Credit policy, economic survey weigh on markets

Markets are reeling under intense selling pressure after the Reserve Bank of India kept key policy rates unchanged and amidst  the Economic Survey which is currently underway. The Sensex has shed 262 points at 17,657 levels and the S&P CNX Nifty is down 96 points at 5,368 levels.

The central bank kept the key rates unchanged as it believes that upside risk to the inflation still remains.

"Notwithstanding the deceleration in growth, inflation risks remain, which will influence both the timing and magnitude of future rate actions," the RBI said in its mid-quarter review statement.

“On the basis of the current macroeconomic assessment, it has been decided to keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.75% of their net demand and time liabilities; and keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 8.5%," RBI said in its mid-quarter monetary policy review: March 2012.

Meanwhile, in the Economic Survey the government has projected the growth for FY'13 at 7.6% and for the FY'14 at 8.6% and the projected inflation is pegged at 6.5-7% by March.

Back to markets, selling pressure is visible across the board. The rate sensitive sector stocks have nose dived in the noon deals tracking these developments. The banking stocks are among the worst hit in trades today. The BSE banking index- Bankex has shed nearly 3% or 330 points to 12,198 levels. Bank of India, IDBI Bank, Canara Bank, Yes Bank, Union Bank, Indusind Bank, ICICI Bank, HDFC Bank and Punjab National Bank.

The Realty index is also down, 2.7% at 1,820 levels. DLF, Unitech, HDIL, Anant Raj Industries, Sobha Developers, Godrej Properties and Oberoi Realty are among the top losers from this space.

Consumer Durables, Capital Goods, PSU, Metal, Oil & Gas, Auto, Power and FMCG indices have shed 1.2-2.6% each.

Among the Sensex stock, DLF is the top Sensex loser, down 4.4% at Rs 197. Coal India, Sterlite Industries, ONGC, BHEL, HDFC Bank, ICICI Bank, State Bank of India, Larsen & Toubro, Hero MotoCorp and Jindal Steel are also trading lower by 2-3% each.

On the other hand, NTPC, HUL, Gail India, Sun Pharma, Maruti Suzuki and Tata Steel are among the notable gainers.

The broader markets have also shed over 1% each. The BSE mid-cap index is down 82 points at 6,413 and the small-cap index has shed 70 points to 6,776 levels.

The overall breadth is extremely negative as 1,793 stocks are declining while 779  are advancing.