In its biggest fall for nearly a month, the BSE Sensex was plummeted by 661 points on Tuesday afternoon. Coupled with that, the 12 paise fall in the Rupee added to the market set back as RBI took a cautious stance on economic recovery.
Early in the day, the markets opened with a cheer after cut in the Repo rates by the RBI, but the news of a weak monsoon caused the enthusiasm rolling down.
Total investor wealth fell sharply by Rs 2.26 lakh crore with Sensex falling by 660.61 points or 2.37 per cent to 27,188.38. And the Rupee too depreciated by 12 paise to end at 63.82 against the US Dollars tracking steep losses in local equities and good dollar demand from banks and importers.
However, the gold prices recovered by Rs. 45 to reach Rs. 27,270 per 10 grams buying rate in the national capital.
The Reserve Bank reduced interest rate by 0.25 per cent for the third time this year but hinted there may not be any more cuts in the near-term sending stock markets in a tizzy. Inflation too remains a worry for the bank as it expects price rise to remain subdued till August before rising to 6 per cent by January 2016.
But the biggest set back was caused after Union government announced the forecast of a “deficient” monsoon. The Met Department on Tuesday afternoon announced monsoon to remain 88 % of the normal, setting the fears of drought. Markets were quick to react to the scare.
“RBI expects the inflation to tick higher from here owing to higher oil prices, below normal monsoon, and fall in crop output. The rise in input costs may further impact the profitability of the already ailing India Inc,” said Hiren Dhakan, Associate Fund manager at Bonanza Portfolio.
Broad-based NSE Nifty dipped below the 8,300-mark by tanking by 196.95 points or 2.34 per cent to 8,236.45. Today’s fall is the worst since May 6 when the BSE Sensex tumbled by 722.77 points.
(With inputs from PTI)