More than expected hike in repo rate and CRR by RBI has smashed out markets very badly. Rate sensitives like banking, realty and auto, and infrastructure sectors like capital goods and power took huge beating on the bourses. Sell off in global markets on the back of renewed credit concerns in US financial space was another reason for free fall in markets.

Broader indices - Sensex and Nifty again breached 14000 and 4200 levels, respectively. Sensex 30 closed at 13,791.54, down 557.57 points or 3.89%, after hitting an intraday low of 13,727.14 (down 621.97 points from previous close). Nifty touched low of 4159.15, down 172.95 points from previous close. It ended with a loss of 142.25 points at 4,189.85.

RBI has announced monetary policy today, wherein it raised repo rate (rate at which banks borrow money from RBI) by 50 bps and CRR (funds which banks have to keep with RBI) by 25 bps to 9% each to control inflation. CRR will be effective from August 30. Hike in repo rate to 9% is for the first time since October 2000 and CRR at 9% for the first time since November 1999.

RBI says bringing down inflation is highest priority. It aims to bring down inflation to 5% as soon as possible. Central bank expects inflation fall sharply from Q4FY09. Inflation has emerged biggest risk to global outlook, says RBI.

This hike was more than analysts expectations, they were expecting 25 bps hike in repo rate and that is why markets slaughterd in todays session. Now another interest rate hike from banks is imminent, say banks. Analysts expect some slowdown in GDP growth, and another hike in repo rate and CRR is not ruled out.

Public sector bank, Bank of India says RBI action is more than expected as inflation trend moderating. Banks will definitely look at revising interest rates. BOI expects minimum 50 bps hike in PLR.

HDFC Bank says might need to revise growth rates lower. GDP growth is likely to come down to 7.3-7.6%. Bank sees maximum of another 50-75 bps hike in repo rate.

ICICI Prudential says average inflation for the year will be higher than 7% and in short-term, RBI move will be harsh on banking and realty.

Citibank is of the view that RBIs hawkish stance will continue and benchmark bond yield may inch higher to 9.75%.

India's second largest bank, ICICI Bank says RBI move could see lending rates moving higher. Inflation remains high, so RBI must use all policy tools, ICICI Bank said.

Amongst frontliners, HDFC Bank tumbled 8.71%, ICICI Bank -8.45%, Reliance Infrastructure -7.99%, PNB -7.94%, Maruti Suzuki -7.03% and SBI -6.84%. However, NALCO was up 3.56%, HUL 3.01%, Sterlite Industries 1.72%, Sun Pharma 1.08% and Cairn India 0.71%.

Biggest losing index was BSE Bankex in todays trade, which lost 562.22 points or 8.31% to settle at 6,199.60. Bank of India, Axis Bank, Kotak Mahindra, IOB, Bank of Baroda, ICICI Bank and HDFC Bank plunged 8-13%.

Realty Inded fell 281.41 points or 5.54% at 4,797.71 due to sell off in Indiabulls Real, Unitech, Mahindra Life, Akruti City, DLF, Sobha Developer and Parsvnath, which down 4-8%.

Capital goods stocks like Bharat Elec, Praj Industries, Kirloskar Bros, L&T, Siemens and Punj Lloyd tumbled 6-16%. Index lost 586.21 points or 4.92% at 11,320.60.

Power stocks also took huge beating. Index slipped 106 points or 4.11% at 2,473.81. Reliance Power, Reliance Infra, GMR Infra, Power Grid Corp, NTPC, GVK Power and Torrent Power fell 3-9%.

Auto Index skid 150.59 points or 4.04% at 3,573.21 due to selling pressure in Tata Motors, M&M, Maruti Suzuki, Hero Honda and Exide Industries.

Oil & gas stocks like Aban Offshore, BPCL, RNRL, HPCL and Reliance Ind melt down over 4%. Index lost 349.33 points or 3.62% at 9,303.57.

Metal Index plunged 236.36 points or 1.91% at 12,130.36 as selling pressure was seen in Guj NRE Coke, Hindalco, Welspun Guj, SAIL and Ispat Industries, which tumbled 4-8%.

Pharma stocks like Dr Reddys Labs, Aventis Pharma, Ranbaxy Labs, Glenmark and Fortis Health also slipped. Index lost 1.65% to end at 4,133.14.

IT Index fell 0.51% at 3,588.57 on the back of sell off in Aptech, NIIT Tech, Moser Baer, Mphasis and NIIT.

Total turnover traded by markets stood at Rs 82,073.60 crore. This includes Rs 12,179.76 crore from NSE Cash segment, Rs 64,804.21 crore from NSE F&O and the balance Rs 5,089.63 crore from BSE Cash segment.

Asian markets were trading lower. Nikkei, Hang Seng, Shanghai, Straits Times, Taiwan and Kospi fell 1.5%-3.6%.