The BSE Sensex and NSE Nifty erased all early gains as the Reserve Bank of India (RBI) disappointed the street by keeping repo rate and cash reserve ratio unchanged in its mid-quarter policy review on Monday.
Traders wound up long positions that had been created in last two weeks on hopes that the central bank may cut repo rate or cash reserve ratio by 25 basis points at least.
The BSE benchmark fell 143.55 points or 0.85% to 16806.28 and the NSE benchmark lost 48.85 points to 5,090.
Even the Indian rupee depreciated by 18 paise to 55.57 as against the US dollar. 8.15% 10-year bond yields spiked 1.11% to 8.14.
In its statement, the RBI says, global macro and financial conditions have been deteriorated since April. Even domestic macro situation raises deepening concerns.
Retail inflation is on uptrend, so cut in policy rates now could exacerbate inflation, the RBI says. Inflation for May increased to 7.55% from 7.23% in April.
Central bank has hiked Export Credit Refinance Facility to 50% that will be effective from fortnight beginning June 30.
The BSE Bankex fell over 2% as country's largest lenders State Bank of India, ICICI Bank and HDFC Bank were down 2-3%. Housing finance company HDFC too lost 1%.
FMCG majors ITC and HUL declined 1% each.
Index heavyweight Reliance Industries and L&T slipped over 0.6%.
About two shares declined for every share rising on the National Stock Exchange.
At 10:22 hours IST: Sensex holds 17000 ahead of RBI policy; SBI rises 2%
The BSE Sensex continued to trade above the 17,000 level ahead of credit policy, supported by banks, capital goods, auto, oil & gas and metals stocks. Asian markets remained strong after favourable outcome from Greece's elections.
The BSE benchmark rose 130.28 points to 17080.11 that hitthe 17,000 level for the first time since May 4, 2012. Meanwhile, the NSE benchmark gained 41 points or 0.8% at 5,180.05, though there was somewhat profit booking.
Country's largest lender State Bank of India shot up 2% on hopes that the RBI may surprise the street at its mid-quarter monetary policy review. Market experts feel the RBI may cut repo rate or CRR by 25 bps, but the market may rally if the RBI cuts rates by 50 bps. Private sector lender ICICI Bank was up 1.5% while HDFC Bank and HDFC were up 0.5%.
Top commercial vehicle maker Tata Motors jumped nearly 3% after Finance Minister rejected Petroleum Minister's proposal of tax hike on Diesel cars. Maruti, M&M, Hero Motocorp and Bajaj Auto gained 1-1.6%.
Engineering and construction major by sales Larsen & Toubro and state-owned capital goods company BHEL were up 1.6% each.
Reliance Industries, India's most valued stock rose 0.7%. Technology majors Infosys and TCS moved up 0.5% each.
Tata Steel gained more than 2.6%; it made open offer to shareholders of Tinplate (up 16%) and Tata Sponge Iron (up 11%) for buying 1.46 crore shares and 17.34 lakh shares, respectively.
However, FMCG majors ITC and HUL were marginally down.
Asian markets like Hang Seng, Nikkei, Straits Times, Kospi and Taiwan Weighted gained 1-2% while Shanghai was up 0.7% as Greece exit from Eurozone averted for the time being after New Democracy Party emerged as the largest party with around 30% vote share followed by Syriza party with 27% vote share.
At 9:20 hours IST: Sensex gains 150 pts on rate-cut hopes, global cues aid
The BSE Sensex and NSE Nifty started off trade with 1% gain on Monday following strong Asian cues after favourable outcome from Greek election. RBI's mid-quarter policy review will also be closely watched by the market today.
The BSE benchmark was up 150.72 points at 17,100.55 and the NSE benchmark climbed 50 points to 5,189. The broader markets were up over0.5%.
Among Asian markets, Hang Seng, Nikkei, Straits Times, Kospi and Taiwan Weighted rose 1-2% while Shanghai was up 0.75%. The Dow Jones futures climbed 67 points, pointing towards a positive open today.
Greek polls provided hopes that Greece will stay in eurozone after New Democracy emerged as the largest party with around 30% vote share followed by Syriza party with 27% vote share. Socialist PASOK won over around 13% in Greek election.
Back home, the Reserve Bank of India will announce its mid-quarter policy review today. Experts feel the RBI may cut repo rate by 25 basis points or cash reserve ratio by 25 bps.
Nandan Chakraborty of Enam expects the RBI to cut repo rate by 25 basis points as the slip in domestic growth deterioration warrants front-ended action.
IDFC, ICICI Bank, PNB, Axis Bank, Sesa Goa, Sterlite, Tata Steel, L&T, JP Associates, BHEL, Maruti and Hero Motocorp gained 1-2%.
ITC, HUL and BPCL were flat.
The CNX Midcap rose 65 points to 7,097. About four shares advanced for every share declining on the National Stock Exchange.
In the second line shares, GMR Infrastructure, Lanco Infratech and IVRCL were up 1.5-2.5%.
IDBI Bank, Yes Bank, DCB and UCO Bank moved up 1.5-2%.
Real estate stocks like Unitech, HDIL and Indiabulls Real Estate too gained 1.5-2%.
Aviation companies like Kingfisher Airlines, Jet Airways and SpiceJet rallied 1-2% after a 5% cut in aviation turbine fuel price in Delhi.
Pantaloon Retail surged 3%.
Tinplate shot up 16% to Rs 16.55 and Tata Sponge Iron surged 11.5% to Rs 340.55 after open offer made by Tata Steel. Open offer for Tata Sponge is for up to 17.34 lakh shares (11.26%) at Rs 375/share and open offer for Tinplate is for 1.46 crore shares (14%) at Rs 60/share.
However, SKS Microfinance fell over 1% after The Hindu Business Line reportedthat company has been barred from operating in Andhra Pradesh's Mahabubnagar district for not following rules.