Mumbai: The Bombay Stock Exchange (BSE) benchmark Sensex plunged by 146 points to below 18,000-level on Thursday as the RBI increased key policy rates for the 10 time in a row in its bid to tame rising inflation.

The key index of the BSE declined 100 points in the opening trade and declined further during the day. It finally settled the day at 17,985.88, a sharp loss of 146.36 points or 0.81 per cent from its last close

The NSE 50-share Nifty also fell by 50.75 points or 0.93 per cent to finish at 5,396.75.

Market participants, however, said that stocks were not weighed down by the Reserve Bank of India's (RBI) decision to hike short-term lending and borrowing by 25 basis points each as the increase was already accounted for by bourses.

 "Market gave thumbs up to the RBI announcement as it surged sharply upwards to gain some lost ground. Good buying was witnessed in banking stocks which further aided the uptrend," Bonanza Portfolio Sr Research analyst Shanu Goel said.
 
The uptrend was short-lived in the absence of optimistic signals regarding growth and curbing inflation, he added.

Investors battered stocks across counters but it was the IT, capital goods, metal shares that bore brunt of selling amid particularly weak global trends.

Brokers said market leader RIL plummeted a two-year low at Rs 888 a piece, after it was downgraded by HSBC Holdings which had a cascading effect on markets.

IT stocks went down for the second day in succession on weak economic data in the US and on continuing sovereign debt crisis in Europe. US and Europe are the two key markets for Indian IT companies. Metal stocks were weighed down by the decline in the London Metal Exchange on Wednesday.

IT giant TCS was worst loser at 2.40 per cent, followed by Sterlite at 2.33 per cent. Engineering major Larsen was down by 2.00 per cent, while another IT major Wipro lost 1.99 per cent.
Relinace Infra, however, shot up by 2.00 per cent, HUL 1.10 per cent and SBI 1.09 per cent. 

The total market breadth at BSE continued to remain negative as 1,744 stocks finishing with losses while 1,085 stocks ending with gains at BSE.

The total turnover moved up to Rs 2,775.38 crore from Rs 2,676.87 crore on Wednesday.

Analysts said that markets went on a downtrend due to weak global cues.

European stock markets fell in their early trade with banks tumbling as worries of a Greek default intensified. The key benchmark indices in UK, France and Germany were down by 0.35 per cent to 0.73 p er cent.

Key benchmark indices in China, Hong Kong, Indonesia, Japan, Singapore, South Korea and Taiwan fell in the range of 1.15 per cent to 2 per cent.

Meanwhile, continuing its efforts to check price rise, RBI raised key short-term lending and borrowing rates by 25 basis points for the 10th time since March, 2010.

Food inflation went down marginally to 8.96 per cent for the week ended June 4 on the back of cheaper pulses and vegetables.

(Agencies)