Stocks slip after RBI holds rates, lowers growth forecast (Roundup)

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Mumbai, Dec 7 (IANS) Indian equity markets slipped on Wednesday after the Reserve Bank of India (RBI) decided to keep its key lending rates unchanged in its fifth bi-monthly monetary policy of 2016-17.

Besides, investors’ sentiments were subdued as the RBI lowered the forecast for India’s growth rate to 7.1 per cent from an earlier 7.6 per cent.

The key Indian indices, which opened in the green on positive Asian peers and hopes of the RBI easing interest rates, witnessed heavy selling pressure after the RBI announcement, and finally closed the day’s trade with losses of around half a per cent each.

Moreover, global markets were also cautious ahead of the European Central Bank monetary policy announcement scheduled on December 8, and that of the US Federal Open Market Committee (FOMC) and Bank of England (BoE) in the week starting December 12.

However, the fall was mitigated by fresh inflow of foreign funds and rupee appreciation.

The wider 51-scrip Nifty of the National Stock Exchange (NSE) slipped by 41.10 points or 0.50 per cent to 8,102.05 points.

Similarly, the barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 26,456.21 points, closed at 26,236.87 points — down 155.89 points or 0.59 per cent from the previous close at 26,392.76 points.

The Sensex touched a high of 26,540.83 points and a low of 26,164.82 points during the intra-day trade.

The BSE market breadth was tilted in favour of the bears — with 1,523 declines and 1,085 advances.

On Tuesday, the equity markets closed on a flat note as profit booking and caution ahead of key global events capped gains.

The barometer index was up 43.66 points or 0.17 per cent, while the NSE Nifty rose by 14.40 points or 0.18 per cent.

“The plunge seen in the equity markets right after the RBI announcement was more of a panic move as investors, who were expecting an easing of the lending rates, resorted to selling,” Anand James, Chief Market Strategist, Geojit BNP Paribas Financial Services, told IANS.

“However, the markets will not see a recovery straightaway as there are many important global events to look forward to, such as the FOMC meet, the ECB meet, and the BoE and BoJ (Bank of Japan) meets next week.”

According to Dhruv Desai, Director and Chief Operating Officer of Tradebulls, the Bank Nifty sectoral index traded with volatile sentiments as the RBI kept rates unchanged.

“Almost all sector stocks failed to hold their initial gains and witnessed selling pressure in second half of the session. USD/INR futures witnessed good recovery from lower levels which pressurised the sentiments of Nifty in second half of the session,” Desai said.

However, the Indian rupee appreciated by 26 paise to close at 67.64 against a US dollar from its previous close of 67.90 to a greenback.

“Indian rupee gained sharply on the back of selling from the central bank as well as recovery in the yield differential between India and the US,” Anindya Banerjee, Associate Vice President for Currency Derivatives with Kotak Securities, told IANS.

“Post the RBI policy, a sell-off in local bonds triggered a rise in yields on long term bonds and that helped improve the yield differentials between the two countries.”

In terms of investments, provisional data with exchanges showed that the foreign institutional investors (FIIs) bought stocks worth Rs 193.66 crore, while the domestic institutional investors (DIIs) divested scrip worth Rs 56.28 crore.

Sector-wise, the S&P BSE healthcare index receded by 265.83 points, the banking index fell by 225.18 points, and the capital goods index was lower by 77.27 points.

On the other hand, the S&P BSE oil and gas index surged by 107.09 points, followed by the automobile index, which gained 84.61 points, and the energy index, which rose by 10.81 points.

Major Sensex gainers on Wednesday were: Adani Ports, up 1.86 per cent at Rs 277.10; HDFC, up 1.74 per cent at Rs 1,265.45; Hero MotoCorp, up 1.31 per cent at Rs 3,240; Tata Motors, up 0.88 per cent at Rs 445.25; and Mahindra and Mahindra (M&M), up 0.77 per cent at Rs 1,184.25.

Major Sensex losers were: Sun Pharmaceuticals, down 5.96 per cent at Rs 663.95; Axis Bank, down 2.00 per cent at Rs 447.55; State Bank of India (SBI), down 1.47 per cent at Rs 255.35; Tata Consultancy Services (TCS), down 1.47 per cent at Rs 2,158.20; and Tata Steel, down 1.40 per cent at Rs 412.50.

–IANS

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