Mumbai: A benchmark index of Indian equities markets slumped over two percent this week as investor-sentiments were dampened after the Reserve Bank of India hiked key policy rates and indicated that inflation may remain stubbornly high and growth moderate leading to decline in company-earnings.

The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) slumped 2.18 percent or 398.01 points to 17,870.53 points during the weekly trade. The benchmark Sensex had lost 116.36 points in the previous week. 

 The Reserve Bank of India (RBI) on Thursday raised repo rate by 25 basis points to 7.5 percent in a bid to curb the stubbornly high inflation. As per the structural changes announced in the monetary policy for 2011-12, the reverse repo rate stands automatically revised to 6.5 percent.   This is the tenth time the RBI has raised interest rates since March 2010. 

Reacting on the rate hike Finance Minister Pranab Mukherjee said Friday the monetary tightening measures pursued by the RBI might moderate growth in short-term.   The benchmark Sensex slumped 252 points in the last two days of the week after the central bank hiked lending rates Thursday. The Sensex fell 115.35 points or 0.64 percent to close at 17,985.88 points on the last trading day of the week.   At the National Stock Exchange the 50-scrip S&P CNX Nifty closed 0.56 percent down at 5,366.4 points on Friday.   Reliance Industries slumped sharply during the week.

The scrip closed 2.21 percent down at Rs.868.40 on Friday. RIL closed in the red throughout the week following a report by the Comptroller and Auditor General of India that said the government and the Oil ministry had favoured RIL by allowing it to double the cost of development of the KG-D6 gas field. 

Broader markets and most sectoral indices also slumped during the week under review. There was a heavy selling pressure in IT, energy, healthcare, consumer durables and telecom stocks.

Major Sensex losers on Friday were: TCS, down 3.58 percent at Rs.1,110.50; M&M, down 2.02 percent at Rs.644.95 and Hindalco, down 1.96 percent at Rs.169.85. 

Among gainers on the 30-scrip Sensex Friday were: Tata Steel, up 3.45 percent at Rs.572.25; Bharti Airtel, up 2.58 percent at Rs.380.35; Reliance Communications, up 1.49 percent at Rs 95.10 and Reliance Infra, up 0.97 percent at Rs.580.50.  Asian markets ended lower as weak economic data from the US and the possibility of a debt default by Greece put pressure on the bourses.

The Nikkei of the Japanese stock exchange closed 0.64 percent down at 9,351.4 points, while the Hang Seng of the Hong Kong stock exchange shut shop 1.17 percent higher at 21,695.26 points.  The Chinese Shanghai composite index moved down 0.81 percent to close at 2,642.82 points.

However, most European markets ended the week on a positive note. Britain's FTSE 100 index ended 0.28 percent higher at 5,714.94 points. The French CAC 40 advanced 0.83 percent at 3,823.74 points and the German DAX closed 0.76 percent higher at 7,164.05 points on Friday.

(Agencies)