RBI policy, global cues weigh on Sensex

Rate sensitives weigh on the benchmark indices, which remain in the red ahead of the Reserve Bank of India’s mid-quarterly monetary policy review. Global weakness also added to the benchmark indices' woes.

The Sensex dropped to a low of 18,006 in early morning trades. However, fresh buying in mid-morning trades has helped the markets recoup some of the losses. The Sensex is now at 18,082, down 50 points. The NSE Nifty is down 23 points, holding on to the key 5,400-level.

The markets has already factored in a 0.25 per cent rate hike by the central bank. But a hawkish stance may prove dampener for the markets.

Heavyweights like Infosys, L&T, Wipro, HDFC Bank, Sterlite, ITC, DLF were the prominent losers in early trades. Maruti, owing to Manesar union trouble couple the fears of imminent rate hike, is down almost 2%. Infosys, RIL and L&T pulled down Sensex by 15-20 points each.

Ambuja Cement, IDFC, Grasim, Bajaj Auto, M&M, ACC, HCL Tech were other notable losers on the NIfty, each down between 1.5 and 2%.

The benchmark indices opened lower in early trade on the back of weak global cues.  Asian stocks slid to their lowest level in nearly three months today and the euro wobbled as Greece's debt troubles deepened and fresh US data indicated its economic "soft patch" could drag on longer than expected.  

All sectoral indices are trading in the negative territory, except the FMCG Index, which is flat. Dabur India and United Breweries are up 2% and 1% each. Capital Goods, Metal, Auto, Realty and Bank indices are down up to 1% each, as they wait for RBI’s way forward on interest rate.

Sterlite and JSW Steel are biggest losers (down over 1% each) in the metals pack. Crompton Greaves (down over 3%), Thermax (down over 1%), Praj Industries (down over 2%), Havells India (down over 1.5%) are the capital goods losers.

Maruti, Exide, Amtek Auto and Bajaj Auto are pulling down the auto index, each stock is down 1-2%. Union Bank and PNB are the laggards in the banking space, down over 2% each. Anant Raj (down over 3%), Unitech (down 2%), Sobha Developers and Peninsula Land (down 1.5%) are the real estate losers.

Broader markets are also very negative today with the CNX Midcap Index down 56 points and BSE Small Cap Index down 32 points.

Market breadth is also negative with only 809 stocks advancing and 1,315 stocks declining on the Bombay Stock Exchange.

Other stocks in news were the airlines stocks on the back of increased ATF prices - Kingfisher Airlines down 0.5% and SpiceJet down 1.5%. Ashok Leyland is up over 2% after the board approved 1:1 bonus issue.