RBI policy disappoints markets

The benchmark Bombay Stock Exchange index, the Sensex, opened on a subdued note at 16,699 - down 42points - tracking extremely weak global cues. The index after extending losses recovered for a brief while after the announcement of the RBI credit policy review. However, the index soon tumbled deeper into the negative territory to touch a low of 16,311 as the review turned out to be hawkish going forward depsite the current status quo stance.

The markets were extremely volatile and the index moved in the range of 388 points throughout the day. The Sensex finally ended at 16,353, down 387 points or 2%-the biggest single day fall since August 17 when the index shed 626 points. The NSE Nifty settled at 4,847, down 124 points.

The Reserve Bank of India (RBI) today kept key rates uncahanged while the central bank did away with some of the special liquidity measures which were announced in the aftermath of the global financial crisis. The RBI in the last one year had pumped in huge amount of liquidity in the banking system to revive the domestic economy.

All the banking stocks were hammered badly. A 100 basis point hike in Statutory Liquidity Ratio (SLR) and warning of likely higher inflation around 6.5 per cent with an upside bias by this fiscal, dented the sentiment at the banking counters.  Stocks also fell as the RBI did not relax mark-to-market rules for bank's debt holdings.

The realty stocks, too, tanked heavily on fresh credit concerns. The RBI raised the provisioning margins from 0.4% to 1% and warned against likely non-performing assets (NPAs) from this sector.

The Midcap and the small-cap indices also fared extremely poor, down 3.5% and 4.5%, respectively.

The market breadth was extremely negative. Out of 2,789 shares traded, 2,274 declined and 449 advanced on the BSE today.

All the sectoral indices ended in red, with the realty and the metal indices acting as the major dragger, down 6% each. The prominent sectoral losers were Bankex (4%), power (2%) and auto (1.5%), respectively.

ICICI Bank and SBI were the chief wealth destroyers today, as they both cumulatively accounted for a loss of 122 points on the Sensex followed by Bharti Airtel (42 points ), Tata Steel (33 points), Reliance Industries (28 points), Sterlite (23 points) and Infosys (19 points).

INDEX SHAKERS

Hindalco and Tata Steel plunged over 7.5% each to Rs 126 and Rs 501, respectively.

Bharti Airtel and Reliance Communications shed over 6.5% each to Rs 307 and Rs 208, respectively.

The other prominent draggers were ICICI Bank , Sterlite, SBI, Jaiprakash Associates and Tata Power, down 3-6% each.

...AND THE INDEX MOVERS

Wipro was the major gainer, up 2% at Rs 604 on the back of a 19% jump in consolidated jump in net profit. Tata Motors even added 1.5% at Rs 548.

VALUE & VOLUME TOPPERS

SBI topped the value chart on the BSE with a turnover of Rs 377.44 crore. It was followed by Thinksoft (Rs 220.56 crore), Unitech (Rs 192.53 crore), Tata Steel (Rs 187.24 crore) and Reliance (177.81 crore).

Cals Refineries led the volumes chart with trades of 29.24 million shares. It was followed by Unitech (22 million), Thinksoft (12.13 crore), Ispat Industries (10.74 crore) and Zee News (6.8 million).