RBI's "hawkish" stance makes mkts jittery, Sensex down 160pts

The BSE benchmark Sensex today slumped by 160 points to close at 19,575.64 points on profit selling in rate-sensitive stocks led by ICICI Bank and Tata Motors, as RBI adopted a "hawkish" stance in its monetary policy 2013-14 overshadowing its 0.25 per cent cut in repo rate.
Stocks remained under pressure throughout the day as the 0.25 percentage point rate cut was already factored in and hence profit-booking emerged at higher levels after three days of rally, brokers said.
"While RBI did cut policy rates by 25 basis points as expected, it has adopted an unexpectedly hawkish stance despite mounting evidence for easing inflation going ahead and still soft economic activity," Motilal Oswal Financial Services CMD Motilal Oswal said.

The banking sector index suffered the most by losing 2.40 per cent as ICICI Bank, SBI, HDFC Bank and suffered losses in the range of 1-4 per cent. ICICI Bank and SBI at 3.57 per cent and 3.60 per cent respectively were among the biggest losers.
The RBI in its annual monetary policy said upside risks to inflation in the near term are still significant and monetary policy cannot afford to lower its guard against the possibility of resurgence of inflation pressures, dashing investor hopes of further softening of rates.
Also fanning fresh concerns over growth, RBI projected 5.7 per cent expansion rate for current fiscal against government estimate of 6.1-6.7 per cent.

"In our view, Inflation is clearly on a downward trajectory ... The stance of the monetary policy was a bit more hawkish," Dinesh Thakkar, CMD, Angel Broking said.

"It seems unlikely that any material monetary transmission would take place on account of the repo cut," Brokerage India Infoline said.
The BSE 30-share barometer resumed lower and moved in negative terrain most of the day in a volatile trade.
Gains in Infosys, Sterlite, Hindalco, Jindal Steel, RIL , Sun Pharma and L&T, saved the market from bigger fall.
The Sensex settled at 19,575.64, a fall of 160.13 or 0.81 per cent. In last three days, it gained 449.05 points or 2.32 per cent.