Markets falter on RBI stance, global jitters

The S&P BSE Sensex shed 286 points to close at 24,539 and the Nifty50 lost 100 points to end at 7,456.

Markets finished the choppy session on a weak note after Reserve Bank of India (RBI) kept  key rates unchanged in its bi-monthly monetary policy review and stated that further rate cuts will depend on the reform measures announced in the Union Budget 2016.

Meanwhile, losses in the global equities on further drop in oil prices accentuated the decline.

The S&P BSE Sensex shed 286 points to close at 24,539 and the Nifty50 lost 100 points to end at 7,456. In the broader market, BSE Midcap and Smallcap indices shed between 1%-2%.

“The RBI has kept rates unchanged, as per our expectations. The stance remains accommodative. However, a part of the market which was expecting some measures to ease the current tight liquidity conditions was disappointed as there were no immediate relief measures for the same,” said Mihir Vora, Director and Chief Investment Officer, Max Life Insurance.

“The RBI has acknowledged that global and local growth continues to be tepid. It looks like the RBI will look at the Union Budget in February for signs of continued fiscal consolidation before further rate cuts. We do not expect further rate cuts before the end of this financial year” he added.

RBI POLICY

The RBI at its sixth bi-monthly monetary policy review today kept the repo rate unchanged at 6.75% and the cash reserve ratio (CRR) was also unchanged at 4%.

Meanwhile, RBI revised the inflation projections for FY2017 to 5% vs. 4.8% earlier without factoring the implementation of seventh pay commission and it retained its inflation projections of 6% for January 2016.

Also, the RBI added the GDP growth for FY16 is seen at 7.4% with downside risks and the GDP growth for FY17 is seen at 7.6%.

On the global front, the Asian shares, barring Shanghai Composite, slipped on account of fall in crude oil as well as growing concerns of a global slowdown.

European shares also followed suit with major indices CAC 40, DAX and FTSE 100 falling between 1%-2% each.

In the commodity space, crude oil, overnight fell as much as 7% as growing clamour over slowdown in demand from China added pressure on the commodity.

Further, forecast of a milder winter in the US and scepticism over a deal between OPEC and non-OPEC countries to tackle the supply glut further accentuated the woes.

STOCKS IN FOCUS

Rate sensitive stocks ended the session under pressure after RBI maintained status quo on the interest rates.

In the financial space, ICICI Bank, HDFC twins, SBI and Axis Bank slipped between 0.1%-3%.

Meanwhile, in the auto pack, Hero Motocorp, M&M, Maruti Suzuki and Tata Motors ended lower up to 2%.

However, Bajaj gained 2% after reporting 1.78% increase in total sales in January at 2,93,939 units as against 2,88,746 units during the same month last year.

In the realty bracket, the top losers were Prestige Estates, HDIL, IndiaBulls Real Estate, DLF, Oberoi Realty and Unitech down up to 4%.

Further slip in oil prices hurt the energy shares. RIL and ONGC closed lower by 1% and 3% each.

The metal pack also took a hit owing to a drop in commodity prices globally. Jindal Steel, Vedanta, Tata Steel, all dropped between 5-7% each. 

Healthcare major Sun Pharma dipped nearly 4% on account of profit-booking after the stock run up quite in the bit in the previous sessions.

On the other hand, Dr Reddy’s Lab gained 0.5% on receiving the USFDA nod for two new drugs in three days, in a sign that top Indian drug makers might be looking to move beyond generics to come out with some original drugs of their own.

Meanwhile, shares of InterGlobe Aviation, which operates IndiGo airline, dipped 4% its lowest level since listing on November 10, 2015.

Post December quarter (Q3FY16) results, the stock tanked 30% from Rs 1,198 on January 21, 2016 as compared to 3.3% rise in S&P BSE Sensex.

Another laggard in today's trade was Tech Mahindra which dropped 4% after the third quarter results came below the street estimates.

Also, slower revenue growth in major markets such as Europe and the US, and lower other income dented its net profit numbers.

On the flip side, the technology shares closed higher on the back of a depreciating rupee. TCS, Infosys and Wipro closed the session higher up to 1%.