 "Markets snap 3-day rally as RBI holds rates")
Outgoing RBI governor Raghuram Rajan left the repo rate unchanged at 6.5 per cent and the cash reserve ratio at four per cent, citing inflationary pressures but repeated the central bank’s “accommodative” stance.
The BSE Sensex shed 200 points in intraday trade before closing lower by 0.35 per cent or 97 points at 28,085. The 50-share Nifty slipped 33 points to 8,678. Among broader markets, the BSE Midcap and Smallcap indices fell 0.3-0.4 per cent.
The Sensex had gained over 480 points in the previous three sessions after the nod to the GST Bill by the Rajya Sabha and on the back of positive global cues such as the Bank of England cutting interest rates for the first time in more than seven years and strong US jobs data. On Monday, the amended goods and services tax (GST) constitutional amendment bill was passed by the Lok Sabha.
"We're currently seeing consolidation in Nifty on expected lines and its negative divergence with banking index putting further pressure now. Traders should continue with stock specific trading approach while maintaining positive yet cautious stance especially in leveraged trades," said Jayant Manglik, president, retail distribution, Religare Securities.
According to Motilal Oswal, chairman and managing director of Motilal Oswal Financial Services, the foundation has been laid for low inflation through better distribution network, improved efficiency, and help from monsoon. "The additional income generated by higher real GDP growth will create a much larger pool of investible surplus. This along with the bullish stance from FIIs will fuel the equity markets going forward," said Oswal.
Asian indices mostly ended in the green on Tuesday, with the Straits Times gaining the most at 1.5 per cent. Jakarta Composite and Hang Seng indices, however, slid marginally by 0.34 per cent and 0.13 per cent, respectively.
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European indices were trading in the green at 5.30 IST, with the FTSE, CAC and DAX up anywhere between 0.3 per cent and 0.8 per cent, respectively.
Back home, sectoral performance was mixed, with media and PSU banking stocks attracting buyer interest and healthcare, FMCG and metal stocks edging lower. Twenty stocks declined in the Sensex pack. In the broader market, declines outpaced advances with a ratio of 55:40.
Foreign institutional investors (FIIs) have purchased equities worth more than Rs 34,300 crore in the year to date. Domestic institutions have bought shares worth Rs 2314 crore in the same period.
With the status quo on interest rates and the passage of the goods and services (GST) bill, markets are likely to shift their focus to growth in corporate earnings and global cues.
