Bourses fall around 1% after RBI monetary policy decision

Mumbai: Benchmark stock indices Sensex and Nifty tanked around 1 per cent on Thursday dragged by selling in banking and auto shares due to increased uncertainty about the timing of interest rate cuts after the RBI’s monetary policy decision.

Erasing all its early gains, the 30-share BSE Sensex fell by 723.57 points or 1 per cent to settle at 71,428.43. The barometer slipped into red after the announcement of the RBI monetary policy and hit a low of 71,230.62 thereafter, reflecting a loss of 921.38 points or 1.27 per cent.

The Nifty shed 212.55 points or 0.97 per cent to settle at 21,717.95.

Rate sensitive banking and financial services, auto, realty and commodity shares remained under pressure while energy and IT shares advanced.

The RBI Monetary Policy Committee on Thursday decided to keep policy rate unchanged for the sixth time in a row in view of global uncertainty and the need to bring down retail inflation to 4 per cent. The RBI also maintained its ‘withdrawal of accommodative stance’.

Announcing the decision of the Monetary Policy Committee (MPC), RBI Governor Shaktikanta Das on Thursday said it has decided to keep the policy repo rate unchanged on the basis of an assessment of the current and evolving macroeconomic situation.

MPC also decided to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns to the target while supporting growth, he said.

Among the Sensex firms, ITC, Kotak Mahindra Bank, ICICI Bank, Nestle, Axis Bank, IndusInd Bank, UltraTech Cement, Bajaj Finance, Maruti and HDFC Bank were the major laggards.

State Bank of India, PowerGrid, Tata Consultancy Services, HCL Technologies and Reliance Industries were among the gainers.

In the broader market, the BSE smallcap gauge declined 0.44 per cent while midcap index went up by 0.08 per cent.

Among sectoral indices, FMCG declined by 2 per cent and bankex fell by 1.80 per cent. Financial services (1.46 per cent), commodities (1.13 per cent), auto (0.94 per cent) and realty (0.73 per cent) also closed lower.Energy, IT, telecommunication, utilities and teck were the gainers.

The rupee settled on a flat note at 82.96 against the US dollar on Thursday, after the Reserve Bank decided to keep the key policy rate unchanged for the sixth time in a row to maintain a tight vigil on inflation.

Global oil benchmark Brent crude declined 0.18 per cent to $79.07 per barrel.