Equity markets fall despite RBI cutting lending rates (Roundup)

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Mumbai, Aug 2 (IANS) Indian equity markets on Wednesday were pulled lower to close on a subdued note on the back of broadly negative European markets and profit booking as the RBI’s decision to reduce key lending rates could not lift investors’ sentiments.

The Reserve Bank of India in its third bi-monthly monetary policy review of 2017-18 lowered the repurchase rate, or the short-term lending rate for commercial banks on loans taken from it, to 6 per cent from 6.25 per cent. Subsequently, the reverse repurchase rate, or the short-term borrowing rate, has been adjusted to 5.75 per cent from 6 per cent.

India Inc was of the view that the RBI’s decision to slash key lending rates was on expected lines, but could not lift the sentiments of the business fraternity as it felt a steeper cut would have been better.

“The 25 basis points (bps) reduction in the repo rate, even while continuing with the neutral approach, would go a long way in lifting sentiment among businesses,” said Chandrajit Banerjee, Director General, CII.

“The monetary policy stance taken by the RBI would provide a fillip to growth, especially at a time of benign core inflation print and tepid private investment. Having said so, CII feels that a steeper cut in interest rate would have been more in consonance with market realities,” he said.

On a closing basis, the wider Nifty50 of the National Stock Exchange (NSE) fell by 33.15 points, or 0.33 per cent, to 10,081.50 points.

The 30-scrip Sensitive Index (Sensex) of the BSE, which opened at 32,641.58 points, closed at 32,476.74 points — down 98.43 points, or 0.30 per cent — from its previous close at 32,575.17 points.

The BSE market breadth was bearish with 1,610 declines and 1,042 advances.

In the early morning session, the key equity indices opened on a higher note and surged to new intra-day highs. The NSE Nifty50 scaled a fresh intra-day high of 10,137.85 points and the BSE Sensex of 32,686.48 points.

In terms of the broader markets, the S&P BSE mid-cap index was down 0.30 per cent, while the small-cap index was a tad down by 0.07 per cent.

“Sensex and Nifty on Wednesday developed off-beat trades in the first half of the day after a strong start. However, the markets pared some of the losses soon after RBI’s MPC cut the repo rate by 25 bps from 6.25 per cent to 6 per cent,” Dhruv Desai, Director and Chief Operating Officer of Tradebulls, told IANS.

“Volatility took hold as indices like metal, capital goods and FMCG saw investors taking off profit while consumer durables, realty and energy counters witnessed buying interest. The big losers included Bajaj Auto at 1.12 per cent, along with Asian Paints, Dr Reddy’s and ONGC,” said Desai.

On the currency front, the rupee strengthened by 37 paise to 63.70-71 to a US dollar from its previous close at 64.07-08.

In investments, provisional data with the exchanges showed that foreign institutional investors (FIIs) bought scrips worth Rs 473.72 crore, while domestic institutional investors (DIIs) sold stocks worth Rs 232.95 crore.

“Markets corrected on Wednesday on the back of the 25 bps repo rate cut by RBI, which was in line with market expectations. Weakness in European stocks also weighed on sentiment,” said Deepak Jasani, Head of Retail Research, HDFC Securities.

“Technically, with the Nifty correcting after touching new life highs, traders will need to watch if the Nifty can hold above the immediate support of 10,054; else a further correction is likely,” he added.

Sector-wise, the S&P BSE capital goods index declined by 148.39 points, the IT index by 92.24 points, and the FMCG index by 77.07 points.

On the other hand, the S&P BSE consumer durables index surged by 183.19 points, the energy index rose by 25.20 points and the utilities index was up 6.03 points.

Major Sensex gainers on Wednesday were: NTPC, up 4.06 per cent at Rs 171.60; Hero MotoCorp, up 2.12 per cent at Rs 3,800.35; Adani Ports, up 2.08 per cent at Rs 411.35; Lupin, up 1.60 per cent at Rs 1,034.25; and Reliance Industries, up 1.59 per cent at Rs 1,629.10.

Major Sensex losers were: Sun Pharma, down 1.95 per cent at Rs 524.25; Dr. Reddy’s Lab, down 1.93 per cent at Rs 2,379.85; Tata Motors, down 1.66 per cent at Rs 439.50; Kotak Bank, down 1.39 per cent at Rs 1,001.50; and Tata Consultancy Services, down 1.30 per cent at Rs 2,467.35.

–IANS

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