Mumbai: Equities suffered for the second straight session on Wednesday after the Reserve Bank kept interest rates on hold but raised the inflation forecast, dashing medium term rate cut hopes and sparking a sell-off in banking stocks.
Benchmark Sensex slumped 205 points to end at 32,597.18, while the broader Nifty finished at 10,044.10, down 74.15 points. The six-member Monetary Policy Committee (MPC), headed by Reserve Bank Governor Urjit Patel, kept the policy rate unchanged at 6 percent on expected lines but raised the inflation forecast for the remainder of the fiscal to 4.3-4.7 percent.
The central bank kept the economic growth forecast unchanged at 6.7 percent for the fiscal ending March 31. The 30-share index declined by 205.26 points, or 0.63 percent, to 32,597.18 after hitting a low of 32,565.16 soon after the central bank announced its policy decision.
The wider Nifty hit a low of 10,033.35 before finishing at 10,044.10, down 74.15 points or 0.73 percent. It had touched a high of 10,104.20 in early trade. Interest rate-sensitive stocks took a beating, dragging the BSE banking index down by 1.23 percent. SBI, ICICI Bank, Axis Bank, HDFC Bank, Bank of Baroda, Punjab National Bank and Yes Bank fell by up to 2.27 percent.
"Given that interest rates are unlikely to reduce at least in the near to medium term, rate sensitive stocks slid due to rising oil price and concern over fiscal slippage," said Vinod Nair, Head of Research, Geojit Financial Services.
In sync with overall trend, the rupee too weakened to quote at 64.55 against the dollar intra-day. Sun Pharma emerged as the worst performer among Sensex constituents by falling 2.31 percent, while Bajaj Auto declined 1.65 percent.
Other losers, apart from bank stocks, were ONGC, L&T, Tata Motors, M&M, Tata Steel, Bharti Airtel, ITC Ltd, NTPC, Dr Reddy's, Hero MotoCorp, Asian Paint, Adani Ports, Cipla, Wipro, TCS and Lupin.
Sector-wise, the BSE metal index fell the most by 2.03 percent, followed by telecom 1.38 percent, PSU 1.32 percent, banks 1.23 percent, infrastructure 1.15 percent, capital goods 1.09 percent, healthcare 1.02 per cent, power 0.91 percent and auto 0.73 percent.
The mid-cap index shed 0.89 percent and small-cap declined 0.66 percent. Meanwhile, foreign portfolio investors (FPIs) sold shares worth a net Rs 1,470.56 crore, while domestic institutional investors (DIIs) bought to the tune of Rs 1,074.39 crore yesterday, as per provisional data released by the stock exchanges.
Other Asian markets closed lower. Japan's Nikkei fell 1.97 percent, Hong Kong's Hang Seng shed 1.63 percent while China's Shanghai Index was down 0.29 percent, extending a retreat across Europe and New York. Frankfurt's DAX 30 fell 0.08 percent while Paris CAC 40 shed 0.26 percent in their early deals. London's FTSE too fell 0.16 percent.
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Updated Date: Dec 06, 2017 18:41:45 IST