Markets pare some losses as RBI keeps repo rate unchanged at 6.25%

Banking stocks did not react much to the RBI decision, with Nifty Bank trading flat (up 0.01%)

Benchmark indices pared some losses after the Reserve Bank of India decided to keep the repo rate unchanged at 6.25% in line with the market expectations. Maintaining the ‘neutral’ stance, the Central Bank raised the FY17 GVA target for FY18 to 7.4%.

 

RBI narrowed monetary policy rate corridor as the Reverse Repo rate was hiked to 6% from 5.75%. The MSF rate was also cut to 6.5% from 6.5%. 

 

At 2:40 pm, the S&P BSE Sensex was trading at 29,837, down 136 points, while the broader Nifty50 was ruling at 9,227 down 37 points. BSE Midcap index gained 0.5%, while BSE Smallcap index was up 0.2%.

 

Market breadth depicted fall with 1,372 advances over 1,438 declines on the BSE. 144 stocks remained unchanged.

 

Global peers were trading under pressure after hawkish commentary by Federal Reserve in its March Federal Open Market Committee (FOMC) minutes. Stocks fell as risk appetite soured after minutes of the US Federal Reserve's last meeting showed most policymakers thought the central bank should begin trimming its $4.5 trillion balance sheet later this year, much earlier than many had expected.

 

US stock market futures fell 0.3% and MSCI's broadest index of Asia-Pacific shares outside Japan was 0.8% lower.

 

Banking stocks did not react much to the RBI decision, with the Nifty Bank index trading flat (up 0.01%). The bank index has risen about 19% this year.

 

IndusInd Bank, PNB and Axis Bank were top gainers in the index while Federal Bank and ICICI Bank were losers post the policy outcome.

 

Extending gains for third straight session, Nifty Realty index rose over 1.5% on the RBI rate decision led by DLF, Unitech, Godrej Properties and HDIL.

 

IndusInd Bank shares gained more than 1% as the bank announced its plans to raise funds via issue of bonds.

 

Bajaj Auto rose 2% after Morgan Stanley has upgraded the stock to overweight from underweight and also raised target price to Rs 3,251 (from Rs 2,502 earlier), implying 17% upside.

 

Among other gainers, Reliance Industries continued to trade at 9-year high, up 1%.

 

Jindal Steel and Power gained as much as 5.22% intra-day after posting a 12.3% sequential rise in quarterly consolidated steel production.