Mumbai: The hike in cash reserve ratio (CRR) by the Reserve Bank of India (RBI) on Tuesday evening took its toll on share values during morning trade and the bellwether Sensex was down by a whopping 281.79 points. The market continued to be volatile as the Sensex plunged below the 14,000-mark.
The Bombay Stock Exchange (BSE) 30-share sensitive index, Sensex, opened sharply lower with nearly 100 points downside gap to 1,3990.41 from Tuesday’s close of 14,090.98 and tumbled to quote at 13,817.19 within five minutes of resumption of trading, a steep fall of 281.79 points.
Similarly, on the National Stock Exchange (NSE), the S&P CNX Nifty also crashed by 79.35 points to 3,965.20 from previous close of 4,044.55.
The CRR will rise from 5.5% to 6% in two stages, the first on February 17 and the second one on March 3.
This move by the central bank would lead to increase in corporates loan rates, home loan rates and other loans, besides having negative impact on the profitability of banks.
As a result, there was heavy selling spree in banking stocks and the BSE-Bankex was quoted sharply lower by 412.16 points at 6,854.58 from previous close of 7,266.74.