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MARKET WRAP: Sensex tumbles 792 pts; RBI holds rates; rupee hits 74.22/$

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SI Reporter  |  New Delhi 

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Markets ended lower on Friday after the Reserve Bank of India (RBI) sprung a surprise and kept the repo rate unchanged at 6.50 per cent. Most experts had expected the central bank to hike rates by 25 bps. 

The S&P BSE Sensex lost 792 points, or 2.25 per cent, to settle at 34,377 while the broader NSE's Nifty50 index dropped 283 points, or 2.7 per cent, to close at 10,316. Among specific stocks, shares of oil marketing companies such as HPCL, BPCL and IOCL hit 52-week lows after the government announced that it will cut excise duties on petrol and diesel prices and OMCs will absorb Re 1 per litre.

Heavy losses were also visible in banking stocks with the Nifty Bank index slipping 1.5 per cent. YES Bank, State Bank of India (SBI), Bank of Baroda (BoB), IDFC Bank and ICICI Bank lost up to 5.1 per cent.

RBI policy

Earlier, the monetary policy committee (MPC) of the Reserve Bank on Friday kept the repo rate unchanged at 6.50 per cent in its fourth bi-monthly monetary policy review of 2018-19. The central bank changed the policy stance to 'Calibrated tightening' from 'Neutral'. Calibrated tightening means rate will be maintained or hiked in this cycle.

Rate sensitive stocks took deep cuts despite RBI's status quo. The Nifty PSU Bank index dropped 4.4 per cent to settle at 2,656 levels, while Nifty Auto index tumbled nearly 3.2 per cent. Nifty Realty, too, slipped 3 per cent. Volatility benchmark, India VIX, advanced 7 per cent.

Rupee hits 74.22/$

The Indian rupee Friday crashed below the 74-level against the US dollar for the first time ever after the Reserve Bank kept its key policy rate unchanged. The domestic currency was quoted 55 paise lower at 74.13 against the dollar soon after the RBI announced its monetary policy. 

Investors remained concerned over sustained foreign capital outflows and fears of widening current account deficit in the wake of soaring crude oil prices. READ MORE HERE
Global markets

Asian shares were mostly fragile on Friday after benchmark US Treasury yields surged to a seven-year high and strong economic data fanned concerns about inflation and the risk of faster-than-expected interest rate hikes. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.3 per cent, while Japan's Nikkei dropped 0.5 per cent.

MARKET WRAP: Sensex tumbles 792 pts; RBI holds rates; rupee hits 74.22/$

Sectoral trend on NSE

MARKET WRAP: Sensex tumbles 792 pts; RBI holds rates; rupee hits 74.22/$

S&P BSE Sensex gainers and losers

MARKET WRAP: Sensex tumbles 792 pts; RBI holds rates; rupee hits 74.22/$

Market at close   The S&P BSE Sensex ended at 34377, down 792 points while the broader Nifty50 index settled at 10,316, down 283 points.

MARKET WRAP: Sensex tumbles 792 pts; RBI holds rates; rupee hits 74.22/$

NEWS ALERT Rupee at record low, trading at 74.15/$

MARKET WRAP: Sensex tumbles 792 pts; RBI holds rates; rupee hits 74.22/$

MARKET COMMENT Dr VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services The status quo on policy rates has came against the market expectations of a 25 bp rate hike. But the change in stance from neutral to 'calibrated tightening' is indicative of the likely tightening to come depending on evolving data. The RBI’s surprising policy announcement is the consequence of its confidence on benign inflation, which in turn, stems from the softening of food prices. Since the Indian economy, like many other emerging markets are presently in the cross currents of global developments, the RBI is likely to be on guard keeping a strong vigil of the US 10 year bond yield and crude prices

MARKET WRAP: Sensex tumbles 792 pts; RBI holds rates; rupee hits 74.22/$

COMMENT ON RBI POLICY Abheek Barua, Chief Economist, HDFC Bank  This is a risky move by the RBI since the market was positioned for a rate hike, purely as a rupee defence. In its absence currency and asset markets could see sharper corrections. A narrow focus on inflation targets perhaps not desirable in the middle of a financial crisis. Change in stance suggests that the rate hike could still come in the coming months

