Market benchmark Sensex plunged over 178 points in early trade on Monday as financial stocks led decline after RBI Governor Raghuram Rajan said no to a second term amid mixed cues from Asian markets.
Moreover, the rupee, which nosedived by 61 paise to 67.69 against the dollar in opening trade, also had a bearing on domestic equities.
Investors were also cautious ahead of Britain referendum vote later this week to decide on its future in the European Union.
On Saturday, Rajan had said no to a second term in the post, a surprise decision the industry and opposition parties term as nation’s loss.
The 30-share index declined 178.03 points or 0.66 per cent to 26,447.88 with banking, consumer durables, FMCG, power, healthcare, metal and PSU sector stocks leading the fall.
However, the index later recovered early losses to trade higher by 70 points around 1000 hrs. It had gained 100.45 points in the previous session on narrowing CAD and positive global cues.
The NSE Nifty opened lower by 62.85 points or 0.76 per cent at 8,107.35. Later it was also trading higher.
Sentiment turned weak following RBI Governor’s decision to not seek a second term in the post that dented investor confidence, triggering fresh round of selling by funds.
In regional markets, Hong Kong’s Hang Seng was up 1.10 per cent, Shanghai Composite fell 0.17 per cent in early trade while Japan’s Nikkei was trading in the positive zone.
The Dow Jones Industrial Average had ended 0.23 per cent lower in Friday’s trade.