Mumbai: Markets erased early gains and fell 0.9% on Tuesday morning after the central bank raised interest rates by a higher-than-expected 50 basis points.
The Reserve Bank of India increased the repo rate , at which it lends to banks, to 8%, exceeding market expectations that it would raise rates by 25 basis points.
At 11:02am, the 30-share BSE index was down 0.93% at 18,696.49 points, with 22 components falling. It had started higher. The 50-share NSE index was down 1% at 5,622.10 points.
Leading lenders State Bank of India , ICICI Bank and HDFC Bank were up between 0.2% and 0.5% as a rate rise has already been discounted, traders said.
Energy major Reliance Industries dropped 0.6% to 877.85 rupees, after its quarterly net profit lagged forecasts as slowing gas production weighed on results.
Telecom stocks eased as investors took profits after Monday’s huge gains.
Bharti Airtel , Reliance Communications and Idea Cellular were down between 1.5% and 3.7%, after they had soared 5.2-15.1% on Monday on hopes the tariffs would improve after Bharti raised call prices in some regions.
Around 64 million shares changed hands on the NSE, where 700 stocks advanced while 454 declined.
The MSCI’s measure of Asian markets other than Japan gained 1%, while Japan’s Nikkei was up 0.7%.
UTV Software Communications was up 5.8% at Rs 953.30 after the media firm said its board had approved a proposal from promoter Walt Disney Company, South East Asia to delist shares of the firm from all stock exchanges.
Strides Arcolab rose 4% to Rs 382.50 after the drugmaker said it had received US FDA approval for a generic a cancer treatment drug.