Sensex falls 250 pts on RBI move to hold rates
MARKET REACTION Weakness in the rupee against the US dollar, renewed concerns over the US-China trade dispute also weighed on investor sentiment
Benchmark indices nursed losses for the second straight day on Wednesday as the Reserve Bank of India (RBI) left the repo rate unchanged, while global markets wobbled on renewed concerns over the US-China trade dispute.
The BSE Sensex tumbled 249.90 points, or 0.69% to close at 35,884.41. Similarly, the broader National Stock Exchange (NSE) Nifty fell 84.55 points, or 0.74%, to end at 10,784.95.
All sectoral indices on the BSE finished with losses, led by metal, pharma and rate-sensitive auto and banking stocks.
The RBI on Wednesday left the repo rate unchanged at 6.5% while maintaining the stance of ‘calibrated tightening’ of policy.
In a bid to boost lending, the RBI lowered the reserves lenders are compulsorily required to hold in the form of government securities.
However, it failed to enthuse the markets, which had opened weak and dropped further after RBI’s policy announcement.
Weakness in the rupee against the US dollar also weighed on sentiment, traders said. The local unit fell 11 paise to 70.60 against the US dollar intra-day.
“Nifty performed in line with the weak international cues and shut the shop with losses... Nifty Midcap and Small-cap indices fell even sharply by 1.5% and 1.8% respectively.
“Key US indices tumbled more than 3% on Tuesday on the combined onslaught of inversion in bond yields and fresh jitters on trade,” said VK Sharma, head
MUMBAI: THE RBI ON WEDNESDAY LEFT THE REPO RATE UNCHANGED AT 6.5% WHILE MAINTAINING THE STANCE OF ‘CALIBRATED TIGHTENING’ OF POLICY
PCG and Capital Markets Group, HDFC Securities.
Sun Pharma, under the regulatory lens for alleged corporate governance lapses, was the biggest loser in the Sensex pack, declining 6.59%.
Other laggards included Tata Steel, Vedanta, Tata Motors, M&M, Coal India and ITC, falling up to 4.27%.
Top gainers included HUL, HDFC, HDFC Bank, Wipro, Reliance Industries and Adani Ports, spurting up to 2.07%.
Global investor sentiment turned weak following uncertainty over negotiations between the US and China on their trade dispute.
US President Donald Trump and his Chinese counterpart Xi Jinping had agreed to a truce at the G20 meet.
Trump, however, muddied the waters by suggesting the possibility of an extension of trade talks.
“The negotiations with China have already started. Unless extended, they will end 90 days” from Saturday, Trump tweeted.
On a net basis, foreign portfolio investors (FPIs) sold shares worth ₹55.89 crore on Tuesday, while domestic institutional investors (DIIs) were net sellers to the tune of ₹521.38 crore, provisional data available with BSE showed.
Brent crude, the international benchmark, was trading 0.53% lower at $61.75 per barrel.
Elsewhere in Asia, Korea’s Kospi fell 0.62%, Japan’s Nikkei dropped 0.53%, Hong Kong’s Hang Seng shed 1.62% and Shanghai Composite Index gained 0.61%.
In Europe, Frankfurt’s DAX shed 0.91% and Paris’ CAC 40 fell 0.97%. London’s FTSE too slipped 0.95%.