Markets end lower as RBI policy fails to impress

After a positive start, markets finished the session in the negative territory as the RBI in its third bi-monthly monetary policy review meeting kept the repo rate unchanged at 7.25% while the cash-reserve-ratio (CRR) was also maintained at 4% on the back of rise in inflation and subnormal monsoons.

Provisionally, the Sensex closed 97 points lower at 28,090 levels and the Nifty finished 19 points lower at 8,524.

___________________

(updated at 2:30 PM)

Benchmark share indices continued to trade weak in late noon trades on Tuesday as investors booked profits after the Reserve Bank of India at its third bi-monthly policy review today maintained status quo on key rates as retail inflation continued to remain at elevated levels.

At 2:30PM, the Sensex was down 124 points at 28,063 levels and the Nifty dropped 29 points at 8,514.

In the broader market, BSE Midcap and Smallcap indices were up 0.4-0.7% each. Market breadth remained positive with 1,430 gainers and 1,335 losers.

RBI POLICY

The Reserve Bank of India at its third bi-monthly Monetary Policy today kept its key interest rate unchanged at 7.25% and also kept the CRR unchanged at 4%.

The central bank, however, retained its growth forecast of 7.6% for the financial year ending March 2016, citing a gradually improving outlook on the back of better real income from the decline in commodity prices and likelihood of better agricultural income if the monsoon continues to improve.

In its policy review on August 4, however, the RBI took a marginally softer outlook on hardening inflation, saying "...inflation projections for January-March 2016 are lower by about 0.2%, with risks broadly balanced around the target of 6.0% for January 2016".  

Earlier, on June 02, 2015, the RBI had slashed its benchmark lending rate, the repo rate by 25 basis points to 7.25% in its monetary policy review.

MONSOON

India’s southwest monsoon in the remaining two months of the four-month season, that is in August and September, is expected to be below normal at 84 per cent of the long-period average (LPA) as El Niño weather conditions have strengthened in the past few months, the India Meteorological Department (IMD)  said on Monday.

SECTORS & STOCKS

BSE Oil and Gas index was the top loser down 0.9% followed by FMCG and IT indices.

Index heavyweights ITC and HDFC were down 0.7% each. Among IT majors, Infosys, TCS and Wipro were down 0.4-1.8% each on the back of an appreciating rupee.

Oil shares remained subdued after global crude oil prices eased on concerns of oversupply and weak demand outlook. Reliance Industries, ONGC and GAIL were down 1.4-2.6% each.

Tata Motors and L&T were among the other Sensex losers.

Hero MotoCorp trimmed early gains and was down 2%. The country’s largest two-wheeler player reported a 33 per cent surge in net profit to Rs 750 crore for the quarter against Rs 563 crore in the corresponding quarter last year on the back of higher-than-expected margins.

Financials were trading mixed despite the status-quo on key rates by the RBI. SBI, ICICI Bank and Axis Bank were up 0.3-1.4% each.

Steel stocks gained on reports that the government plans to hike import duty on flat and long steel products. SAIL, Tata Steel, Jindal Steel, JSW Steel were up 1.7-3.1% each.

Bharti Airtel was marginally down ahead of its April-June 2015 quarter earnings due today.