Indian markets lost further ground after the Reserve Bank of India maintained a status quo on key policy rates and the cash reserve ratio. The 30-share Sensex was down 58 points at 17,086 and the 50-share Nifty was down 20 points at 5,180. However, the disappointment on the streets is not much as the RBI’s decision on keeping rates unchanged was more or less expected.
However, the central bank reduced the statutory liquidity ratio by 100 basis points to 23 percent from 24 percent, indicating it was nudging banks to lend more to the private sector by this move.
Meanwhile banking stocks are the main losers post the RBI policy with SBI down 2.3 percent, ICICI Bank down 0.94 percent and HDFC Bank down 0.7 percent.
Realty stocks too are trading in the red. HDIL is down 2.7 percent, Unitech has lost 2.1 percent, DB Realty is down 2 percent, while DLF is up marginally.
Rate sensitives too were under pressure due to no rate cut. Auto stocks like Tata Motors, M&M and Hero Motocorp plummeted 0.7%-1.5%.
RIL, Wipro, TCS, ICICI Bank, Sun Pharma,ONGC,Coal India, Sterlite, ITC, Jindal Steel, HDFC are among gainers in Sensex and Nifty.
Tata Power, SBI, Tata Motors,BHEL are among losers in Sensex and Nifty.
The BSE Small-Cap index and BSE Mid-Cap index were trading Down 0.13% and 0.8%.
The 10-year benchmark bond yield was last trading up 7 basis points on day at 8.22 percent, after rising to as much as 8.28 percent immediately post the SLR cut.
The benchmark 5-year OIS rate rose 10 bps to 7.10 percent from its previous close, while the 1- year rate rose 4 bps to 7.68 percent.
The partially convertible rupee also briefly turned flat on the day, but fell again in line with shares to trade at 55.73 per dollar, from 55.5850/5950 at previous close.
Brent has slipped under $106 on caution ahead of US Fed, ECB meet.
According to the RBI lowering policy rates now will aggravate inflation which remains well above the comfort zone. It doesn’t rule out further pressure on core inflation. Macroeconomic conditions have worsened since April.
The monsoon and drought-like situation unfolding in several states is keeping investors cautious, while the EGoM headed by Agriculture Minister Sharad Pawar is expected to meet today over relief measures to tackle the situation.
Traders were seen piling up position in FMCG, HC and Realty sector, while selling was witnessed in Auto, Metal and TECk sector.
Software stocks like Wipro, TCS and HCL Technologies were trading in green after Prime Minister Manmohan Singh has set up a panel headed by N Rangachary to review taxes in information technology and R&D sectors.