Sensex down 156 points on RBI status-quo

Mumbai: The benchmark Sensex reversed its two-day rally as it fell 156 points today to end at 26,237 as RBI left interest rate unchanged at 6.25 per cent, contrary to market expectations, in its first policy review since the currency switch.

Reserve Bank Governor Urjit Patel today left the repo rate intact in his second monetary policy even as the central bank lowered GDP growth forecast to 7.1 per cent from 7.6 per cent for the current fiscal, saying short-term disruption in economic activity and demand compression arising out of demonetisation has led to downside risks to growth.

The 30-share index declined by 155.89 points, or 0.59 per cent, to 26,236.87 after shuttling between 26,540.83 and 26,164.82. The gauge had gained over 162.10 points in the previous two sessions.

The wider Nifty hit a low of 8,077.50 before recovering partially to settle at 8,102.05, down 41.10 points or 0.50 per cent. It had touched a high of 8,190.45 in early trade.

The Patel-led 6-member Monetary Policy Committee (MPC), which in its first policy review had cut interest rate by 0.25 per cent in October, belied expectations to keep benchmark repo rate unchanged at 6.25 per cent unanimously.

In sync with overall trend, the rupee too gave up its initial gains to trade almost flat (intra-day) against the dollar during the day, which weighed on sentiment. Interest-linked banking stocks such as SBI, HDFC Bank, ICICI Bank and Axis Bank fell by up to 2 per cent in reaction to the RBI decision.

RBI left the short-term lending rate, or repo rate, unchanged at 6.25 per cent, and the cash reserve ratio at 4 per cent. The central bank also lowered the GDP projection at 7.1 per cent for this fiscal from earlier estimate of 7.6.

Out of the 30-share Sensex pack, 25 ended lower, while 5 led by Adani Ports, HDFC Ltd, Hero MotoCorp, Tata Motors and M&M finished higher and cushioned the fall. Sun Pharma fell the most  among Sensex constituents by falling 5.96 per, followed by TCS 1.47 per cent, Tata Steel 1.40, Lupin 1.33 per cent, ITC Ltd 1.17 per cent and Wipro 0.06 per cent.

Sector-wise, the BSE healthcare index fell the most by 1.70 per cent, followed by realty 1.49 per cent, bank 1.07 per cent, IT 0.63 per cent, FMCG 0.61 per cent and capital goods 0.56 per cent.

In line with the trend, the small-cap index shed 0.51 per cent and mid-cap 0.16 per cent. Meanwhile, foreign portfolio investors (FPIs), which had been net sellers on the domestic bourses since November 8, bought shares worth a net Rs 161.80 crore yesterday, as per provisional data released by the stock exchanges.

Other Asian markets closed higher with Japan's Nikkei advancing 0.74 per cent, China's Shanghai Index rose 0.71 per cent and  Hong Kong's Hang Seng closed 0.55 per cent up.

European markets too were trading in positive terrain in their early deals. Frankfurt's DAX 30 gained 1.10 per cent while France Paris CAC 40 climbed 1 per cent.