Nifty ends below 5600; Bankex loses 2%, Maruti gains 2%

Indian shares plummeted over 1 percent on Tuesday, weighed down largely by rate sensitives after the Reserve Bank of India kept policy rates unchanged and lowered GDP forecast significantly for FY13, in its half-yearly monetary policy review.

The 50-share NSE Nifty fell 67.70 points to close tad below 5600 level the first time since September 20, at 5597.90 despite positive European cues.

Meanwhile, the 30-share BSE Sensex lost 204.97 points or 1.10 percent to 18,430.85 due to weakness in 22 out of 30 components.

The revision in provisioning norms by the Reserve Bank of India hammered banking shares quite badly, driving the BSE Bankex down over 2 percent.

The central bank raised banks' provisioning requirement to 2.75 percent as against the existing 2 percent on restructured standard loan accounts that would eat away profits of the banks. Analysts feel this move will have major impact on the profitability of country's largest public sector lenders State Bank of India, Punjab National Bank and Bank of Baroda, which fell 4.4 percent, 3.6 percent and 4.6 percent, respectively.

The RBI reduced cash reserve ratio the portion of deposits that banks are mandated to keep with RBI - by 25 basis points (in-line with expectations) to 4.25 percent that to pre-empt prospective liquidity strain. But the unchanged in repo rate a rate at which banks borrow from RBI at 8 percent was somewhat negative for the market because that would be reduced in 2013, say analysts.

"With RBI's unwavering focus on managing inflation (that was 7.81 percent in September as against 7.55 percent in August) and inflation expectations; we assign a low probability to repo rate cut in December mid-quarter review. However, implementation of recent policy initiative, progress towards fiscal consolidation and a likely retracement of inflation are expected to provide significant room for monetary easing in Q4 FY13," IIFL said.

The RBI also cut GDP forecast for FY13 to 5.8 percent from 6.5 percent earlier while raised inflation projection to 7.5 percent from 7 percent earlier.

The BSE Realty and Capital Goods indices were down over 2 percent while Metal, Auto and Power fell 1-1.5 percent.

Engineering conglomerate Larsen & Toubro dropped 3 percent; commercial vehicle maker Tata Motors plunged 3.5 percent.

Index heavyweights Reliance Industries, ITC and HDFC Bank were down 1-1.5 percent. Private sector lender ICICI Bank went down 2 percent.

India's largest software services exporters TCS, Infosys and Wipro outperformed other bluechips, rising 0.13 percent, 1 percent and 0.78 percent, respectively.

Top car maker Maruti Suzuki gained 2.27 percent following better-than- expected numbers on every count in second quarter . Net profit came in at Rs 227.5 crore as against forecast of Rs 215 crore while EBITDA margin stood flat at 6.3 percent as against expectations of 5.4 percent.

Drug producer Dr Reddy's Labs was up 1.58 percent after higher-than-expected quarterly earnings in Q2 . Net profit rose 32 percent YoY to Rs 407 crore.

Tyre stocks were in bull grip in second half of trade today . Apollo Tyres, Ceat, JK Tyre and MRF rallied 1.5-2.5 percent after the Competition Commission of India said did not find cartelisation among tyre-makers.

FMCG major Hindustan Unilever and power equipment maker BHEL rebounded on short covering, rising 0.8 percent and 0.37 percent, respectively. Disappointing volume growth hit HUL and poor numbers on every count hammered BHEL.

The broader markets were down over 1 percent as about two shares declined for every share advancing on the Bombay Stock Exchange.

In the second line shares, HDIL, UCO Bank, Union Bank and Prestige Estates were down 4-6 percent.

IRB Infrastructure gained 4 percent following better-than-expected numbers in September quarter.

On the global front, European markets gained 0.5-1 percent on positive earnings and successful bond auction in Italy. But the US markets will be closed for the second consecutive day on Tuesday due to Hurricane Sandy.

The BSE Sensex remained in bear grip since the announcement of monetary policy review by the Reserve Bank of India. But the upmove in Infosys, HUL and TCS capped the losses.

Shares of Dr Reddy's Labs gained 2 percent following stronger-than-expected quarterly earnings. Net profit grew by 32.4 percent year-on-year to Rs 407.4 crore as against analysts' forecast of Rs 365 crore. Even EBITDA margin improved 400 basis points YoY to 27 percent for the second quarter of FY13.

