The benchmark S&P BSE Sensex tumbled 1,023.63 points, or 1.75%, to 57,621.19 on Monday as rising global crude oil prices fuelled fears of faster inflation and concerns mounted that the Reserve Bank of India may use its monetary policy meeting this week to signal a shift in policy stance and possibly even move to tighten liquidity.
Private sector lenders led the losses with HDFC Bank declining 3.65%, Bajaj Finance falling 3.15% and Kotak Bank losing 2.92%.
“Global headwinds have again started impacting sentiment,” said Ajit Mishra, VP - Research, Religare Broking. “And, this fall ahead of the MPC (monetary policy committee) meet indicates that markets are factoring in the change in stance by the committee and possibly a hint towards the beginning of liquidity tightening as well,” Mr. Mishra added.
The NSE Nifty-50 index too slid 302.70 points, or 1.73%, to 17,213.60.
“Markets are volatile ahead of the State elections, witnessing a steep fall led by FII selling,” said Vinod Nair, Head of Research at Geojit Financial Services.
“Strong U.S. jobs data gave rise to fears of sharper than expected Fed rate hikes, resulting in a spike in the bond yields. The volatility in the market is likely to continue due to high chances of interest rate lift-off by the RBI given domestic inflation and policy tightening by global central banks,” Mr. Nair added.