The uncertainty in Dalal street is likely to linger further as the markets on Friday gave a thumbs down to the Reserve Bank of India's mid-term credit policy and investors would adopt a cautious approach following weak global cues, analysts say.
Ahead of the credit policy markets were down by 400 points and after RBI announced the credit policy, it went into a downward spiral falling by another 337 points to below 9,000-points mark, a level last seen in July 2006.
"Market has given a thumbs down to the credit policy. Markets are very nervous at the moment besides the global cues are also very week which will add on to the volatility," Kejriwal Research and Investment Services official Arun Kejriwal said.
RBI on Friday kept its key rates unchanged in the mid-term review of annual monetary policy and lowered economic growth projections to 7.5-8 per cent for 2008-09.
"The policy is more of neutral in nature as RBI is now waiting to see how the measures it had underataken through cash reserve ratio and repo rate cut effects the market. Besides, the domestic bourses is also taking cues from the global uncertainty," brokerage firm SMC Global vice president Rajesh Jain said.
The fall in the market was widespread as all sectors were trading in the negative territory with Metal witnessing the maximum decline of nearly 10.28 per cent.
Other major sector losers were -- Realty (down 8.13 per cent), Health Care (down 7.19 per cent), Auto (7.49 per cent), Power (7.66 per cent) and PSU was down 7.57 per cent.
Banking index, which was down 4 per cent ahead of the monitory policy review, fell further and was down 8.06 per cent.
Among the major indices BSE 100 fell the most registering a decline of 7.04 per cent, followed by BSE 200 and the 30-share Sensex which was down nearly 7 per cent.
Meanwhile, midcap index was down 4.68 per cent and small cap index declined by 4.19 per cent.
More from rediff