Share prices fell early on Wednesday triggered by weak global cues and as the central bank increased interest rates over night. Banking and real estate scrips led the decline. At 10:05 am, the Bombay Stock Exchanges Sensex was down 230 points or 1.63 per cent at 13,876.64.

HDFC (down 5.13%), Maruti Suzuki (5.11%), DLF (3.14%), Mahindra& Mahindra (3.06%), State Bank of India (3.05%) and HDFC Bank (2.58%) led declines. Ranbaxy Laboratories (down 0.3%) and Grasim Industries (0.11%) were the only two gainers in the 30-share index. Market breadth on BSE showed 599 declines against 113 advances.

The National Stock Exchanges Nifty was down 52 points or 1.24 per cent at 4139.30.

 Nifty could test the 4000 level in the morning; but to call that a support may be misleading. The electronic media was aghast as the likes of Hindustan Unilever lost Rs 10 in the last 40 minutes of trade. These are bearish times and stocks that do well for some time are like the sacrifical lamb that is being fed today to be cut tomorrow. The market has become quite like an bowling alley, where any standing pin is a target. For the nimble footed traders, however, the morning capitulation could provide a long trading opportunity for a few minutes, said Anagram Stock Broking in a note.

The Reserve Bank of India raised its key lending rate by 50 basis points to 8.5 per cent with immediate effect, its highest since March 2002 and the second hike this month. It also increased its cash reserve ratio, the ratio of deposits banks must keep with it, to 8.75 per cent from 8.25 per cent in two 25-basis-point stages on July 5 and July 19.

This move would boost the CRR 125 basis points this year, after hikes in April and May to drain excess inflation-stoking cash from the money markets. Banks are also expected to raise rates following this move, in turn, adding pressure on interest rate sensitive sectors.

Asian stocks fell for a fifth day tracking Wall Street losses. The Nikkei was down 1 per cent, Hang Seng lost 1.14 per cent and Straits Times edged 0.02 per cent lower.

US stocks slipped on Tuesday on concerns about the economy after a report showed consumer confidence hit a 16-year low. The Dow ended 34.93 points, or 0.29 per cent lower at 11,807.43. The Standard & Poor's 500 Index was down 3.71 points, or 0.28 per cent, at 1,314.29 and the Nasdaq Composite Index shed 17.46 points, or 0.73 per cent, to close at 2,368.28.