Markets have slumped to their day's lows, dragged by rate sensitive shares, after the RBI in its mid-quarter monetary policy review today maintained status quo on key policy rates and kept the cash reserve ratio unchanged. The Sensex touched a low of 16,743 - down 207 points. Nifty has dropped to a low of 5,073 - down 66 points.
The Reserve Bank of India has kept the cash reserve ratio (CRR) or the portion of cash banks are required to keep with RBI at 4.75% of their net demand and time liabilities; and the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 8%. Repo is the rate of interest at which banks borrow money from RBI.
“The markets were expecting at least a 25bps cut, so a status quo policy comes as a bit of a disappointment. But the fact is that in spite of significant decline in growth, inflation has remained very sticky in India, creating challenges in monetary policy-making,” said Dinesh Thakkar, CMD, Angel Broking.
“I believe the markets and policy-makers alike will continue to look for cues on the domestic front from the inflation readings and crude prices, and if core inflation continues to slow-down on expected lines due to weak demand, then in the coming quarters we will likely see rate cuts, though more slow-paced than earlier expected,” he added.
Most of the sectoral idnices have slipped into the negative zone, led by bankex and realty indices. The rate sensitives have slipped 1.5%-2% each. FMCG, PSU and healthcare sectors have also dropped. Meanwhile, the BSE consumer durables index has managed to hold on to some of its gains and is trading at 6,142.
Banking stocks have dragged the Sensex. SBI is the top loser and si down 3% at Rs 2,119. HDFC Bank, SBI and ICIC Bank together accounts for a 70 point fall on the Sensex.
Dr Reddy's has slipped 1.5% to Rs 1557. Tata Power is down 1.4%, followed by auto shares - Mahindra & Mahindra and Maruti Suzuki. Sterlite, Wipro, Gail India are also in red. Meanwhile, Tata Steel and Tata Motors have managed to trade marginally in green at Rs 418 and Rs 241, respectively.
National Aluminium Company (Nalco) has bucked the trend and is up 5% at Rs 61.15 on reports that the government has initiated the process of 10% stake sale in state-owned aluminium company. The government currently holds 87.15% stake, is proposed to raise around Rs 12,000 crore through disinvestment in Nalco.
BSE market breadth has turned negative. Out of 2,346 stocks traded, 1,234 shares have declined and 987 shares have advanced.
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