Weekly review: RBI policy, global cues weigh on markets

The Indian bourses continued to decline for the second straight week on the back of mixed corporate results, global cues and fears ahead monetary tightening ahead of the RBI review. Eventually, the Central Bank announced a 75 basis points hike in Cash Reserve Ratio (CRR). The CRR hike was suprisingly higher than the 50 bps expected by the markets. The first phase of 50 basis points CRR hike is effective from 13 February 2010 and the second stage effective from 27 February 2010. However, RBI kept the repo and reverse repo rates unchanged, which brought some cheers to the banking stocks late on Friday.

The BSE Sensex slipped 502 points or 3% to end the week at 16,358.

The BSE Midcap and the small cap indices shed 4% and 5%, respectively.

 Among the sectoral index, the metal index crashed 8% to 15,962. It was followed by auto (6%) and IT (4%) indices.

Tata Motors was the major dragger this week, down 11% at Rs 694. The company, on Friday, after market hours reported a net profit of Rs 400 crore in Q3FY10.

Mahindra & Mahindra slipped 10% to Rs 1,010.

The other major losers on the Sensex were Tata Steel, Hindalco, Sterlite, Wipro, Reliance Communications, Jaiprakash Associates, DLF and Hindustan Unilever declined 5-9% each.

Sun Pharmaceuticals was the only prominent gainer on the Sensex, up 3% at Rs 1,469 inspite of a decline of 17% in its Q3 net profit at Rs 339 crore. The other marginal movers included BHEL and ITC, up 1.5% and 0.5%, respectively.