After losing 383 points in the previous session as Reserve Bank of India unexpectedly hiked repo rate by 0.25 percentage points, the 30-share Sensex lost another 362.75 points, or 1.79 percent, to end at 19,900.96. (Agencies)
Among Sensex components, 22 stocks declined led by SBI, ICICI Bank, HDFC Bank, ITC, Jindal Steel, L&T, Maruti Suzuki, ONGC, Sun Pharma, RIL, Tata Motors, Tata Power and Tata Steel.
The market sentiment was also tepid ahead of the expiry of monthly derivative contracts on Thursday, traders said.
Similarly, the National Stock Exchange index Nifty dropped by 122.35 points, or 2.04 percent, to close at 5,889.79, after touching the day's low of 5,871.40. It had lost 103.45 points in the previous session.
The BSE Banking sector index suffered the most as it lost 4.41 percent, followed by Realty (4.33 percent), Capital Goods (3.28 percent), PSU (2.56 percent) and Power (2.26 percent). Bucking the general weakening trend, stocks in Information Technologies and Consumer Durable sectors gained on heavy buying.
Infosys, Wipro and TCS shareas rose amid the rupee showing weakening trend. It was last trading at 62.6 levels versus the US dollar. Having been surprised by the repo rate increase on inflation concern, analysts from Standard Chartered, Credit Suisse and Nomura expect new RBI Governor Raghuram Rajan to hike repo rate by another 0.50 percentage points this fiscal.
"We now expect RBI to increase repo rate by 0.25 percent each at the next two policy meetings to 8 percent by end of 2013," Standard Chartered said in a report.
Absence of clear direction from overseas markets with Japan and Hong Kong markets being closed for a public holiday, and mixed trend in Europe also forced funds to reduce their positions in India, brokers said.
After losing 383 points in the previous session as Reserve Bank of India unexpectedly hiked repo rate by 0.25 percentage points, the 30-share Sensex lost another 362.75 points, or 1.79 percent, to end at 19,900.96.