The Sensex slipped over 200 points to sub-29,000 levels after the Reserve Bank of India decided to hold the key interest rates steady at its monetary policy review.
The broader Nifty also slipped below 8,800 owing to weakness in the rate-sensitive sectors.
The Reserve Bank of India governor Raghuram Rajan today decided to hold the key interest rates steady, saying that the central bank would be closely watching the Budget, growth numbers and inflation data, all due this month. However, the RBI announced to cut statutory liquidity ratio (SLR) by 50 basis points to 21.5 per cent. This will free up more resources for banks to lend.
The rate sensitive stocks faced the heat of selling pressure. Banking stocks were the worst hit from the rate sensitive pack. The Bank Nifty plunged nearly 2 per cent to 19,517 levels. Capital goods, real estate and auto stocks also witnessed selling pressure.
Among the frontline stocks, Punjab National Bank was the top loser. The stocks slipped 5.4 per cent to Rs 181 after the public sector lender announced less-than-expected third quarter numbers and also a deterioration in asset quality.
Bajaj Auto, Kotak Mahindra Bank, HDFC, Axis Bank, State Bank of India, HDFC Bank, Mahindra & Mahindra and IDFC were also trading weaker by 1.6-3.3 per cent each.
At 12:10 PM, the Sensex was down 172 points at 28,949 and the Nifty was down 51 points at 8,745.