The Bombay Stock Exchange’s (BSE’s) Sensitive Index fell for a second day as the Reserve Bank of India (RBI) forecast that the economy would expand at the slowest pace since 2003, prompting a reduction in interest rates to a record low.
ICICI Bank, the nation’s second-largest lender, fell 6.5 per cent, while the State Bank of India (SBI), the biggest lender, declined 3 per cent. Sterlite Industries led commodity producers lower as metal prices retreated.
“The central bank may have to adjust its growth forecast for the economy even lower,” said Navneet Munot, who oversees about $5.5 billion of assets as chief investment officer at SBI Asset Management Company in Mumbai. “We are towards the end of the rate cut cycle, now we need to see the transmission of the policy measure in the economy,” Munot added.
Sensex fell 0.7 per cent to 10,898.11. The S&P CNX Nifty Index of the National Stock Exchange slid 0.4 per cent to 3,365.30. The BSE 200 Index declined 0.7 per cent to 1,298.64. Nifty futures for April delivery fell less than 0.1 per cent to 3,368.
RBI reduced the reverse repurchase rate to 3.25 per cent from 3.5 per cent, according to a statement in Mumbai today. Economic growth may ease to 6 per cent in the year that started April 1 from 7.1 per cent in the previous 12 months, the central bank said.
ICICI Bank closed the day at Rs 398.75, while SBI ended the day at Rs 1,255.35. Axis Bank slid 3.1 per cent to Rs 493.85.
Sterlite, the country’s largest copper producer, dropped 4.5 per cent to Rs 382.5. Copper for three-month delivery lost $165, or 3.6 per cent, to $4,425 a metric tonne in early trade on the London Metal Exchange. The contract slid as low as $4,378, the lowest intraday price in almost two weeks.
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Tata Steel, the nation’s largest maker of the alloy, fell 7 per cent to Rs 244.2.
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GHCL dropped 8.3 per cent to Rs 29.30 after teh market regulator barred its founders from trading in securities markets due to irregularities in shareholding disclosures.
Punj Lloyd fell 8.5 per cent to Rs 102.85 after its UK-based unit lost a contract dispute to Sabic UK Petrochemicals in an interim ruling.