Sensex tumbles by another 398 points

The BSE benchmark Sensex extended losses for the second consecutive week.

The BSE benchmark Sensex extended losses for the second consecutive week by slipping by another 398 points on persistent selling pressure from operators on hike in interest rates by the Reserve Bank of India (RBI).

In addition to the central bank’s anti-inflationary stance,weak global cues also prompted investors to liquidate their positions. Fears of a potential default by Greece and weak economic data in the US added to the nervousness among investors.

The barometer index BSE Sensex fell by 398.01 points or 2.18 per cent to 17,870.53. The 50-unit S&P CNX Nifty also lost by 119.40 points or 2.18 per cent to 5,366.40.

The BSE Small-Cap index fell 1.38 per cent and the BSE Mid-Cap index 1.21 per cent.

Key benchmark indices dropped to three-week lows as concerns over Greece’s debt crisis rattled world stocks.

Interest rate sensitive realty,banking and auto stocks declined after the RBI raised its key lending rate viz. The repo rate by 25 basis points to 7.5 per cent to tame inflation.

India’s largest private sector company by market capitalisation Reliance Industries (RIL) was the biggest Sensex loser of the week. The stock fell 8.01 per cent to Rs 868.40 on reports that a government watchdog has accused the Oil Ministry for favouring the firm by allowing it to double the development cost of its KG-D6 gas field.