BSE Sensex falls for sixth day; RBI rate review key

By Abhishek Vishnoi

MUMBAI (Reuters) - The BSE Sensex fell for a sixth consecutive session on Tuesday as rate-sensitive stocks such as HDFC Bank continued to tumble a day before the Reserve Bank of India is widely expected to raise interest rates at its policy review.

Most analysts in a Reuters poll expect the central bank to lift the repo rate by 25 basis points to 8 percent, its third consecutive rate hike, after both consumer and wholesale prices surged last month.

The benchmark BSE index has now retreated in every session since hitting a record high of 21,483.74 on December 9, a day after election results showed the main opposition Bharatiya Janata Party sweeping most state elections.

 

Investors are also on tenterhooks over when the Federal Reserve will start to reduce its $85 billion-a-month bond-buying programme ahead of its two-day meeting ending on Wednesday, a major driver of global risk assets in recent years.

"Market has already factored in a 25 basis points hike. I think what will give a reprieve to the market is if RBI gives positive cues on inflation and Fed doesn't taper," said Deven Choksey, managing director at K R Choksey Securities.

The benchmark BSE index fell 0.23 percent, or 47.38 points, to end at 20,612.14, its lowest close since November 28 after earlier gaining as much as 0.6 percent during the day.

The BSE index is now 4.1 percent away from the record high.

The broader NSE index ended 0.25 percent lower, or 15.65 points, to end at 6,139.05.

Bank shares fell 1.4 percent, having declined in five of the past six sessions, on continued risk aversion ahead of the RBI's policy decision due at 1100 India time (0530 GMT) on Wednesday.

HDFC Bank Ltd fell 3.9 percent, while Axis Bank Ltd ended 0.4 percent lower.

State Bank of India Ltd lost 0.8 percent, while Bank of Baroda Ltd fell 1.4 percent.

Housing Development Finance Corp fell 2.5 percent after the RBI placed a cap on further foreign institutional investments in the company on Monday.

Software services exporters such as HCL Technologies Ltd fell 1.3 percent on profit-taking after earlier hitting a record high of 1,198 rupees in the session.

Wipro Ltd also declined 1.2 percent after earlier touching its highest level since March 2000.

However, Tata Consultancy Services Ltd (TCS) gained 1.3 percent after analysts cited company executives as saying October-December revenue was broadly in line with seasonal trends despite seasonal weakness.

TCS executives were also positive about the demand environment, according to the analysts.

Among other stocks that gained, Apollo Tyres Ltd rose 2.2 percent after Cooper Tire & Rubber Co lost its U.S. court bid on Monday to force the Indian tyremaker to complete their proposed $2.3 billion merger.

Mahindra & Mahindra Financial Services Ltd rose 1.1 percent after its inclusion in National Stock Exchange's derivatives market, dealers said.

(Editing by Anand Basu)