Markets volatile post policy announcement

Markets have turned volatile post the Reserve Bank of India's (RBI) policy announcement. The Sensex was at 16,961, up 22 points and the Nifty was up 5 points at 5,103. Earlier, in the day the Sensex touched the high of 17,124 an the low of 16,900.

RBI with an aim to control the spiralling inflation hiked the repo rate by 25 basis points for the thirteenth time in a row. The repo rate is now adjusted at 8.5%. Reverse repo rate is unchanged at 7.5% and the cash reserve ratio was also kept unchanged at 6%.

The central bank has also deregulated the bank deposit (savings) rates with immediate effect, subject to certain conditions. Banks can now decide the saving rates subject to certain regulations.
 A move that would directly impact the profit margins of the bank.

Meanwhile, most of the European markets have opened lower. The CAC 40 index opened at 3,198, down 22 points, DAX opened lower by 20 points at 6,035 and the FTSE opened at 5,543, down 4 points.

Back home, the rate sensitive stocks reacted sharply to the move and plunged into the red. HDFC Bank was the top loser among the Sensex stocks, down over 6% to Rs 455. State Bank of India shed 3.4% to Rs 1,842 and ICICI Bank was also trading lower by 1.3% to Rs 857. BHEL, DLF, Coal India, Cipla, ONGC, Bajaj Auto and Hero MotoCorp were also among the laggards.

On the other hand, Sterlite Industries was the top gainer. The stock jumped 2.5% to Rs 119. Infosys, Larsen and Toubro, Sun Pharma, Hindalco, NTPC, Maruti Suzuki, Bharti Airtel, HDFC and Tata Steel were also trading higher by 1-2% each.

Among the individual stocks, VIP Industries has plunged 6% to Rs 846 after reporting 13% year-on-year (y-o-y) drop in net profit at Rs 10.90 crore for the quarter ended September 2011, compared with Rs 12.60 crore in the corresponding quarter of previous fiscal. However, net sales grew 16% to Rs 174 crore on y-o-y basis.

Titan Industries has dipped 5% to Rs 215 after reporting lower-than-expected 16% year-on-year (y-o-y) growth in net profit at Rs 148 crore for the quarter ended September 2011. Analyst expected a net profit of Rs 157 crore from the apparels and accessories maker. However, total income grew 37% to Rs 2,125 crore on y-o-y basis.

Consumer durable stocks witnessed heavy selling pressure. The BSE Consumer Durables index was down nearly 3% to 6,753. Bankex slipped 2.4% or 271 points to 10,781. Raelty and PSU indices were also trading in the red.

At the same time, IT index was the top gainer, up 1.4% to 5,707. Capital Goods, oil & gas, metal, healthcare FMCG and power stocks also witnessed some bit of buying.

TTK Prestige, Whirlpool, C Mahendra Exports, Bajaj Electricals and Gitanjali Gems were the top losers among the consumer durable stocks. From the banking space, Axis bank, Punjab National Bank, Bank of Baroda, Union Bank and Bank of India were also among the prominent losers.

The broader markets were trading with a negative bias. The BSE mid-cap index shed 19 points to 6,072 and the small-cap index was at 6,770, down 35 points.

The overall breadth was negative as 1,454 stocks were declining while 972 were advancing.