Indian shares fell more than 3 percent on Monday, led by bank stocks like ICICI Bank and State Bank of India, after the central bank raised a key interest rate unexpectedly on Friday to contain inflation.
After market hours on Friday, the Reserve Bank of India lifted its short-term lending rate by 25 basis points and the proportion of cash banks have to hold with it on deposit by half a percentage point.
Shares in top private lender ICICI Bank were down 5.1 percent at 809.90 rupees while state-run State Bank of India was also off 5.6 percent at 937.45 rupees.
ICICI Bank on Saturday raised its benchmark lending rate by 100 basis points to 15.75 percent, effective April 1.
Private bank HDFC Bank was down 3.6 percent at
914.95 rupees on concerns that firmer interest rates could lead to a slowdown in credit growth.
"The rate decision has come as a negative surprise for the market. People were expecting some kind of stability at least for the next couple of months," said Jayant Pai, vice-president of equity sales at Parag Parikh Financial Advisory Services.
"Anyway we were in a downtrend, the interest rate hike has only accelerated the fall. I think the market will breach the
12,300 level soon."
By 11:10 am, the main BSE index was down 388 points at 12,684.42, after touching a low of 12,653.52.
The mood was mostly negative in the broader market with 1,300 losers beating 517 gainers in total volume of 45 million shares.
The 50-issue Nifty was down 3 percent at 3,706.00.
Foreign funds sold Indian equities worth $81 million on Thursday, taking their total investment in the stock market to $1.4 billion so far this year.
Elsewhere in the region, Karachi's 100-share index was down 0.1 percent at 11,270 points. Colombo was shut on Monday for a local holiday.
STOCKS ON THE MOVE
* Optical storage device maker Moser Baer India Ltd. rose 2 percent on news its unit bought a 40 percent stake in Slovenia-based Solarvalue Proizvodnja d.d. from Solarvalue AG for an undisclosed sum.
* Two-wheeler maker Hero Honda Motors Ltd., Bajaj Auto Ltd. and TVS Motor Co. Ltd. were down 3.4-6.3 percent after reporting weak March sales.
* Gas transmission utility Gujarat State Petronet Ltd. was up 4.06 percent at 48.65 rupees after it signed a 15-year agreement with Reliance Industries Ltd. to transport gas to the latter's refinery at Jamnagar.
LEADING STOCKS BY VOLUME
* Idea Cellular Ltd. 459,000 shares.
* Tata Motors Ltd. on 409,000 shares.
Source : in.today.reuters.com