Nifty ends below 5,600

Banking stocks amongst the worst hit

Markets ended today's session on a weak note. The Sensex provisionally ended at 18,397, downn 238 points and the 50-share Nifty closed weaker by 73 points at 5,592.
----------------------------------------------
(Updated at 1440 hours)

Markets continue to trade on a weak note after the Reserve Bank of India kept the key rates unchanged while cutting the cash reserve ratio by 25 bps. A move that dashed the hopes of the street of a rate cut going ahead in this year. The Sensex has slipped 170 points to 18,466 and the 50-share Nifty is down 60 points at 5,605 levels.

Showing concerns over hardening inflation, the Reserve Bank today left the key interest rate unchanged but reduced cash reserve ratio by 0.25% to infuse additional liquidity that will inject Rs 17,500 crore into the financial system.

Accordingly, the CRR or the portion of deposits banks have to park with the RBI now stands at 4.25% while the repo rate, at which RBI lends to the system, has been retained at 8%.

The reverse repo, at which RBI absorbs excess liquidity through borrowings from banks, remains at 7%.

The new rates will be effective November 3, RBI Governor D Subbarao said while unveiling the mid-year monetary policy review.

Asian shares were subdued on Tuesday after a powerful hurricane curtailed activity in US markets overnight, while the dollar held gains against the yen ahead of a widely expected policy easing by the Bank of Japan later in the session. Hang Seng slipped 82 points to 21,428, Nikkei slipped 87 points to close at 8,842 and the Shanghai Closed flat at 2,062 levels.

The European markets were trading marginally higher keeping within their recent range in a likely quiet session with Wall Street still closed, as investors digested mixed company results. CAC, DAX and FTSE were up 0.6-0.8% each.

Back home, banking and rate sensitive stocks are amongst the worst hit in trades today after the central bank's decision to hold the repo and reverse repo rates. State Bank of India is the top Sensex loser, the stock has slipped nearly 4% to Rs 2,087. ICICI Bank, HDFC Bank, Canara Bank Bank of Baroda, Punjab National Bank, Bank of India and Kotak Mahindra Bank are also trading weaker by 2-4% each.

Other heavyweight stocks such as Larsen & Toubro, Tata Motors, Hero MotoCorp, Bajaj Auto, Maruti Suzuki, Mahindra & Mahindra, NTPC, Reliance Industries and Tata Power are also among the losers, down 1-2.7% each.

On the other hand, Dr Reddy's Labs, Infosys, Wipro, TCS and Bharti Airtel are among the notable gainers.

Selling pressure is visible across the board. The BSE bankex is the top loser, down 2% at 12,908. Consumer durables, realty, capital goods, PSU, auto, metal, oil & gas and FMCG indices are also down 0.2-2% each. While, IT and healthcare indices are trading marginally higher.

Among the individual stocks, Colgate-Palmolive (India) is trading higher by 3% at Rs 1,269, also its record high, after reporting a better-than-expected 37% year-on-year (yoy) growth in net profit at Rs 145 crore in September 2012 quarter on back of higher volumes. Analyst on an average had expected profit of Rs 122 crore from personal products maker.

De Nora India has locked in 20% upper circuit of Rs 195 after reporting almost eight-fold jump in net profit at Rs 6.81 crore in September 2012 quarter on back of higher operational income. The company engaged in electrolytic products had profit of Rs 89 lakh in previous year quarter.

Heritage Foods (India) has surged 13% to Rs 395 after reporting six-fold jump in its consolidated net profit at Rs 14.48 crore for the second quarter ended September 2012. The company engaged in packaged foods business had profit of Rs 2.55 crore in previous year quarter.

The broader markets are also trading on a weak note. The BSE mid-cap and small-cap indices are down nearly 1% each.

The overall breadth is negative as 1,776 stocks are declining while 900 are advancing.