Markets slip post RBI policy

Banking and auto shares drag

Markets have slumped sharply post the Reserve Bank of India's review of the monetary policy. The Sensex, after trading in the positive zine in morning trades, has dropped to a low of 17,068. It is now down 29 points at 17,113. Nifty is down 10 points at 5,189.

The RBI, in its mid quarter policy review, has left the cash reserve ratio (CRR) and Repo rate unchanged. However, the central bank has changed the Statutory liquidity ratio (SLR) to 23% from 24%. The RBI has said that the primary focus of the policy remains inflation management. FY13 GDP growth has been revised lower to 6.5% from 7.3% earlier.

PMEAC Chief C Rangarajan has said that a repo rate cut would have sent a wrong signal. The RBI has struck an appropriate balance between inflation and growth.

Meanwhile in Asia, markets gained on hopes for further stimulus from the European Central Bank and the US Federal Reserve, both of which hold policy meetings this week. Japan's Nikkei gained 0.7% at 8,699. Hang Seng has also added 1% to 19,800.

The rate sensitive banking space has tumbled 1% to 11,829. Bank of Baroda has declined 1.8% to Rs 659. The bank had reported a rise of 10.26% in net profit to Rs 11.38 billion for the quarter ended June 30, 2012 as compared to Rs 10.32 billion in the same period last year, on Monday.

State Bank of India is down 1%, followed by IndusInd Bank, Punjab National Bank, Bank of India and HDFC Bank. Banking major - ICICI Bank has declined 0.3% at Rs 961.

Auto and metal indices are also down around 1% each. Among other losers are the power and realty indices.

From the Sensex pack, Bharti Airtel is the top dragger and is down 3% at Rs 300. According to reports, the company is exploring issuing new shares to the public or institutional investors. Auto shares such as Hero MotoCorp, Tata Motors and Mahindra & Mahindra are down 1% each. Tata Steel, Dr Reddy's, BHEL are also among nmajor losers.

Meanwhile, Cipla has held on to gains and is up 2.3% at Rs 341. Wipro and HDFC are up 1% each. ITC, ONGC, Coal India and NTPC are up marghinally in trades.