Sensex, Nifty end RBI policy day in red; HDFC Bank top loser

Key indices ended in the red Tuesday after an intra-day spurt on policy rate cuts by the Reserve Bank of India. The weak closing shows that the market had already factored in a 25 basis point-cut in the repo, the rate at which RBI lends to banks.

The Sensex closed at 19990.90, down 112.45 points after touching 20,203.66 earlier in the day. The Nifty closed at 6049.90, down 24.90 points after touching a high of 6,111.80 intra-day.

Markets began to lose steam with sectors across board witnessing marginal to sever cuts. Banking stocks that moved up after the Reserve Bank of India reduced its policy interest rate by a widely expected 25 basis points, fell  towards the end of trading day .

Private sector banks like Axis Bank, ICICI Bank, HDFC, Kotak Mahindra remained in the green. At 14.12 PM, the Sensex was down 79.96 points or 0.40% at 20023.39, and the Nifty fell 17.70 points or 0.29% at 6057.10. the midcap index, which recovered in the initial trade, succumbed to profit breaking.

IVRCL was seeing another bad bout in the market. The stock was quoting at Rs 31.90, down Rs 3.90, or 10.89%.

Markets turned volatile although the Nifty moved around the 6100 level after the Reserve Bank of India reduced its policy interest rate by a widely expected 25 basis points. Heading into futures and options expiry later in the week, stock markets are expected to remain volatile.
The RBI also unexpectedly reduced the cash reserve ratio (CRR), the share of deposits banks must keep with the central bank, by 25 bps to 4 percent, which will infuse an additional Rs 180 billion into the banking system.

At 13.09 PM, the Sensex was trading up 12.50 points at 20115.85, and the Nifty gained 14.60 points to at 6090.

Taking advantage of the cumulative impact of this largesse, rate sensitives including  banks and real estate stocks inclined forward. Axis Bank raced ahead with twin benefits of rate cuts and QIP issue and gained 5.37 percent. ICICI Bank too showed smart recovery with 2.69 percent gains. However, SBI, Kotak Mahindra and HDFC were trading with moderate gains. HDFC Bank, IndusInd Bank and Yes Bank saw a sharp decline, defying the overall mood in the market. SBI, ICICI Bank and Axis Bank were most active on the NSE.

Oil and gas stocks are having a rough day with Refinery major HPCL trading at Rs 334.10 down 2.12%. Other heavyweights - Reliance Industrie, ONGC, IOC, GAIl and OIl India - suffered marginal to significant cuts.

Markets made a smart recovery and yields softened marginally after the Reserve Bank of India announced a 25 bps cuts each in repo and CRR .

Nifty made a turn towards 6100 and rate sensitives reacted in response to the rate cut move. At 11.15 AM, the Sensex was up 19.55 points at 20122.90, and the Nifty gained 13.45 points at 6088.25.

Banks were trading up with SBI gaining 0.56 percent followed by marginal rise in Kotak Mahindra Bank, ICICI Bank and HDFC. Axis Bank leapt 4.11 percent, however, much of the gain was due the QIP book launched yesterday. HDFC Bank was the top loser registering 1.13 percent cut.

In the realty space, Shobha Developer and Oberoi Realty jumped 2.65 pecent and 2.40 percent respectively, while DLF and Pantaloon inched up marginally. After losing for a few consecutive sessions, HDIL moved up 1. 25 percent.

Cipla, Tata Power, Hero MotpCorp, Bharti Airtel and Jindal Steel were the top gainers on the Sensex gaining around 1 percent each.

In the midcap sapce, Persistent Systems was trading with 2.64 percent gains after losing in yesterday's session. Other midcap gainers include Amara Raja Batteries, Shree Renuka and Fresenius Kabi.

The markets opened flat after the Reserve Bank took a hawkish stance in its macroeconomic survey released yesterday. RBI sounded a note of caution- saying a widening current account deficit is a constraint on easing monetary policy. The tone in RBI's macroeconomic survey report suggests it will continue a calibrated stance as inflation remains above its comfort zone.  A CNBC poll suggests that markets are expecting a 25 bps cut.

At 09.17 AM, the Sensex was down 11.68 points or 0.10% at 20091.67, and the Nifty slipped 3.00 points at 6071.80.

Frontline banks opened subdued. State Bank, ICICI Bank, HDFC Bank and HDFC were mildly negative. Axis Bank gained 1.7 percent after it launched its QIP book yesterday.
Sterlite Industries, Glenmark Pharma, Crompton Greaves, Reliance Capital and IDEA Cellular will be announcing their quarterly result. These were trading at Rs 113.85 (down 0.18 percent), Rs 14 (up 2.80 percent), Rs 479 (up 0.6 percent), and Rs 113 (up 0.18 percent).

Maruti Suzuli remained the top trading Sensex stock, rising 1.24 percent, followed by Bajaj Auto which rose a tad less than one percent. ONGC and Tata Motors were the top losers on the Sensex with 1.06 percent and 0.68 percent cuts.

Globally, Wall Street consolidated on mixed eco data while Nasdaq got supported from Apple, which rebound 2.3% yesterday. In a major move, Fitch scaled down possibility of a US downgrade in near term and hoped Congress now has the space to focus on substantive fiscal policy choices.

Europe too closed mixed and was impacted by issues related to Spanish bank restructuring.