Sensex crashes below 16,000 in shock reaction

At 11:27 hours IST, the benchmark Sensex tanked over 300 points to 15982, in a knee jerk reaction to the 75 bps CRR hike by RBI (See: RBI raises CRR by 75 basis points to 5.75 per cent). But it managed to retrace from that level on the back of buying in BHEL, ICICI Bank, SBI, HDFC and DLF along with cement stocks. It touched the day's low of 15,982.08 and the Nifty tested the low of 4766.

The Reserve Bank of India hiked its cash reserve ratio (amount of funds that the banks have to keep with RBI) by 75 bps to 5.75 per cent  as against 5 per cent at its credit policy meet today, (100 basis points=1 per cent). The move will be implemented in two stages; 50 bps hike w.e.f February 13 and 25 bps hike w.e.f February 27. This CRR hike will absorb Rs 36,000 crore of excess liquidity from the markets. It kept Repo and Reverse Repo rate unchanged. The RBI revised GDP forecast to 7.5 per cent from 6 per cent.

The 30-share BSE Sensex was trading at 16159, down 147 points and the Nifty was at 4826, down 40 points. The market breadth was negative; about 185 shares advanced while 1083 shares declined on the NSE.In the technology space, Wipro, Patni Computer, HCL Tech, Tech Mahindra, TCS and Infosys were down 2.5-4.5 per cent.

MTNL, Bharti Airtel, Reliance Communications, Tata Teleservices and Idea Cellular declined 0.76-2.3 per cent in the telecom pack.

Jindal Steel, Hindalco, Tata Steel, Sterlite Industries, SAIL and NALCO lost 1.5-4.2 per cent in the metal segment.

Tata Motors tumbled 3.40 per cent ahead of third quarter numbers today. Bharat Forge, Ashok Leyland, Apollo Tyres, M&M, Hero Honda and Maruti Suzuki fell 1-2.7 per cent, in the auto space.