Unchanged RBI rates depress markets, Sensex down 333 points

Mumbai, Feb 2 (IANS) Disappointment over the status-quoist stance of the sixth monetary policy review for the current fiscal, coupled with a weak rupee and flat global indices, depressed the Indian equity markets on Tuesday.

This led to a barometer index of the Indian equity markets provisionally closing the day’s trade on a negative note — down by 333 points.

Initially, both the bellwether indices of the Indian equity markets opened on a firm note as investors anticipated an easing of key lending rates.

However, sentiments were subdued following the Reserve Bank of India’s (RBI) decision to keep the repo and reverse repo rates unchanged in the current fiscal’s final bi-monthly monetary policy review.

Ignoring the clamour for an easing of monetary policy as an instrument to boost the fledgling economic growth, India’s central bank maintained its short-term lending rates.

The RBI’s decision and flat Asian markets dented sentiments.

Besides, a weak rupee unnerved investors. It opened on a flat note on Tuesday at 67.85 to a US dollar from its previous close of 67.84 to a greenback.

“Rupee has been choppy since morning. Against the US dollar it weakened sharply towards 67.96 levels on spot, before intervention from the central bank brought it down towards 67.84/86 levels,” Anindya Banerjee, associate vice president for currency derivatives with Kotak Securities, told IANS.

“Importer demand and demand for US dollars in offshore centres is supporting the (rupee-dollar) pair at lower levels.”

According to Banerjee, Chinese officials have dropped several hints about allowing yuan to drop from its current levels and that is exerting downward pressure on other Asian currencies like the rupee.

Nevertheless, the markets briefly pared their losses on the back of a dovish RBI stand on future interest rates and non-performing assets (NPAs) of commercial banks.

However, absence of any positive triggers and caution over the upcoming budget and doubts over the government’s ability to perk up investments spiked volatility and dipped Indian indices.

Consequently, the barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) provisionally lost 333 points — or 1.34 percent — at the closing.

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) ended in the negative territory. It plunged by 113 points, or 1.50 percent, at 7,442.90 points.

The S&P BSE Sensex, which opened at 24,868.21 points, provisionally closed at 24,491.44 points (at 3.30 p.m.) — down 333.39 points or 1.34 percent from the previous day’s close at 24,824.83 points.

It touched a high of 24,928.75 points and a low of 24,460.53 points during the intra-day trade.

The S&P BSE market breadth favoured the bears — with 1,842 declines and 858 advances.

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