Market cracks as RBI turns on the screws

The market tumbled, as the Sensex fell below the 12,500 mark today. Selling was spread over the entire breadth of the market, irrespective of sectors. The shares continued to drift downward on account of the Reserve Bank of India's decision to hike the cash reserve ratio and repo rate last Friday, after trading. Index heavyweights suffered a sharp fall today. Banking, auto, construction, steel, and real estate shares were at the forefront of the decline. However, sugar shares stood tall among the ruins.

The sensex closed at 12455 , down by 616 points while Nifty closed at 3633 down by 187 points.

Private banking major ICICI Bank lost 5.70% to Rs 804.50, on raising the benchmark-lending rate by 100 basis points to 15.75%, effective 1 April 2007. ICICI Bank also raised its floating reference rate for consumer loans, including home loans, by 100 basis points to 12.75%, with immediate effect.

Yes Bank (1.99% to Rs 137.90) also raised its prime lending rate (PLR) by 75 basis points, to 14.75%. Interest rate sensitive auto shares were also hit on concerns that a rise in lending rates will rein in demand. Adding to the woes of auto scrips, were sluggish-to-weak March 2007 sales report by Bajaj Auto (down 5.15% to Rs 2300.60), Hero Honda (down 6.68% to Rs 639.55) and TVS Motors (down 4.45% to Rs 56.95).

Tata Motors shed 8.04% to Rs 669.25, and Maruti Udyog (MUL) dropped 8.09% to Rs 753.40. Mahindra & Mahindra (M&M) dropped 8.31% to Rs 715.30.