The benchmark BSE Sensex and the broader NSE Nifty eased for a third straight session on Tuesday, dragged down by interest rate-sensitive stocks such as real-estate companies and banks after the central bank kept policy rates unchanged, while some weak corporate earnings also dampened sentiment.
India’s central bank held interest rates steady at 7.75 percent on Tuesday after easing monetary policy just three weeks ago, leaving its next move probably until after the government presents its annual budget at the end of this month.
Indian shares also mirrored trends across the region as most Asian stocks sagged on Tuesday amid growth concerns, while the Australian dollar plumbed six-year lows after the Reserve Bank of Australia cut interest rates to a record low.
Adding to the concerns, overseas investors sold Indian shares worth 6.3 billion rupees on Monday, after buying $2.9 billion so far this year and 11 continuous days of buying, provisional exchange and regulatory data showed.
“There was nothing extraordinary in the policy. So people took it as an option to exit positions. Further, earnings of some of the banks were very disappointing,” said Suresh Parmar, head, institutional equities at KJMC Capital Markets. “However, the underlying sentiment remains same. It’s still a buy-on-dips market.”
The benchmark BSE index eased 0.7 percent to 28,917.77 points, while the broader NSE index fell 0.61 percent to 8,743.15 points.
Interest rate-sensitive stocks fell with the bank Nifty index of the NSE down 1.9 percent after the policy review as a section of investors said “a minor rate cut would have been better”.
State Bank of India fell 1.8 percent while ICICI Bank was down 1.3 percent. Real-estate stocks also fell. DLF shed 1.8 percent while Unitech was down 3.1 percent. Shares in Punjab National Bank were down 5.6 percent after its non-performing assets grew unexpectedly.
However, oil explorers were among the gainers with Reliance Industries up 1.6 percent after a rebound in international crude prices.