 "Markets remain range-bound; Midcaps outperform")
Benchmark shares indices continue to maintain the range-bound trend with negative bias after the RBI surprised the street by hiking the repo rates by 25 bps to 8% in its third quarter monetary policy review today.
Consequently, the reverse repo rate under the Liquidity Adjustment Facility (LAF) stands adjusted at 7%, and the marginal standing facility (MSF) rate and the bank rate at 9%.
The Cash Reserve Ratio (CRR) was kept unchanged at 4% of Net Demand and Time Liabilities (NDTL).
The yield on the 10-year benchmark government bond shot to 8.80% compared with previous close of 8.77%. Just before the policy announcement it was trading at 8.71%.
Adds Sandeep Nayak, ED & CEO, Centrum Broking, “the rate hike was not expected by most market players given that inflation both CPI and WPI was below expected numbers when released earlier this month. This is disappointing in the short term and the recovery of the rate sensitives may take a tad longer. However, structurally this move should help rein in inflation both CPI and WPI and therefore pave the way for easing in the second half of the next fiscal”
By 13:25 PM, the Sensex has dipped by 6 points at 20,699 mark and the Nifty slipped by 4 points at 6,133 levels.
Rate sensitive shares pared early gains and slipped into negative terrain after the Reserve Bank of India at its third quarter monetary policy review surprised the street by hiking the repo rate by 25bps to 8%. The central bank kept the cash reserve ratio unchanged at 4%.
Market experts expected the central bank to maintain status quo on key policy rates.
Banking shares are trading lower by up to 3% erasing their entire early morning gain after the Reserve Bank of India (RBI) has increased repo rate by 25 bps from 7.75% to 8%. Cash Reserve Ratio (CRR) has been left unchanged at 4%.
Repo rate is the rate of interest that banks pay when they borrow money from the RBI to meet their short-term fund requirements. CRR is the amount of funds that the banks have to keep with the RBI.
IndusInd Bank, Bank of India, ICICI Bank, Punjab National Bank and Canara Bank are down more than 2% each, while Axis Bank, YES Bank, HDFC Bank and Kotak Mahindra Bank are trading lower by 1-2% on the National Stock Exchange (NSE).
Other notable losers are HUL, Sun Pharma, Cipla, Infosys, GAIL, ITC and Wipro.
Shares of Hindustan Unilever witnessed profit taking today on concerns over volume growth in the third quarter and expensive valuations.
On the gaining side, Tata Steel, Tata Motors, Bajaj Auto, RIL and M&M have gained between 1-2%.
Among other shares, Petronet LNG is trading lower by 1% at Rs 104, extending its over 10% fall in past two weeks, on concerns of weak financial performance for the quarter ended December 31, 2013 (Q3 FY14).
Just Dial has fallen by nearly 11% on BSE after net profit rose 3.80% to Rs 29.75 crore on 6.39% increase in total income from operations to Rs 119.86 crore in Q3 December 2013 over Q2 September 2013.
The broader markets are out performing the benchmark indices- BSE Midcap and Smallcap indices are up between 0.3-0.5%.
The market breadth in BSE remains positive with 1,015 shares advancing and 989 shares declining.
Consequently, the reverse repo rate under the Liquidity Adjustment Facility (LAF) stands adjusted at 7%, and the marginal standing facility (MSF) rate and the bank rate at 9%.
The Cash Reserve Ratio (CRR) was kept unchanged at 4% of Net Demand and Time Liabilities (NDTL).
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A month after touching a record high, CPI inflation came down to a three-month low of 9.87% in December compared with 11.16% a month ago. While the Wholesale Price Index (WPI) inflation was at five-month low in December at 6.16% compared with 7.52% the previous month.
The yield on the 10-year benchmark government bond shot to 8.80% compared with previous close of 8.77%. Just before the policy announcement it was trading at 8.71%.
Adds Sandeep Nayak, ED & CEO, Centrum Broking, “the rate hike was not expected by most market players given that inflation both CPI and WPI was below expected numbers when released earlier this month. This is disappointing in the short term and the recovery of the rate sensitives may take a tad longer. However, structurally this move should help rein in inflation both CPI and WPI and therefore pave the way for easing in the second half of the next fiscal”
By 13:25 PM, the Sensex has dipped by 6 points at 20,699 mark and the Nifty slipped by 4 points at 6,133 levels.
Rate sensitive shares pared early gains and slipped into negative terrain after the Reserve Bank of India at its third quarter monetary policy review surprised the street by hiking the repo rate by 25bps to 8%. The central bank kept the cash reserve ratio unchanged at 4%.
Market experts expected the central bank to maintain status quo on key policy rates.
Banking shares are trading lower by up to 3% erasing their entire early morning gain after the Reserve Bank of India (RBI) has increased repo rate by 25 bps from 7.75% to 8%. Cash Reserve Ratio (CRR) has been left unchanged at 4%.
Repo rate is the rate of interest that banks pay when they borrow money from the RBI to meet their short-term fund requirements. CRR is the amount of funds that the banks have to keep with the RBI.
IndusInd Bank, Bank of India, ICICI Bank, Punjab National Bank and Canara Bank are down more than 2% each, while Axis Bank, YES Bank, HDFC Bank and Kotak Mahindra Bank are trading lower by 1-2% on the National Stock Exchange (NSE).
Other notable losers are HUL, Sun Pharma, Cipla, Infosys, GAIL, ITC and Wipro.
Shares of Hindustan Unilever witnessed profit taking today on concerns over volume growth in the third quarter and expensive valuations.
On the gaining side, Tata Steel, Tata Motors, Bajaj Auto, RIL and M&M have gained between 1-2%.
Among other shares, Petronet LNG is trading lower by 1% at Rs 104, extending its over 10% fall in past two weeks, on concerns of weak financial performance for the quarter ended December 31, 2013 (Q3 FY14).
Just Dial has fallen by nearly 11% on BSE after net profit rose 3.80% to Rs 29.75 crore on 6.39% increase in total income from operations to Rs 119.86 crore in Q3 December 2013 over Q2 September 2013.
The broader markets are out performing the benchmark indices- BSE Midcap and Smallcap indices are up between 0.3-0.5%.
The market breadth in BSE remains positive with 1,015 shares advancing and 989 shares declining.