Sensex tumbles 616 points

Continuing its downward slide, the Bombay Stock Exchange benchmark Sensex tanked over 600 points on all-round selling triggered by RBI's move to hike key lending rate to squeeze liquidity.

The Reserve Bank on Friday hiked its short-term lending rate (repo rate) by 25 basis points to 7.75 per cent with immediate effect and cash reserve ratio (CRR) by 50 basis points to 6.50 per cent in two tranches with an aim to tame soaring inflation.

According to market players, the move has a cascading effect on market sentiment as there was panic like situation and investors resorted to heavy selling across-the-board.

Banking shares were at the receiving end while interest rate sensitive sectors like auto, consumer durables and real estate also registered sharp losses, expecting cooling down the demand for loans.

After resuming with a huge downside gap of over 260 points, the Bombay Stock Exchange (BSE) Sensex tumbled to quote at 12,455.37 at close, a sharp fall of 616.73 points over Friday's close of 13,072.10.

The wide-based S&P CNX Nifty of the National Stock Exchange (NSE) also plunged by 187.95 points to 3,633.60 from previous close of 3,821.55.

The selling was so widespread that all other sectoral indices were down by an average of 1 to 5 per cent.

Sectoral indices such as Auto, Banking, Consumer Durable and Metal were traded in negative terrain while 29 out of 30 Sensex-based stocks showed sharp falls