Markets End Deep in Red

The markets had a disastrous session of trade as the banking regulator's move to hike the interest rates led to a trail of selling in the rate-sensitive space. The Sensex ended at 1,534, weaker by 463 points and the Nifty ended at 5565, down 136 points. The midcap index ended at 6897, down 130 points and the smallcap index ended at 8435, down 179 points. All the sectoral indices on the BSE ended in the red, with the rate-sensitive auto index skidding by nearly 4%, and the banking and realty indices shedding in the region of three percent each. Strengthening its already hawkish stance vis-a-vis spiralling inflation numbers, the Reserve Bank announced a 50 basis points hike in repo and reverse repo rates to 7.25% and 6.25% respectively under the liquidity adjustment facility (LAF) in its third quarter review of monetary policy 2010-11. The RBI, however, kept the cash reserve ration (CRR) unchanged at 6%. Moreover, the banking regulator lowered the economic growth projection to 8 per cent for this fiscal and promised to continue with its anti-inflationary stance. Home, auto and other loans are set to become costlier as a result of the rate hike, while savings bank deposits are likely to fetch more as interest rates on the money lying in savings bank accounts has been hiked by half a percentage point to 4%. The market breadth was weak. Out of 2925 stocks traded on the BSE, there were a mere 711 advances as against 2101 declines.