Sensex snaps 4-day winning run as RBI holds rates

Tuesday, 4 August 2015 – 5:47pm IST | Place: Mumbai: Bulls ran out of fuel today as the benchmark BSE Sensex snapped its four-day winning run by losing 115 points to 28,071.93 after RBI kept interest rates unchanged looking at stickiness of inflation and banks passing on to consumers only less than half of its previous rate cuts.

But support came form buying in select banking stocks and a strong rupee.

Besides, the reaction to RBI status quo was largely tepid as the “policy was in line with the street expectation,” said Alex Mathews, Head Research at Geojit BNP Paribas Financial.

In highly volatile trade, the 30-share BSE index after rising to touch the day’s of 28,264.72 points in early trade, quickly slipped into the negative terrain and dipped below the 28,000-mark to touch a low of 27,866.12 before the RBI policy announcement.

However, it tried to recover after the RBI kept key policy rates unchanged and trimmed most of losses to close the session 115.13 points or 0.41% lower at 28,071.93.

The gauge had rallied by 727.83 points in the previous four straight sessions.

On similar lines, the 50-share Nifty, after moving both ways, settled with a loss of 26.15 points or 0.31% at 8,516.90. Intra-day, it dipped below the 8,500-mark to hit a low of 8,448.25 and touched a high of 8,565.15.

In its third bi-monthly policy review on Tuesday, RBI kept the short-term lending rate, or repo rate, unchanged at 7.25% and the cash reserve ratio (CRR), the amount of deposits lenders park with RBI, at 4%.

Retaining economy growth forecast at 7.6% for 2015-16, the apex bank said outlook was improving gradually.

Banking shares, like SBI, ICICI Bank and Axis Bank, closed up but HDFC Bank ended 0.57% lower.

Rupee, which ended higher against dollar in previous session, today strengthened by 29 paise to 63.75 (intra-day).

This put pressure on IT companies, including TCS, Infosys and Wipro, which earn most of their revenues in US currency.

Out of 30 Sensex constituents, 18 ended with losses led by Hero MotoCorp (2.73%), GAIL (2.53%), ONGC (2.40%), Tata Motors (1.85%), RIL (1.30%) and HDFC (1.27%).

Sectorwise, BSE consumer durbales index suffered the most by losing 0.77%, followed by oil&gas index 0.69% and IT index 0.59%, among others.

Broader markets, however, outperformed Sensex as investors widened their positions lifting the mid-cap index by 1.11%, while small-cap index gained 0.67%.

Globally, other Asian bourses were mixed and Europe was little changed in its opening trade.