Mumbai Aug 2 (IANS) Indian equity markets on Wednesday were pulled lower to close on a subdued note on the back of broadly negative European markets and profit booking as the RBI s decision to reduce key lending rates could not lift investors sentiments.
The Reserve Bank of India in its third bi-monthly monetary policy review of 2017-18 lowered the repurchase rate or the short-term lending rate for commercial banks on loans taken from it to 6 per cent from 6.25 per cent. Subsequently the reverse repurchase rate or the short-term borrowing rate has been adjusted to 5.75 per cent from 6 per cent.
India Inc was of the view that the RBI s decision to slash key lending rates was on expected lines but could not lift the sentiments of the business fraternity as it felt a steeper cut would have been better.
"The 25 basis points (bps) reduction in the repo rate even while continuing with the neutral approach would go a long way in lifting sentiment among businesses " said Chandrajit Banerjee Director General CII.
"The monetary policy stance taken by the RBI would provide a fillip to growth especially at a time of benign core inflation print and tepid private investment. Having said so CII feels that a steeper cut in interest rate would have been more in consonance with market realities " he said.
On a closing basis the wider Nifty50 of the National Stock Exchange (NSE) fell by 33.15 points or 0.33 per cent to 10 081.50 points.
The 30-scrip Sensitive Index (Sensex) of the BSE which opened at 32 641.58 points closed at 32 476.74 points -- down 98.43 points or 0.30 per cent -- from its previous close at 32 575.17 points.
The BSE market breadth was bearish with 1 610 declines and 1 042 advances.
In the early morning session the key equity indices opened on a higher note and surged to new intra-day highs. The NSE Nifty50 scaled a fresh intra-day high of 10 137.85 points and the BSE Sensex of 32 686.48 points.
In terms of the broader markets the S&P BSE mid-cap index was down 0.30 per cent while the small-cap index was a tad down by 0.07 per cent.
"Sensex and Nifty on Wednesday developed off-beat trades in the first half of the day after a strong start. However the markets pared some of the losses soon after RBI s MPC cut the repo rate by 25 bps from 6.25 per cent to 6 per cent " Dhruv Desai Director and Chief Operating Officer of Tradebulls told IANS.
"Volatility took hold as indices like metal capital goods and FMCG saw investors taking off profit while consumer durables realty and energy counters witnessed buying interest. The big losers included Bajaj Auto at 1.12 per cent along with Asian Paints Dr Reddy s and ONGC " said Desai.
On the currency front the rupee strengthened by 37 paise to 63.70-71 to a US dollar from its previous close at 64.07-08.
In investments provisional data with the exchanges showed that foreign institutional investors (FIIs) bought scrips worth Rs 473.72 crore while domestic institutional investors (DIIs) sold stocks worth Rs 232.95 crore.
"Markets corrected on Wednesday on the back of the 25 bps repo rate cut by RBI which was in line with market expectations. Weakness in European stocks also weighed on sentiment " said Deepak Jasani Head of Retail Research HDFC Securities.
"Technically with the Nifty correcting after touching new life highs traders will need to watch if the Nifty can hold above the immediate support of 10 054; else a further correction is likely " he added.
Sector-wise the S&P BSE capital goods index declined by 148.39 points the IT index by 92.24 points and the FMCG index by 77.07 points.
On the other hand the S&P BSE consumer durables index surged by 183.19 points the energy index rose by 25.20 points and the utilities index was up 6.03 points.
Major Sensex gainers on Wednesday were: NTPC up 4.06 per cent at Rs 171.60; Hero MotoCorp up 2.12 per cent at Rs 3 800.35; Adani Ports up 2.08 per cent at Rs 411.35; Lupin up 1.60 per cent at Rs 1 034.25; and Reliance Industries up 1.59 per cent at Rs 1 629.10.
Major Sensex losers were: Sun Pharma down 1.95 per cent at Rs 524.25; Dr. Reddy s Lab down 1.93 per cent at Rs 2 379.85; Tata Motors down 1.66 per cent at Rs 439.50; Kotak Bank down 1.39 per cent at Rs 1 001.50; and Tata Consultancy Services down 1.30 per cent at Rs 2 467.35.
--IANS
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