MARKET WRAP: Sensex tumbles 792 pts; RBI holds rates; rupee hits 74.22/$

Nifty PSU bank index tank over 4%

MARKET WRAP: Sensex tumbles 792 pts; RBI holds rates; rupee hits 74.22/$

Quote on Monetary Policy by Mr Shachindra Nath, Executive Chairman and Managing Director, Ugro Capital RBI maintaining the rates in its monetary policy while may be surprising for the broader market, however, RBI has stuck to the principal of targeting inflation as core framework of the monetary policy. While the currency market and equity market have reacted negatively – this intermediary halt should help soothe the market once the immediate reaction on the mismatch on expectation is over. RBI stand is well thought through and considered given where the broader economic and liquidity challenges are in the current market.

MARKET WRAP: Sensex tumbles 792 pts; RBI holds rates; rupee hits 74.22/$

RBI on global macros The MPC notes that global headwinds in the form of escalating trade tensions, volatile and rising oil prices, and tightening of global financial conditions pose substantial risks to the growth and inflation outlook

MARKET WRAP: Sensex tumbles 792 pts; RBI holds rates; rupee hits 74.22/$

SENSEX HEAT MAP

MARKET WRAP: Sensex tumbles 792 pts; RBI holds rates; rupee hits 74.22/$

NEWS ALERT System liquidity remained in surplus mode till March 2018: Dy Governor Viral Acahrya

First Published: Fri, October 05 2018. 08:32 IST
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MARKET WRAP: Sensex tumbles 792 pts; RBI holds rates; rupee hits 74.22/$

Catch all the live market action here!

Markets ended lower on Friday after the Reserve Bank of India (RBI) sprung a surprise and kept the repo rate unchanged at 6.50 per cent. Most experts had expected the central bank to hike rates by 25 bps. 

The S&P BSE Sensex lost 792 points, or 2.25 per cent, to settle at 34,377 while the broader NSE's Nifty50 index dropped 283 points, or 2.7 per cent, to close at 10,316. Among specific stocks, shares of oil marketing companies such as HPCL, BPCL and IOCL hit 52-week lows after the government announced that it will cut excise duties on petrol and diesel prices and OMCs will absorb Re 1 per litre.

Heavy losses were also visible in banking stocks with the Nifty Bank index slipping 1.5 per cent. YES Bank, State Bank of India (SBI), Bank of Baroda (BoB), IDFC Bank and ICICI Bank lost up to 5.1 per cent.

RBI policy

Earlier, the monetary policy committee (MPC) of the Reserve Bank on Friday kept the repo rate unchanged at 6.50 per cent in its fourth bi-monthly monetary policy review of 2018-19. The central bank changed the policy stance to 'Calibrated tightening' from 'Neutral'. Calibrated tightening means rate will be maintained or hiked in this cycle.

Rate sensitive stocks took deep cuts despite RBI's status quo. The Nifty PSU Bank index dropped 4.4 per cent to settle at 2,656 levels, while Nifty Auto index tumbled nearly 3.2 per cent. Nifty Realty, too, slipped 3 per cent. Volatility benchmark, India VIX, advanced 7 per cent.

Rupee hits 74.22/$

The Indian rupee Friday crashed below the 74-level against the US dollar for the first time ever after the Reserve Bank kept its key policy rate unchanged. The domestic currency was quoted 55 paise lower at 74.13 against the dollar soon after the RBI announced its monetary policy. 

Investors remained concerned over sustained foreign capital outflows and fears of widening current account deficit in the wake of soaring crude oil prices. READ MORE HERE
Global markets

Asian shares were mostly fragile on Friday after benchmark US Treasury yields surged to a seven-year high and strong economic data fanned concerns about inflation and the risk of faster-than-expected interest rate hikes. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.3 per cent, while Japan's Nikkei dropped 0.5 per cent.

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