Sensex declines 160 pts on RBI's 'hawkish' policy stance
The BSE benchmark Sensex today fell by 160 points on profit-booking in interest-sensitive banking, auto and realty stocks as RBI adopted a "hawkish" stance in its monetary policy 2013-14 that overshadowed its 0.25% cut in repo rate.business Updated: May 03, 2013 17:32 IST
In a highly volatile trade, the BSE benchmark Sensex on Friday fell by 160 points on profit-booking in interest-sensitive banking, auto and realty stocks as RBI adopted a "hawkish" stance in its monetary policy 2013-14 that overshadowed its 0.25% cut in repo rate.
Snapping three days of gains, the Sensex fell by 160.13 points, or 0.81%, to 19,575.64. The index had gained 449 points in the last three sessions.
Similarly, the Broad-based National Stock Exchange index Nifty fell by 55.35 points, or 0.92% to 5,944 points after touching a low of 5,930.15.
The Reserve Bank today cut the key interest rate by just 0.25% to 7.25% and kept the liquidity enhancing cash reserve requirement unchanged, disappointing the industry and stock market.
Brokers said interest-related stocks of bank, auto and realty sectors suffered losses on fresh selling after the RBI said assessment of growth-inflation dynamics limits scope for further easing of policy rate. They said the bank holding CRR unchanged overshadowed the 0.25% cut in key rates.
"While RBI did cut policy rates by 25 basis points as expected, it has adopted an unexpectedly hawkish stance despite mounting evidence for easing inflation going ahead and still soft economic activity," said MOFSL Chairman and Manging Director Motilal Oswal.
The banking sector index suffered the most by losing 2.40% to 14,183.60 as ICICI Bank, SBI, HDFC Bank and Housing Development Finance Corp suffered heavy losses on profit-booking.
The auto sector was second worst performer by losing 1.50% to 10,831.43 as stocks of Tata Motors, Maruti Suzuki, Hero MotoCorp and Bajaj Auto lost substantial ground.
The realty sector fell by 1.39% to 1,902.66, and consumer durable index by 1.06% to 7,421.56.
In 30-BSE index components, 18 stocks declined led by GAIL India, Cipla, ITC, ONGC and TCS.
However, a gain in Infosys, Sterlite Industries, Hindalco, Jindal Steel, RIL , Sun Pharma and L&T, saved the market from any major fall.