The markets have slid in noon trades in a seemingly belated reaction to the rate hike announced by the RBI. The Sensex is quoting at 19030, weaker by 121 points and the Nifty is at 5704, down 38 points, with the rate sensitive sector stocks doing a bulk of the damage.
The rate-sensitive banking, realty and auto stocks have been volatile on the bourses after the Reserve Bank of India (RBI) increased the repo rate and reverse repo rate in its third quarter review of monetary policy 2010-11. In a knee-jerk reaction, the banking stocks had flared up in the aftermath of the policy announcement, but slipped immediately thereafter on the realisation that the banking regulator has been behind the curve this time around as far as tackling inflation is concerned.
The RBI increased the repo rate to 6.5% from 6.25% and reverse repo rate to 5.5% from 5.25% earlier under the liquidity adjustment facility (LAF). However, the central bank retained the cash reserve ratio (CRR) at 6% of net demand and time liabilities (NDTL) and the bank rate has been retained at 6%.
In the banking space, ICICI Bank has weakened by 3.1% at Rs 1049 and HDFC Bank has shed 2.8% at Rs 2088. The auto space has seen the likes of M&M shedding 1.4% at Rs 777 and Tata Motors has lost 1.1% at Rs 1174. And in the realty space, Unitech has slipped by 2.2% at Rs 56, while HDIL has lost 1.8% at Rs 161 and DLF has edged lower by 0.8% at Rs 254. And index heavyweight Hindustan Unilever has collapsed by 4.3% at Rs 284 after its net profit declined 1.78% to Rs 637.51 crore on 12.84% rise in total income to Rs 5204.73 crore in Q3 December 2010 over Q3 December 2009.
On the other hand, metal stocks are going strong as LMEX, a gauge of six metals traded on the London Metal Exchange rose 0.43% on Monday. Tata Steel has continued with its spectacular performance of the previous day, rising another 1.5% at Rs 659 after its follow-on public offer (FPO) was subscribed 6.03 times. Hindalco has jumped 10.5% at Rs 235 and Sterlite is up 0.9% at Rs 180.
The market breadth has turned weak. Out of 2917 stocks traded on the BSE, there are 1188 advancing stocks as against 1608 declines.
