Sensex ends 205 pts lower, Nifty below 10050 post RBI policy outcome

Here's all that happened in the market today

4:21 PM

Radhika Rao, India Economist, DBS Bank on RBI policy

 

The guidance was cautious on the near-term inflation outlook, owing to higher oil prices, housing rent allowance increases, rising input prices, fiscal slippage risks and core pressures. However, this was counter-balanced by a negative output gap and the cuts in GST rates which are expected to partly ease price pressures. While the FY18 GVA estimate was maintained and growth has bottomed-out in 2Q, a downward revision remains on the cards. 

 

Back on inflation, we expect the headline to settle within a broad 4-5% range, with base effects tempering the headline prints intermittently. While this closes the door for rate cuts, a clear bias towards rate hikes will require faster inflation to be accompanied by a strong turnaround in growth. 

 

On this account, we see range-bound inflation whilst growth returns gradually, providing the central bank with the comfort to remain on-hold during this phase, not rushing to tighten policy. A modest fiscal slippage is expected but not a deviation from the consolidation path. Oil prices remain the most uncertain part of the price outlook

4:18 PM

Nomura on RBI policy

The policy outcome was largely in line with expectations. Although there could be some downside risk to the RBI’s FY18 GVA growth projection, we believe that growth is headed higher, supported by ongoing remonetisation, resolution of GST-related issues and large bank recapitalisation. Meanwhile, risks to near-term inflation have risen on higher oil prices and rising vegetable prices, while the cobweb cycle (adverse supply response to low food prices in H1 2017) and higher growth are medium-term risks. Overall, we believe that both growth and inflation are headed higher, but we expect rates to be on hold through 2018 as the RBI has a sufficient real rate cushion to absorb higher inflation

4:05 PM

Market rundown by Anand James, Chief Market Strategist, Geojit Financial Services 

 

"RBI's decision to maintain status quo was widely expected in the market but weakness in global indices meant that there was little impetus to push ahead. With MPC raising inflation expectations while retaining growth estimates for FY 17-18, markets would now keep an eye on budget cues for further direction."

 

3:46 PM

Nifty Fin services index also slipped over 1%

Source: NSE

3:44 PM

Nifty Bank index down pver 1% post RBI policy outcome

Source: NSE

3:42 PM

Sectoral trend

Source: NSE

3:40 PM

Top Sensex gainers and losers

Source: BSE

3:38 PM

Broader Markets

The BSE Midcap index underperformed the benchmark indices down 0.9% for the day while the BSE smallcap index ended 0.7% lower.

3:37 PM

Markets at Close

The S&P BSE Sensex ended the day at 32,597, down 205 points while the broader Nifty50 index settled at 10,044, down 74 points

3:16 PM

Upasna Bhardwaj, senior economist, Kotak Mahindra Bank on RBI policy

 

RBI’s policy was in line with expectations, maintaining a word of caution on the upside risks emanating from high commodity prices, global financial instability, HRA related increases, rising input costs and fiscal slippages. 

 

RBI’s 2H inflation has been revised marginally higher by 10bps to 4.3-4.7% even as they retained the GVA forecast of 6.7% as against our expectation of 6.5%. Given that MPC members are fixated with anchoring 4% inflation target and the upside risks emanating from higher oil prices, higher rural real wages, sticky core inflation and mean reversion of food prices, we find limited room for any further monetary accommodation this year

3:15 PM

RBI Policy

 

Expect GVA growth of 7-7.8% for Q3 and Q4 respectively

3:13 PM

Nifty Realty also falls post RBI Policy outcome

Source: NSE

3:03 PM

Reliance Securities on the RBI Policy

 

On expected lines, the Reserve Bank of India (RBI) kept the benchmark repo rate unchanged at 6% and hiked the inflation trajectory to 4.3%-4.7% for H2FY18. With the Union Budget on the anvil and while awaiting more data on the inflation trajectory, we expect RBI to maintain its current stance at least till the current fiscal year end.

 

Apart from the local factor development at international front also indicates that further monetary policy easing will be difficult in current fiscal year.  International curd oil price has surged shapely over the last few months led by the production cuts by OPEC along with increasing political uncertainty in Saudi Arabia and other oil producing nations. 

 

We expect higher fuel price will eventually get transmitted into inflation rates as well negatively impact fiscal deficit estimates of GOI. Theses all factors will weight against monetary policy easing going forward

3:03 PM

RBI Policy

Viral Acharya: Will consider OMOs if liquidity is to be absorbed or injected on durable basis

3:01 PM

RBI Policy

Viral Acharya: Banking system moving towards neutrality; expect liquidity neutrality by first half of next FY

2:59 PM

RBI Governor

MPC considered upside pressure on food, living costs; also reiterated commitment to meet inflation target of 4%

2:59 PM

SBI extends losses post RBI policy outcome

2:56 PM

RBI Policy

 

Governance reforms for all PSBs will also feature for all banks
 

PSU Bank recap bonds to be front-loaded for banks with better balance sheets

2:56 PM

RBI Policy

 

RBI has been working closely with Govt on PSB Bank Recap plan. The plan will be differentiated across banks

2:54 PM

RBI Policy

Survey shows improvement in overall eco situation in January-March

2:51 PM

Nifty Chart for the day

Source: NSE

2:50 PM

Shishir Baijal, CMD, Knight Frank India on the RBI Monetary Policy

 

The move to keep the repo rate unchanged by the Reserve Bank of India’s monetary policy committee comes as no surprise. The industry was not expecting a rate cut amid the current macro-economic scenario with inflation touching a six-month high in October and more importantly the uncertainty staring the economy in the near future. However, the want of a growth-inducing monetary policy would continue to have its imprints on the slowdown-hit real estate sector. A cut in the policy rate could have helped stimulate growth and demand particularly in the wake of the recent Moody’s India upgrade

2:47 PM

RBI's decision is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth. The main considerations underlying the decision are set out in the statement below. -- Policy statement

2:47 PM

RBI Policy

Rise in food, fuel prices may further harden expectations

2:46 PM

RBI Policy

The RBI said the projection of real GVA growth for 2017-18 of the October resolution at 6.7% has been retained, with risks evenly balanced.

2:45 PM

Forex check

The 10-year bond yield spiked 0.14% to 7.07 % and the rupee declined 7 paise to 64.45 a dollar 

2:44 PM

RBI Policy

 

MPC feels some recent developments are favourable to growth

 

See capital market funds get deployed for new projects

2:43 PM

BofA on Indian economy

 

‎We expect India to continue to see a shallow recovery in 2018. Growth will likely inch up to 7.2% in FY19 (and 7.6% in FY20) from 6‎.5% in FY18.

2:43 PM

Nifty Auto extends losses post RBI policy outcome

Source: NSE

2:42 PM

Market check

Index	Current	Pt. Change	% Change
S&P BSE SENSEX	32,624.68	-177.76	-0.54
S&P BSE SENSEX 50	10,497.11	-62.05	-0.59
S&P BSE SENSEX Next 50	34,813.23	-303.40	-0.86
S&P BSE 100	10,524.04	-67.06	-0.63
S&P BSE Bharat 22 Index	3,629.97	-30.63	-0.84

(Source: BSE)