Stocks tumble as RBI keps repo rate unchanged at 6.25% | business-news | Hindustan Times
Today in New Delhi, India
Jul 25, 2017-Tuesday
-°C
New Delhi
  • Humidity
    -
  • Wind
    -

Stocks tumble as RBI keps repo rate unchanged at 6.25%

The BSE Sensex, which had traded largely in the green since morning, declined 180 points or 0.7% at 26,212.77 and the wider NSE Nifty was down 39 points or 0.5% at 8,104.40 after the RBI monetary policy announcement.

business Updated: Dec 07, 2016 17:38 IST
Nachiket Kelkar
The BSE Sensex, which had traded largely in the green since morning, declined 180 points or 0.7% at 26,212.77 and the wider NSE Nifty was down 39 points or 0.5% at 8,104.40 after the RBI monetary policy announcement.
The BSE Sensex, which had traded largely in the green since morning, declined 180 points or 0.7% at 26,212.77 and the wider NSE Nifty was down 39 points or 0.5% at 8,104.40 after the RBI monetary policy announcement.(Reuters)

India’s stock markets gave up earlier gains and tumbled 0.5% after the Reserve Bank of India unexpectedly left key interest rates unchanged on Tuesday.

Most had expected the central bank to cut repo rates by at least 25 basis points, since the government’s move to ban high value currency notes has hit consumption and will hurt GDP growth in 2016-17.

The BSE Sensex, which had traded largely in the green since morning, closed down 156 points or 0.6% at 26,236.87 and the wider NSE Nifty ended down 41 points or 0.5% at 8,102.05 after the RBI monetary policy announcement.

“With inflation under control and expectations of an economic slowdown post demonetisation we as well the street had factored in a 25 bps rate cut. However, RBI seems to be worried on inflation spiking up due to rising crude oil prices. looking at the current move rate sensitive stocks could remain under pressure in the near term,” said Dinesh Thakkar, chairman and MD, Angel Broking.

Banking stocks tumbled with ICICI Bank, Axis Bank, HDFC Bank and State Bank of India all down 1-2%. Other major losers included, Sun Pharma, which declined 6%, Tata Steel and TCS also fell close to 1.5%.

Realty stocks also took a hit with the BSE Realty index plunging 1.1%. HDIL, Indiabulls Real Estate, Phoenix Mills and DLF were all down 2-4%.

While no rate cuts came as a surprise to most, analysts say the central bank announcing that the incremental CRR of 100% will be withdrawn from Dec 10 should create room for banks to pass on earlier rate cuts.

“As such, in the light of improved banking system liquidity, the focus needs to be more on the transmission of the rate cuts already delivered, rather than lowering the signalling rates much further,” said Sonal Varma, chief India economist at Nomura.