The Indian equity markets snapped their two-day rally to end in the red today after RBI Governor D Subbarao said inflation has come off a peak but is still high, a comment that tempered expectations for a rate cut later this month.
“When growth is slowing down you can stimulate the economy either by monetary easing or by fiscal stimulus, but both monetary and fiscal side have no room for stimulus. So that is the big concern,” Subbarao said.
The Sensex closed at 19795.99, down 0.95 percent and the Nifty closed at 6001.85 , down 0.90 percent.
The World Bank has pegged India’s GDP growth for 2012-13 at 5.4 percent, lower than the government’s projection of 5.7-5.9 percent in its mid-year economic review.
“In India … growth measured in factor cost terms is projected to decelerate to 5.4 percent in the 2012 fiscal year (ending in March 2013) from 6.5 percent in the 2011 fiscal year,” a press release posted on its website said.
Stocks in news
Reliance Industries closed up 2 percent ahead of its earnings.
Bajaj Auto closed down 2 percent after its Q3 net profit margin slipped.
Rate-sensitive sectors including banking stocks closed in the red. ICICI Bank closed down 2 percent, HDFC Bank closed down 2.16 percent and State Bank of India was down 2.25 percent.
Tata Motors closed down 3.24 percent after posting lower-than-expected global vehicle sales in December, dealers say.
Kingfisher Airlines closed up 1.8 percent after CNBC TV18 reported the airline has been given a “no-objection certificate” from oil companies and some aircraft leasing companies to restart operations.