The 30-share BSE Sensex dropped 169 points to 18,466.73, weighed down largely by rate sensitives. Meanwhile, the 50-share NSE Nifty fell 60.25 points to 5,605.35.

Country's largest lender State Bank of India tanked 3.8 percent after the Reserve Bank of India raised the amount of provisioning against restructured loans to 2.75 percent as against 2 percent earlier, effective immediately. Bank of Baroda tumbled 4.7 percent while Punjab National Bank was down 3.8 percent.

Private sector lender ICICI Bank lost 2 percent while its rival HDFC Bank was down just 0.7 percent as analysts feel there would be minimal impact on its profitability.

The Central Bank today kept repo rate - a rate at which banks borrow from RBI, unchanged while cut cash reserve ratio by 25 basis points to 4.25 percent .

Engineering conglomerate Larsen & Toubro tumbled 2.5 percent and commercial vehicle maker was down 3 percent.

Shares of Hero Motocorp and Jindal Steel dropped over 2.5 percent.

Software services exporter Infosys and Wipro were up 1 percent while TCS gained 0.5 percent.

Power equipment maker BHEL and telecom operator Bharti Airtel rose marginally. FMCG major Hindustan Unilever moved up 1.4 percent.

Indian shares fell quite sharply with the NSE Nifty hitting the 5600 level - nearly a month low - due to weakness in banks, auto and real estate stocks after the Reserve Bank of India left repo rate unchanged, raised inflation forecast for FY13 to 7.5 percent from 7 percent earlier and reduced GDP projection to 5.8 percent for FY13 from 6.5 percent earlier.

Another reason behind the fall in lenders, especially state-owned ones, was that the RBI increased the amount of provisioning against restructured loans to 2.75 percent from 2 percent, effective immediately, as part of its monetary policy review.

Analysts feel Bank of Baroda, Punjab National Bank and State Bank of India will get largely impacted from this norm. These stocks were down 5.4 percent, 3.7 percent and 3.3 percent, respectively.

The 30-share BSE Sensex plummeted 148 points to 18,488 and the 50-share NSE Nifty went down 54 points to 5,611.60, though they have pared somewhat losses due to buying in technology stocks.

Country's largest software services exporter TCS and Infosys gained 1 percent each. FMCG major Hindustan Unilever rose 1 percent. Drug producer Dr Reddy's Labs went up 1.4 percent ahead of second quarter earnings today.

Commercial vehicle maker Tata Motors topped the selling list, losing over 4 percent and two-wheeler maker Hero Motocorp was down 3.5 percent.

Private oil & gas producer Reliance Industries and cigarette major ITC were down 0.7 percent each. Engineering and construction major Larsen & Toubro fell 2.6 percent.

The broader markets dropped 1 percent as about three shares declined for every share advancing on the National Stock Exchange.

The BSE Sensex dropped 200 points following the RBI kept repo rate unchanged and cut GDP forecast significantly. While announcing the half-yearly monetary policy review, the central bank said they cut cash reserve ratio by 25 basis points to 4.25 percent that to pre-empt prospective liquidity strain.

But the fall in rupee and equities was attributed majorly to unchanged in repo rate. Analysts were expecting at least 25 basis points cut in repo rate - a rate at which the banks borrow money from central bank.

Another negative was that the Reserve Bank has cut gross domestic product to 5.8 percent from 6.5 percent for current financial year 2012-13 and raised inflation projection to 7.5 percent from 7 percent earlier for the same period.

The BSE benchmark was down 189 points to 18,447 and the NSE benchmark fell 64.65 points to 5,601.

Even the Indian rupee, which appreciated to 53.88, fell by 9 to 54.17 against the US dollar.

Country's largest lenders State Bank of India and ICICI Bank tumbled 2.75 percent each. HDFC Bank was down 0.4 percent and HDFC fell 1 percent.

Engineering conglomerate Larsen & Toubro dropped 2.8 percent and commercial vehicle maker Tata Motors tanked 4 percent.

Realty stocks too hit quite badly post no change in repo rate. DLF, Unitech, Indiabulls Real and HDIL plunged 3-4 percent.

Index heavyweights Reliance Industries and ITC were down 0.8 percent.

