New Delhi: Reserve Bank of India’s rate cut of 25 basis points has failed to enthuse equity markets, with the BSE Sensex plunging 516 points to end at 24,833.16 points. Nifty too cracked 155.60 points to and closed at 7,603 points.
RBI’s rate cut of 25 basis points was in line with market expectations. This, coupled with heavy profit booking coupled with its decision to keep the cash reserve ratio for banks unchanged contributed to this substantial fall.
Moreover, Asian shares and other riskier assets skidded on Tuesday, pressured by slumping crude oil prices and mixed messages from Federal Reserve policymakers on the outlook for US interest rate rises. This too had a bearing on Indian markets.
Rate sensitive indices such as banking bore maximum brunt with ICICI Bank falling 5.45 per cent, followed by SBI by 5.38 per cent, Axis Bank 2.89 per cent and HDFC Bank 1.03 per cent.
All BSE sectoral indices ended in the red. Among them, banking index fell the most by 3.21 per cent, followed by auto 2.82 per cent, metal 2.81 per cent and infrastructure 2.73 per cent.
Top five Sensex losers were Adani Ports (-6.23%), ICICI Bank (-5.45%), State Bank of India (-5.38%), Bharti Airtel (-5.03%) and Tata Motors (-4.52%), while the only gainer was Lupin (+0.12%).
While traders welcomed other measures by the RBI in its policy review including flirting with the possibility of another rate cut later this year, they felt these measures would translate in due course of time. The 25 bps rate cut, they felt, was already factored in; thus explaining the reason behind the market thumbs down.
(With agencies)
