Markets Top Gainers, Markets Top Losers
After a higher start, the BSE Sensex plunged to the day's low of 20,554.28 soon after RBI Governor Raghuram Rajan hiked the repo rate by 0.25 per cent in a bid to curb inflation.
After tumbling over 153 points intra-day, markets digested the rate hike and most rate-sensitive banking and auto stocks gained on value-buying and on comments that RBI may pause rates going forward, said traders.
The 30-share BSE Sensex concluded the day at 20,683.51, down 23.94 points, or 0.12 per cent. The gauge has now lost 690 points in three straight sessions.
Also, the 50-share National Stock Exchange Nifty index declined 9.60 points, or 0.16 per cent, to end at 6,126.25, after touching a low of 6,085.95.
"This (rate hike) was against our expectation and a heavy street consensus of no change in rates...However, while we think RBI's action today is in some way part fallout from its aggressive December guidance, we think it has softened its guidance in this round and actually revealed its inclination to stay on hold in the coming months," Barclays said.
Maruti Suzuki led 13 BSE Sensex constituents lower. The car maker posted a 35.87 per cent increase in net profit to Rs 681.15 crore for the third quarter but its shares plunged 8 per cent. "Its results were in line with estimates on the topline and operating margins front but the bottomline came below our expectations," said brokerage ICICIdirect.com
A weakening Asian trend further influenced the domestic market sentiment. Yesterday, the index had fallen the most in five months amid a rout in emerging-markets on fears the US Fed would dial back its monthly bond purchases by another USD 10 billion. Investors avoided heavy bets ahead of the 2-day Federal Open Market Committee meet, which starts later today.
Sectorally, the BSE Teck sector index suffered the most by losing 1.06 per cent, followed by IT index (1.06 per cent), Healthcare index (0.79 per cent) and Bankex (0.30 per cent).
* BSE index falls 0.12 pct; NSE ends 0.16 pct lower
* Indian shares suffer biggest sales by foreign investors in 5 months
* Just Dial shares plunge; earnings disappoint
Indian shares hit 2-month low on surprise rate hike
(Reuters) - Indian shares edged lower, falling for a third consecutive session on Tuesday, after hitting their lowest intraday level in two months as lenders such as Axis Bank were hit by an unexpected interest rate hike by the central bank. The Reserve Bank of India raised interest rates by 25 basis points in a bid to contain inflation, although it softened the concerns on economic growth by signalling it did not foresee any further near-term monetary policy tightening should retail prices ease as projected.
The RBI had previously raised interest rates by 25 bps each in September and in October, but left policy on hold last month. Indexes were also hit as Maruti Suzuki Ltd shares slumped 8 percent, posting their biggest single-day fall in 1-1/2 years, after the automaker announced a new plant in Gujarat that would be owned by Suzuki Motor Corp.
That would mean Maruti Suzuki would enjoy only marketing margins from the production at the plant, analysts tracking the sector said.
"Markets could remain volatile on surprise rate hike and ahead of Fed meet outcome. Even RBI guidance seems unnecessarily dovish to me," said Phani Sekhar, fund manager at Angel Broking.
The benchmark BSE index fell 0.12 percent, or 23.94 points, to end at 20,683.51, to mark its lowest close since Dec. 17, 2013
The broader NSE index lost 0.16 percent, or 9.60 points, to end at 6,126.25.
Both indexes earlier hit their lowest intraday level since Nov. 28.
Shares are expected to remain volatile ahead of the conclusion of the U.S. Federal Reserve two-day meeting on Wednesday amid widespread expectations of a continued wind down in its monetary stimulus.
Overseas investors sold Indian cash shares worth of 13.34 billion rupees ($210.9 million) on Monday, the biggest single-day sale since Aug. 27 amid turmoil in emerging markets.
India's bank shares fell as much as 2 percent after the rate hike but eventually ended down 0.3 percent on the back of the RBI's more dovish statement.
Among state-owned banks, Canara Bank fell 1.8 percent, while Bank of India lost 0.6 percent.
Local search service provider Just Dial Ltd plunged 12.9 percent as its October-December quarter earnings fell short of some analysts' expectations.
However among stocks that gained, Ranbaxy Laboratories Ltd rose 2.8 percent on value buying after falling 26 percent over Friday and Monday following a ban by U.S. drug regulator on more of its products.
FACTORS TO WATCH
* Dollar stabilises, Aussie up as emerging sell-off eases
* Oil rises to $107 as chill expected to drain U.S. stocks
* Emerging market rout pauses ahead of Turkey
* Foreign institutional investor flows