Sensex falls 205 pts to 5-wk low as RBI refrains from rate cut

The BSE benchmark Sensex on Tuesday shed 205 points to close at over five-week low of 18,430.85 on selling in banks and other rate-sensitive stocks after RBI dashed hopes of a rate cut, hiked loan provisioning norms and also cut economic growth projections.

After a better start, the Sensex rose by over 80 points in early trade on the back of hopes of a rate cut after the government yesterday announced a fiscal consolidation plan.

But with the central bank today keeping key interest rate unchanged and raising the provision for restructured standard accounts from the existing 2 per cent to 2.75 per cent, the markets were disappointed led by banking sector.

SBI, which fell 4.4 per cent, was the worst performer in Sensex while ICICI bank, HDFC Bank and HDFC also closed down.

Barring Maruti, auto stocks including Tata Motors, Hero MotoCorp and M&M fell in 1.6-3.5 per cent range as hopes of rate cut boosting demand in festival season were dashed.

On similar lines, the 50-share National Stock Exchange index Nifty fell by 67.70 points, or 1.19 per cent to end below key 5,600-level at 5,597.90.

In the broader market, over 1,800 stocks including consumer durables, capital goods and PSU stocks fell, while just 997 shares rose.

After banks, the realty sector was second worst performer today with DLF losing 2.21 per cent.