Bank, realty and auto stocks were on Tuesday battered on the BSE after the Reserve Bank raised short-term lending and borrowing rates by higher-than-expected 50 basis points, which analysts said would dampen consumer demand and slow down sales.
Banking stocks bore the brunt of a steep hike in key rates : SBI, the country's largest bank, plunged 2.86 per cent, largest private lender ICICI Bank fell 3.13 per cent, HDFC Bank 1.44 per cent, Yes Bank 3.98 per cent and PNB 2.70 per cent.
Dragged by their losses, the BSE bank index closed 2.46 per cent lower at 12,694.05.
"Interest rate sensitive sectors such as realty, auto and bank felt the heat of the rate hike," said Inventure Growth and Securities Head Equity Amit Chedda.
The BSE's realty index slumped 3.55 per cent at 2,144.18, as sector heavyweights DLF and Unitech tumbled 4.26 per cent and 4.04 per cent at Rs 233.60 and Rs 34.35, respectively.
DB Realty slipped by 2.95 per cent, Sobha Developers 4.37 per cent and Indiabulls Real Estate 4.79 per cent.
"The rate hikes were beyond the market expectations and the stock market tanked immediately after the announcement.
Interest rate sensitive sectors like Auto, realty were among the major losers and promptly slipped into negative," said Bonanza Portfolio Senior Research analyst Shanu Goel.
The RBI has hiked short-term lending and borrowing rates three times in the last three months to tamp out a stubbornly high inflation. After the 0.50 per cent hike on Tuesday, the short-term lending (repo) rate stands at 8 per cent and the short-term borrowing (reverse repo) at 7 per cent.
The aggressive hike by RBI today pushed BSE auto index 2.14 per cent down at 8,789.78 as index heavyweight Mahindra & Mahindra declined 4.20 per cent, Tata Motors 3.06 per cent, Bajaj Auto 1.72 per cent, Ashok Leyland 0.47 per cent and Maruti Suzuki 0.32 per cent.
The Bombay Stock Exchange (BSE) 30-share Sensex, too, tumbled 353.07 points, or 1.87 per cent down at 18,518.22.