Market indices continue to plunge, all eyes on monetary policy

With all eyes on the Reserve Bank of India's (RBI) bi-monthly monetary policy, market indices continued to plunge on Friday afternoon.

The BSE's Sensex tanked 391.90 points to 34,777.26, while the Nifty failed to maintain the 10,500 mark, trading at 10,446.90.

Oil marketing firms saw maximum losses, with shares of Bharat Petroleum Corp Ltd (BPCL), Hindustan Petroleum Corp Ltd (HPCL) and Indian Oil Corp Ltd (IOC) dropping by around 11-25 per cent.

This came a day after Finance Minister Arun Jaitley announced a cut of Rs 2.50 per litre on both petrol and diesel, and directed the state governments to implement the same.

While IDBI Bank, Titan Company and Infosys registered significant gains, Tech Mahindra, Reliance Industries and TCS saw maximum losses.

In the wake of the volatility witnessed on Dalal Street, market expert Sunil Shah opined that the monetary policy will decide the future of the market indices.

"The market is awaiting the outcome of the monetary policy committee meeting. A lot will depend on the tone of commentary. If the tone is hawkish, the negative bias will continue. The announcement of a cut in fuel prices has resulted in the beating down of oil marketing companies. While we expect midcaps stability to return soon, large caps may see some correction," Shah told ANI.

The RBI's six-member monetary policy committee is expected to announce the bi-monthly policy later in the day. Experts believe that the central bank is likely to hike repo rate by 25 basis points.