Mumbai: The higher-than-expected rate hike by the Reserve Bank of India came as a rude shock for Indian stocks. After a flat opening, Indian stocks plunged in the first half of the trading session as a 50 basis points hike in the policy rate by the Reserve Bank of India sparked concerns about the rising cost of funds and its eventual impact on economic activity.
While increasing the interest rate, the Reserve Bank of India has made it clear that it will maintain a tough monetary policy stance till inflation shows definitive signs of easing.
Sensex: 18,518 –1.87%
Nifty: 5,574 –1.86%
Interest rate sensitive stocks led the losses in the Nifty. IDFC, Mahindra & Mahindra, DLF and Kotak Mahindra Bank lost over 4.3% each. Investors sold Reliance Communications stock on worries that high interest rates will increase cost of funds for the company.
Reliance Communications: Rs 101 -6.1%
IDFC: Rs 134 –6.1%
BHEL: Rs 1,908 –4.6%
Mahindra & Mahindra: Rs 715 –4.5%
DLF: Rs 233 –4.4%
Kotak Mahindra Bank: Rs 465 –4.4%
Maruti Suzuki, on the other hand, emerged relatively unscratched. The stock lost only 0.6% on better-than-expected June quarter earnings. The company reported a net profit of Rs 549 crore. A Reuters poll had forecast the company to report a profit of Rs 433 crore.
Power Grid Corporation, TCS and HCL Technologies are the only three Nifty stocks that closed up.
Power Grid Corporation: Rs 109 +0.5%
TCS: Rs 1,143 +0.3%
HCL Technologies: Rs 517 +0.1%
Maruti Suzuki: Rs 1,174 –0.6%
At the sectoral level, real estate, capital goods, banking and automobile stocks led the losses on the BSE. All BSE sectoral indices closed the day in losses.
BSE Realty: 2,140 –3.7%
BSE Capital Goods: 13,402 –3.4%
BSE Bankex: 12,675 –2.6%
BSE Auto: 8,775 –2.3%
Shares of real estate companies plunged on worries that high interest rates will hamper recovery in the property market. All stocks in the BSE real estate index fell.
Sobha Developers: Rs 266 –4.8%
Indiabulls Real Estate: Rs 110 –4.8%
Anant Raj Industries: 82 –4.4%
Unitech: Rs 34 –4.0%
Meanwhile, shares of Glenmark Pharmaceuticals, Strides Arcolab and UTV Software closed higher on company specific cues. Glenmark Pharmaceuticals rose 2.9% after the company said it received $15 million from Salix Pharmaceuticals towards up-gradation of a manufacturing facility. The company also reported earnings that were better than analysts’ expectations. Read more...
Strides Arcolab rose on reports that the company received US FDA approval for a generic version of a drug used in cancer treatment.
Glenmark Pharmaceuticals: Rs 338 +2.9%
Strides Arcolab: Rs 374 +1.8%
UTV Software Communications surged 5.1% after the company’s board cleared Walt Disney’s proposal to buy out other shareholders and de-list the company from stock exchanges. The de-listing will be executed at price not exceeding Rs 1,000 per share.
UTV Software Communications: Rs 947 +5.1%
Overall, 62.82% of the shares traded on the BSE closed the day with losses.