Sensex ends down 193pts

The Sensex ended (provisional) at 18,166 - down 193 points. Nifty ends down 57 points at 5,455.
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(Updated at 1426 hrs)

Markets extended losses in late noon trades on a hawkish credit policy review by the Reserve Bank of India. Soft cues from the Asian peers also dampened investor sentiments and kept markets in the negative zone.

The Sensex, after opening at 18,227 touched a high of 18,354. However, with the RBI policy coming in, the benchmark started slippingand touched a low of 18,137. The index was down 1% at 18,153. Nifty slipped 64 points at 5,446.

RBI raised its short-term lending and borrowing rates by 25 basis points each today to control spiralling prices of essential commodities. The repo rate has been hiked to 6.75% and the reverse repo rate to 5.75%, respectively. However, most analysts have predicted a further hike in key rates during the policy review in May. Moreover, RBI has also increased its inflation estimate for March to 8% from the 7% projected earlier.

“RBI has acted on expected lines. Problem of inflation is still on top of RBI’s mind, so they have continued tightening monetary policy even at the cost of growth momentum slackening”, said Raamdeo Agrawal, Joint MD Motilal Oswal Financial Services.

Investors ignored better-than-expected inflation data as the RBI policy came in. Food price index rose 9.42% and the fuel price index climbed 12.79% in the year to March 5.

Asian markets were in the red today as the nuclear crisis continued in Japan. The earthquake and tsunami has already cost over 4,000 lives and the count may go up more if the nuclear plants are not taken under control. Many residents started evacuating as panic gripped the island nation. Japan's devastating earthquake is expected to cause insured property losses of about $35 billion. Nikkei shed 1.5% to 8,962. Hang Seng dropped 1.8% to 22,284. Jakarta Composite slipped 1.7% to 3,471.

Crude prices, meanwhile, went up once again after easing for two days. Nymex crude was up 1% at $98.89/ barrel, while Brent crude was up 0.7% at $111.48/ barrel.

Advance tax paid by most of the companies have gone up considerably in the fourth quarter of 2011 over the corresponsing quarter a year ago.

BSE mid and small-cap indices outperformed the benchmark and slipped 0.3% each to 6,530 and 7,862, respectively. Most of the sectoral indices were in red with IT, FMCG, auto and metal indices leading the fall.

Maruti Suzuki shed 4.5% at R 1,169. HDFC, the biggest contributor to Sensex's fall, slipped 3.3% to Rs 639. Hindalco and Tata Motors dropped 2% each. Among other losers were Infosys, DLF, ITC, ICICI Bank and TCS. Market heavyweight, Reliance, was down 1.2% at Rs 1,031.

Meanwhile, Reliance Communications gained 3.5% at Rs 107 after Citigroup raised its ratings on the company from "sell" to "buy".

BHEl jumped 1.6% to Rs 1,958. Cipla, Tata Power and ONGC were also in green.