12:00AM New York, 9:30PM Mumbai – Mumbai benchmark stock index lost nearly 5% on weak global markets and expectations of higher interest rates.

Market sentiment

India shares declined on combined weight of weak global markets and domestic political uncertainty. Stocks in all sectors declined and benchmark index lost nearly 5%.

In Mumbai trading, the 30-share BSE Sensex lost 4.9% or 654.32 to 12,676.19. On the National Stock Exchange, the CNX Nifty index declined 4.4% or 178.60 points at 3861.10.

Of the BSE share, 2,091 shares declined, 540 shares gained and 59 shares remained unchanged.

All 30-members of the Sensex index fell.

Trading statistics

Daily trading turnover on the BSE stood at 4,282 crore rupees, lower than 4,474.95 crore rupees yesterday. On the NSE, daily revenue was at 10,623 crore rupees.

Ranbaxy Laboratories was the most active stocks on the BSE with trading turnover of 303.91 crore rupees followed by Reliance Industries, Reliance Capital and Infosys.

Reliance Natural Resources led the most active stocks on trading volume list on BSE recording volumes of 1.33 crore shares followed by IFCI of 1.29 crore shares, Ispat Industries of 1.16 crore shares, Chambal Fertilisers & Chemicals of 78.10 lakh shares and Reliance Petroleum of 75.05 lakh shares.

Singh Expects Sustained Economic Growth

Prime Minister Manmohan Singh said in a statement that the steps taken by the government would insulate the poor from the adverse impacts of inflation. The recent measures taken by the government are aimed at sustaining the economic growth momentum and taming inflation despite a surge in global oil prices, the prime minister said on Tuesday.

Last week, government data showed India''s wholesale price index rose 11.89% in the 12 months to June 28, its highest in 13 years.

The Indian economy increased at 9% for the fiscal year ending in March 2008 but the Reserve Bank of India expects it to moderate between 8% and 8.5% in the current fiscal year.

Market Movers

Ranbaxy led the decliners from the Sensex index with a steep fall of 15% to 405 rupees.

BSE''s banking sector index declines 8.4% to 5,469.85 and was the biggest loser among all the BSE indices. The banking index had reached 52-week low of 5,437.70 on July 2, 2008.

HDFC Bank lost 11.5% to 914.25 rupees and ICICI Bank declined 9.1% to 527 rupees.
State Bank of India declined 7.9% to 1158 rupees on reports that the bank has recovered 2,000 crore rupees in bad loans during April-June 2008 period.

Even though Indian banks have little exposure to the US housing sector, sentiment in the sector across the globe is at an all-time low, and India is no exception. The likely hood of another interest rate hike on the expectations of elevated inflation remains high. Bank stocks fell.

Metal shares declined. Hindalco closed down 8.1% to 138.40 rupees, Hindustan Zinc fell 6.9% to 542 rupees, Sterlite Industries declined 6.4% to 639.30 rupees and Tata Steel was down 5.7% to 645 rupees.