Political uncertainty drags Sensex down

‘RBI rate cut proved to be a complete non-event’

March 19, 2013 05:07 pm | Updated 11:42 pm IST - Mumbai

NEW DELHI: BSE SENSEX/ NSE NIFTY. PTI GRAHPICS(PTI3_19_2013_000121B)

NEW DELHI: BSE SENSEX/ NSE NIFTY. PTI GRAHPICS(PTI3_19_2013_000121B)

Even though the Reserve Bank of India (RBI) reduced policy rates, stock market indices plunged on Tuesday following several domestic and global issues,

The Bombay Stock Exchange benchmark index, Sensex, fell by 285.10 points to end at 19008.10.

Realty stocks led the fall by losing 3.63 per cent followed by capital goods (2.69 per cent), metal (2.59 per cent) and PSUs (2.08 per cent). All sectoral indices ended in the red.

“It was a turbulent Tuesday for the market,” said Amar Ambani, Head of Research, India Infoline Limited (IIFL).

“While the RBI supported the Government’s growth agenda by cutting the repo rate by 25 basis points, the tone remained hawkish. The DMK drama took the market and Parliament by storm resulting in a market collapse,” Mr. Ambani added.

On the National Stock Exchange (NSE), the 50-share Nifty index closed at 5745.95, losing 89.30 points.

Among the broader indices, BSE 100 lost 1.61 per cent, BSE 200 was down by 1.61 per cent, and BSE 500 closed with a loss of 1.57 per cent.

Mid cap and small cap stocks lost 1.37 per cent and 1.57 per cent respectively.

“As if unrest in the political world was not enough, the 2G spectrum issue returned to haunt the market and especially the bigwigs in the telecom world,” said Mr. Ambani. Shares of Bharti Airtel ended lower by 4.5 per cent.

“With all these developments, the RBI’s monetary policy meeting turned out to be a complete non-event as market participants completely ignored the reduction of key interest rates,” he added.

"The RBI is likely to cut the repo rate by a further 25 basis points as the year goes along. We expect RBI to keep rate unchanged in the annual monetary policy review on May 3,” said Mr. Ambani.

In Europe, markets declined sharply amid worries over the bailout plan for Cyprus.

Rupee falls 20 paise

PTI reports:

The rupee depreciated by 20 paise to close at 54.37 in line with decline in local equities. At the interbank foreign exchange market, the rupee commenced strong at 54.06 a dollar from the previous close of 54.17 and rallied further 53.90 on an initial rise in stocks. The rupee later turned bearish in tandem with equities and fell back to a low of 54.47 before settling at 54.37,

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