Two-wheeler maker Hero Motocorp tanked more than 2 percent whereas shares of Infosys, HUL, Dr Reddy's Labs and Bharti outperformed, gaining 0.3-0.9 percent.

Indian equity benchmarks gained somewhat strength amid choppy trade, helped by banking and financials stocks ahead of monetary policy review by the Reserve Bank of India. The Indian rupee too appreciated by 18 paise to 53.90 against the US dollar, may be on policy rate cut hopes.

The 30-share BSE Sensex rose 41.21 points to 18,677.03 and the 50-share NSE Nifty went up 10.70 points to 5,676.30.

Analysts on an average expect the central bank to cut cash reserve ratio by 25 basis points but the repo rate cut, if it happens, will be positive for the market.

Hiren Ved, Director and CIO of Alchemy Capital Management believes a 25 basis point or so CRR cut is more likely given the current liquidity situation. "A repo rate, if it were to happen, will be taken positively by the market," he told CNBC-TV18 in an interview.

Country's largest private sector lender ICICI Bank jumped 1.3 percent while its rival State Bank of India was up 0.8 percent. HDFC and HDFC Bank gained 0.5 percent.

Software services exporter Infosys went up 1 percent and telecom operator Bharti Airtel climbed 1.5 percent. FMCG major Hindustan Unilever bounced back with 0.9 percent gains.

Drug producer Dr Reddy's Labs rose 1 percent ahead of second quarter earnings today whereas top car maker Maruti Suzuki fell 1 percent ahead of earnings.

Cigarette major ITC and private oil & gas company Reliance Industries declined 0.4-0.6 percent on profit booking.

Two-wheeler manufacturer Hero Motocorp and commercial vehicle maker Tata Motors were down 1.25 percent and 0.88 percent, respectively.

State-owned power equipment producer BHEL shed another 1 percent on disappointing numbers.

The BSE Sensex was directionless in early trade on Tuesday as investors awaited the decision of Reserve Bank of India that will announce its half-yearly monetary policy review.

The 30-share BSE Sensex fell 5 points to 18630 and the 50-share NSE Nifty was flat at 5,665.95.

Banking and financials stocks were on buyers' radar on hopes of cut in policy rates today. Top lenders State Bank of India and ICICI Bank rose 0.6-0.8 percent while housing finance company HDFC was up 0.5 percent.

Majority of analysts feel the central bank may cut repo rate by 25 basis points and cash reserve ratio by 25 basis points.

Sajiid Chinoy of JPMorgan believes a 25 bps rate cut is likely today, though it remains a close call. "In addition, given tight interbank liquidity, a 25 bps CRR cannot be ruled out to facilitate monetary transmission, though we remain more agnostic on the mix of instruments that could be used in the easing," he adds.

Power equipment maker BHEL shed another 1.5 percent following 6 percent decline yesterday post disappointing numbers in Q2FY13.

Country's largest car maker Maruti Suzuki dropped 1 percent ahead of quarterly earnings today.

Shares of Reliance Industries, ITC, ONGC, Coal India, Sun Pharma and Hero Motocorp were marginally under pressure.

Grasim was up 0.5 percent as its net profit jumped 48 percent year-on-year to Rs 620 crore in the second quarter of FY13.

In the second line shares, Suzlon Energy moved up 1.5 percent as the company submitted corporate debt restructuring (CDR) proposal with senior secured lenders.

Orbit Corporation gained 3 percent as its net profit almost doubled YoY to Rs 8.6 crore in Q2FY13.

Bharat Electronics tanked 5 percent as its net profit declined to Rs 80.2 crore in second quarter from Rs 125 crore YoY.

S Kumars tanked 4 percent after company's US subsidiary filed voluntary petition for bankruptcy.

SKS Microfinance plunged nearly 5 percent on higher than expected loss in the quarter. The company reported a loss of Rs 262 crore in Q2 as against loss of Rs 38 crore in previous quarter and loss of Rs 384 crore in a year ago quarter.

Colgate rose 1.5 percent as its net profit increased to Rs 145 crore in Q2 from Rs 99.5 crore in a year ago period.

IRB Infrastructure rose 3 percent ahead of numbers today,

Geometric and Firstsource bounced back with over 1 percent gains.

United Spirits climbed over 3 percent after yesterday's sharp fall.