Sensex, Nifty crack 1% post RBI announcement

CRR remains unchanged at 4%; repo rate cut by 25 bps

In its first monetary policy review for the financial year 2016-17, the Reserve Bank of India announced a 25 basis point reduction in the repo, or repurchase rate, which is the rate at which banks borrow from the central bank. One basis point is one hundredth of a percentage point.

At 11:01 am, the S&P BSE Sensex was at 25,250, down 149 points while the Nifty50 was at 7,712, down by 47 points.
--------------------------------------------------
(updated 10:10 am)

Markets have opened on a lower note ahead of the first bi-monthly policy review meeting of the Reserve Bank of India (RBI) for FY17 amid pressure from global peers.

At 10:10am, the S&P BSE Sensex was at 25,282, down 118 points while the Nifty50 was at 7,720, down by 39 points.

With inflation under check and the government sticking to the fiscal consolidation path, market expects RBI to cut interest rate by up to 0.50 per cent to propel growth.

“Bargain buying is persistent; arresting every downside upside, suggesting that uptrend is intact and could exceed the 7800-7830 objectives, bringing the 8100-8300 into the radar. However, short-term oscillators look non-committal to the bullish idea, but the signal is not strong enough to call for an outright collapse early in the morning,” noted Geojit BNP Paribas’ morning note.

Further, “But, given the pattern, prices may be allowed to push higher early in the day, followed by volatility. Close above 7,800 could be taken as a bullish continuation signal, but would need to be checked with oscillators again before playing the upsides.”

Meanwhile, foreign institutional investors continued to remain buyers with net equity purchases of Rs 237 crore, as per provisional stock exchange data.

In the commodity space, crude prices lowered as hopes that top oil producers would reach an agreement to help tackle a stubborn global glut faded.

GLOBAL MARKETS

Asian markets were trading lower after global crude oil prices eased and overnight losses on Wall Street. Japan's benchmark Nikkei was down 2.2% while Straits Times and Hang Seng were down 1.4%-1.7%. However, China's Shanghai Composite was trading flat with positive bias.

US stocks ended lower on Monday after fresh orders for US factory goods in February declined while capital goods expenditure was lower than expected. The Dow Jones industrial average ended down 0.3% at 17,737, the broader S&P 500 eased 0.3% at 2,066 and tech-heavy Nasdaq settled 0.5% lower at 4,892.

KEY STOCKS

Sectorally, rate sensitive sectors are under pressure ahead of the RBI policy review.

Individually, Adani Enterprises is in focus after the company clarified following the grant of mining lease for the Carmichael mine by the Queensland government, Australia. Adani ports has dropped 1.5%

From the banking space, Axis Bank, ICICI Bank, SBI have lost between 0.1%-1.1% each.

Petrol price was hiked by Rs 2.19 a litre and diesel by 98 paise per litre. In the wake of the hike, OMCs such as BPCL, HPCL, and IOC have gained between 1% - 2.3% each.

However, since crude oil prices dropped in the international market, ONGC, Cairn India have come under pressure, down between 0.5-1% each.

Among other notable losers are Infosys, Bharti Airtel, Tata Motors, ITC , all down 1-1.5% each.

On the flip side, Lupin, RIL, Dr. Reddy’s have gained between 0.5%- 1% each in a weak market.

Among other shares, Jindal Steel & Power (JSPL) honoured its repayment commitment to asset management companies ICICI Prudential and Reliance. The debt-laden steelmaker paid Rs 235 crore to ICICI Prudential AMC and Rs 50 crore to Reliance Mutual Fund (MF). The stock has dropped 0.6%

Gammon India has sold its civil engineering, procurement and construction (EPC) business to Thailand's GP Group, headed by Kirit Shah, in a Rs 250-crore deal. GP will invest in tranches of Rs 26 crore and Rs 224 crore into Gammon Retail Infra Pvt Ltd, the group's EPC arm, and reconstitute the latter's board of directors. The deal is expected to be completed in 12 months.