BackSensex falls 156 points after RBI policy review, bank stocks hit hard
Out of the 30-share Sensex pack, 25 ended lower, while the five led by Adani Ports, HDFC, Hero MotoCorp, Tata Motors and M&M finished higher and cushioned the fall
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Mumbai: The benchmark Sensex reversed its two-day rally as it fell 156 points on Wednesday to end at 26,237 as RBI left interest rate unchanged at 6.25%, contrary to market expectations, in its first policy review since the currency switch.
Reserve Bank governor Urjit Patel on Wednesday left the repo rate intact in his second monetary policy even as the central bank lowered GDP growth forecast to 7.1% from 7.6% for the current fiscal, saying short-term disruption in economic activity and demand compression arising out of demonetisation has led to downside risks to growth.
The 30-share index declined by 155.89 points, or 0.59 %, to 26,236.87 after shuttling between 26,540.83 and 26,164.82. The gauge had gained over 162.10 points in the previous two sessions. The wider Nifty hit a low of 8,077.50 before recovering partially to settle at 8,102.05, down 41.10 points or 0.50%. It had touched a high of 8,190.45 in early trade.
The Patel-led six-member Monetary Policy Committee (MPC), which in its first policy review had cut interest rate by 0.25% in October, belied expectations to keep benchmark repo rate unchanged at 6.25% unanimously. In sync with overall trend, the rupee too gave up its initial gains to trade almost flat (intra-day) against the dollar during the day, which weighed on sentiment.
Interest-linked banking stocks such as SBI, HDFC Bank, ICICI Bank and Axis Bank fell by up to 2% in reaction to the RBI decision. RBI left the short-term lending rate, or repo rate, unchanged at 6.25%, and the cash reserve ratio at 4%. The central bank also lowered the GDP projection at 7.1% for this fiscal from earlier estimate of 7.6%.
Out of the 30-share Sensex pack, 25 ended lower, while the five led by Adani Ports, HDFC Ltd, Hero MotoCorp, Tata Motors and M&M finished higher and cushioned the fall. Sun Pharma fell the most among Sensex constituents by falling 5.96%, followed by TCS 1.47%, Tata Steel 1.40%, Lupin 1.33%, ITC Ltd 1.17% and Wipro 0.06%.
Sector-wise, the BSE healthcare index fell the most by 1.70%, followed by realty 1.49%, bank 1.07%, IT 0.63%, FMCG 0.61% and capital goods 0.56%.
In line with the trend, the small-cap index shed 0.51% and mid-cap 0.16%. Meanwhile, foreign portfolio investors (FPIs), which had been net sellers on the domestic bourses since 8 November, bought shares worth a net Rs161.80 crore on Tuesday, as per provisional data released by the stock exchanges. Other Asian markets closed higher with Japan’s Nikkei advancing 0.74%, China’s Shanghai Index rose 0.71% and Hong Kong’s Hang Seng closed 0.55% up.
European markets too were trading in positive terrain in their early deals. Frankfurt’s DAX 30 gained 1.10% while France Paris CAC 40 climbed 1%.
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