RBI move on rates disappoints market, Nifty tanks 75 points

Stunned by the RBI move, investors went on a selling spree, including in rate sensitive counters like banking, auto, realty and capital goods space.

The RBI, in its mid-quarter monetary policy review today, left the key interest rates, both cash reserve ratio (CRR) and repo unchanged, citing inflationary concerns. It had cut interest rates by 50 basis points in April.

However, the Central bank decided to enhance the Export Credit Refinance (ECR) limit to 50 per cent of the outstanding rupee export credit for banks, from 15 per cent, a move that will potentially release additionally liquidity of over Rs 30,000 crore into the system.

The market had rallied recently on anticipation of a rate cut fueled by concerns over GDP growth, which has plunged to a nine-year low at 5.3 per cent.

Trading started on an upbeat note, rallying more than one per cent on the back of across-the-board buying mainly in rate-sensitive counters ahead of RBI policy meet.

Buoyancy across Asia on the backdrop of positive Greece election outcome after over a month of political uncertainty, too, weighed on the trading sentiment.

The 50-share Nifty traded between a high of 5,184.60 and a low of 5,047.60 before ending at 5,064.25, down 74.80 points, or 1.46 per cent, over the last close.

DLF, SBIN, PNB, Sterlite Industries, RI, HCL-Tech, Bank of Baroda, Axis Bank, ICICI Bank and Siemens were the top percentage-wise losers from the Nifty pack. However, Power Grid, Tata Steel, Bajaj Auto, Cairn and ACC gained.

The turnover in cash segment rose to Rs 9,751.65 crore against Rs 9,495.92 crore on Friday. In all, 5,880.75 lakh shares changed hands in 50,28,088 trades. Market capitalisation stood at Rs 57,78,238 crore.