global shares due to worries over Fed slowing its bond-buying programme.
 
This was largely a reflection of the fall in risk assets which fell after minutes of the Federal Reserve's last policy meeting cast doubts over how much longer the US central bank would stick to its stimulus plan.
 
"The selling pressure is more global, than due to local factors. Some liquidation might continue after such high inflows," said Phani Sekhar, a fund manager at Angel Broking.
 
The government may peg its fiscal deficit target at 4.8 per cent of GDP for the next fiscal year, but it needs to explain as to how the figure is arrived at, he said.
 
The Union Budget to be presented on February 28 will be keenly watched as a test of the government's commitment to fiscal responsibility, whether it has a credible plan for reducing the deficit and whether populist measures can be avoided before the general elections in 2014.
 
The BSE Sensex fell 1.62 per cent, or 317.39 points, to end at 19,325.36, posting its biggest daily fall since July 23, 2012. The index closed at its lowest level since December 24, 2012.
 
The 50-share Nifty fell 1.53 per cent, or 90.80 points, to end at 5,852.25.
 
Banking shares were among the major losers after RBI data showed loan growth continued to remain a concern. ICICI Bank fell 3.74 per cent while State Bank of India ended 1.84 percent lower.
 
Banks' advances have grown 8.7 per cent so far this fiscal year compared with 11.2 per cent a year earlier, while deposit growth was 7.8 per cent compared with 11.4 per cent in the same period a year earlier. Yes Bank fell 4.37 per cent while Axis Bank declined 2.4 per cent.
 
Reliance Industries fell 1.8 per cent after a 3.1 per cent surge on Wednesday.
 
Weak sentiment led to sell-off in blue-chip metal shares such as Tata Steel, which ended 4.05 per cent lower, and Jindal Steel and Power which declined 4.1 per cent.
 
Cigarette maker ITC ended 1.13 per cent lower on concerns over a hike in taxation in the upcoming budget, which might impact its volume, dealers said.

The US dollar gained after minutes of US Federal Reserve's meeting showed many Fed officials are worried about the costs and risks associated with the $85 billion per month asset-purchase programme.

"Global stocks melted after the dollar rose. The rupee could again be under pressure tomorrow. Financial markets have seen low volumes in the past two days due to the ongoing strike as treasury teams were thinly staffed," said Srinivasa Raghavan, Executive Vice President, Treasury, Dhanlaxmi Bank.


(Agencies)