Markets trip on RBI rate hike; bank, auto stocks drag

Press Trust of India  |  Mumbai 

Benchmark Sensex snapped its seven-session record setting spree today after the RBI hiked the policy rate on inflation concerns but maintained its 'neutral' stance.

Interest rate sensitive auto, and stocks finished with losses.

The raised the benchmark lending rate by 0.25 per cent for the second time in two months.

The repo rate, at which the central lends to other banks, now stands at 6.50 per cent.

Profit booking at prevailing higher levels and lower PMI for July added to the selling pressure, brokers said.

The Sensex, which had rallied to a fresh lifetime high of 37,711.87 in early trade, dived after the RBI announced its policy decision.

It staged a bounce-back in late afternoon session, but finally closed lower by 84.96 points, or 0.23 per cent, at 37,521.62 points.

The gauge had gained 1,110.21 points in the previous seven trading days, during which it closed at fresh lifetime highs in each session.

The broader 50-issue NSE Nifty too slipped from its record high, shedding 10.30 points or 0.09 per cent to end at 11,346.20. Intra-day, it shuttled between 11,390.55 and 11,313.55.

Meanwhile, foreign portfolio investors (FPIs) bought shares worth a net of Rs 572.21 crore, while domestic institutional investors (DIIs) sold equities to the tune of Rs 290.87 crore yesterday, provisional data showed.

"RBI maintaining growth forecast at 7.4 per cent for FY19 will help restore investors' confidence in the market. Risk of and inflation is largely factored in by the monetary policy whereas uncertainty in rise in MSP remains a detrimental factor to the projection.

"RBI's continued focus to get balance between inflation and growth and the progressing earnings season will support market direction," said Vinod Nair, Head of Research,

The country's sector activity moderated in July amid softer increase in output, new orders and employment.

The Purchasing Managers Index (PMI) stood at 52.3 in July, down from 53.1 in June.

Vedanta was the top loser in the Sensex pack, falling 1.84 per cent.

Other major losers were 1.75 per cent, 1.68 per cent, 1.46 per cent, HDFC 1.24 per cent, 0.82 per cent, Asian Paints 0.73 per cent, 0.38 per cent and Adani Ports 0.16 per cent.

Bucking the trend, climbed 3.29 per cent, TCS 1.74 per cent, 1.61 per cent, ITC 1.51 per cent, Power Grid 1.02 per cent, 0.73 per cent, SBI 0.58 per cent and RIL 0.45 per cent, among others.

Shares of companies rose following in global markets. spurted 2.16 per cent, BPCL 1.98 per cent and HPCL 1.37 per cent.

Sector-wise, the index lost 0.77 per cent, followed by 0.62 per cent, 0.55 per cent, telecom 0.55 per cent, 0.54 per cent, power 0.14 per cent, capital goods 0.09 per cent and infrastructure 0.03 per cent.

However, jumped 1.11 per cent, 0.99 per cent, PSU 0.80 per cent, FMCG 0.77 per cent, consumer durables 0.48 per cent, IT 0.40 per cent, teck 0.30 per cent and realty 0.21 per cent.

The broader markets showed a firm trend, with the small-cap index rising 0.26 per cent and mid-cap gauge gaining 0.19 per cent.

Asian stocks edged higher, following overnight gains in Wall Street, as report of renewed talks between the US and eased trade war fears.

Japan's Nikkei rose 0.86 per cent, gained 0.27 per cent, while Hong Kong's Hang Seng shed 0.85 per cent and Shanghai Composite Index lost 1.80 per cent.

In Europe, Frankfurt's DAX fell 0.17 per cent and France's Paris CAC was down 0.06 per cent. London's FTSE too fell 1.07 per cent.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, August 01 2018. 17:25 IST