Key benchmark indices further extended losses and hit fresh intraday low in afternoon trade. At 13:20 IST, the barometer index, the S&P BSE Sensex, was down 305.71 points or 0.76% at 39,777.83. The Nifty 50 index was down 100.95 points or 0.84% at 11,920.70. Investors booked profits after the Reserve Bank of India (RBI) cut repo rate by 25 basis points, in line with market expectations.
Indices were trading with small losses in early trade as trading resumed after a public holiday on Wednesday. Key indices extended decline triggered in early trade on selling pressure in index pivotals. The Sensex fell below the psychological 40,000 level while the Nifty declined below the psychological 12,000 level. Stocks were trading on a weak note in mid-morning trade. Stocks extended slide in early afternoon trade after the central bank cut repo rates by 25 bps as expected.
The S&P BSE Mid-Cap index was down 1.21%. The S&P BSE Small-Cap index was down 1.06%. Both these indices underperformed the Sensex.
The market breadth, indicating the overall health of the market, was weak. On the BSE, 743 shares rose and 1625 shares fell. A total of 148 shares were unchanged. Breadth was strong in early trade.
Realty shares were mixed after RBI policy. Godrej Properties (down 2.25), Phoenix Mills (down 1.89), DLF (down 1.74), Sobha (down 1.52) and Sunteck Realty (down 0.79), declined. Mahindra Lifespace Developers (up 0.60%), Prestige Estates Projects (up 0.70%), Brigade Enterprises (up 0.71%), Indiabulls Real Estate (up 0.73%) and Oberoi Realty (up 0.79%), increased.
Auto stocks declined after RBI policy. Mahindra & Mahindra (down 1.83), Ashok Leyland (down 1.5%), TVS Motor Company (down 1.03%), Tata Motors (down 0.55%), Hero MotoCorp (down 0.51%), Bajaj Auto (down 0.03%) and Maruti Suzuki India (down 0.03%), declined . Eicher Motors was up 0.19%.
On the economic front, the Reserve Bank of India (RBI) concluded its three-day Monetary Policy Committee (MPC) meeting today, 6 June 2019. On the basis of an assessment of the current and evolving macroeconomic situation, the Monetary Policy Committee (MPC) at its meeting today decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points to 5.75% from 6% with immediate effect.
Consequently, the reverse repo rate under the LAF stands adjusted to 5.50%, and the marginal standing facility (MSF) rate and the Bank Rate to 6%. The MPC also decided to change the stance of monetary policy from neutral to accommodative.
These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2%, while supporting growth, RBI said in a statement.
Bond yields fell after RBI cut repo rate for the third time this year. The yield on the benchmark 10-year debt fell to 6.9124%.
In the currency market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 69.22, compared with its close of 69.26 during the previous trading session.
Overseas, shares in Europe were trading higher on Thursday, as investors are awaiting the latest decision from the European Central Bank (ECB).
Asian shares were trading mixed Thursday as investors kept a close watch on impending US tariffs on Mexico while trade talks with Beijing remained at a standstill. South Korean markets were closed for a holiday.
American and Mexican officials said late Wednesday that progress was being made at immigration talks at the White House, but President Donald Trump tweeted that it was not nearly enough.
US stocks closed solidly higher Wednesday, after volatile morning trade that saw benchmarks flipping between gains and losses, as investors digested a round of conflicting economic data that showed strength in the U.S. services sector but signaled a potential weakening of the labor market.
In economic data, the Institute for Supply Management services sector index came in at 56.9%, compared with April's 55.5%. The Federal Reserve released its beige book for April through mid-May, which described the U.S. economy as expanding at a modest pace overall, though it also reported anecdotal evidence that labor shortages and new tariffs are holding back growth.
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