Sensex drops 122 points as RBI maintains status quo

Benchmark indices ended lower for the third straight session, amid choppy trades, with financials leading the decline after the Reserve Bank of India at its policy review today kept key rates unchanged.

The 30-share Sensex ended down 122 points at 29,000 and the 50-share Nifty closed 41 points lower at 8,757.

The Reserve Bank of India (RBI) kept the key rates unchanged. The repo rate was unchanged at 7.75% and the reverse repo rate at 6.75%. However, RBI has cut SLR by 50 basis points to 21.5%, effective February 7. he repo rate 25bp to 7.50% from 7.25%

Foreign institutional investors remain net sellers in equities after they sold equities worth Rs 630 crore on Monday, as per the provisional stock exchange data.

Bankex was the top loser down 2.1% followed by Healthcare, Power and Realty indices.The BSE Oil and Gas indes was the top gainer up 1.8% followed by Consumer Durables and FMCG indices among others.

Among bank shares, Axis Bank witnessed profit taking and ended down 5% after rising over 5% yesterday. HDFC Bank, ICICI Bank and SBI ended down 1.5-2.5% each while mortgage lender HDFC closed 3% lower.

Auto shares ended mixed with Hero MotoCorp, Bajaj Auto, Maruti Suzuki and M&M down 0.1-3.7% each. However, Tata Motors ended up 1.7% after the company said its sales of passenger vehicles in the domestic market in January stood at 13,047 units, up 18.89% from 10,974 units in January 2014.

Shares of Sesa Sterlite have gained over 6% after iron ore prices bounced back. Chinese iron ore futures rebounded on Tuesday and were on course for their second-biggest daily gain this year, with traders saying some steel mills had made a surprising return to the market, sensing that ore prices might be near the bottom.

RIL has gained 3.2% after the company announced its plan to apply for a payment bank license in partnership with SBI.

Oil shares were trading higher after the sharp rebound in global crude oil prices. ONGC ended 2.6% higher.

ITC has gained over 1% while its peer HUL gained around 0.6%.

Among other shares, Punjab National Bank ended down 8% after gross NPAs as a percentage to total advances rose to 5.97% from 4.96% in the same quarter an year ago.

Videocon Industries zoomed 8% after it announced petroleum discovery in Brazil by a consortium. This is largest discovery of petroleum by the consortium this year. The consortium includes Petrobras, BPCL and Videocon.

Bharat Forge ended up 2.5% after it posted better than expected Q3 results. It witnessed an exponential increase of 108.8 per cent in the net profit at Rs 196.3 as compared to Rs 94 crore similar period last year.

Shanthi Gears ended down 4% after its net profit fell 18.6% to Rs 3.76 crore in the quarter ended December, 2014 compared to the net profit of Rs 4.62 crore in the same quarter last fiscal.

In the broader market, the BSE Mid-cap and Small-cap indices were trading flat with negative bias.

Market breadth was weak with 1,435 losers and 1,315 gainers on the BSE.