While all rate-sensitive stocks bore the brunt, real estate was the worst performer among BSE indices
Dalal Street found no cause for cheer in the RBI’s monetary policy, in which governor Rajan decided to keep key policy rates unchanged. After a highly volatile session and a smart late-day recovery, Indian equity markets ended the day on the flattish note.
The 30-share Sensex opened firm and rose over 105 points by rallying to 28,641.08 in early trade. However, it pared gains and fell to the day’s low of 28,274.36 after the announcement of the RBI policy statement. By the end of the day, the index had advanced 12.13 points or 0.04% to close at 28,516.59 led by gains in metals and consumer durable companies. The 50-share Nifty ended the day at 8,660.30 up by just 0.40 points.
Gopal Agrawal, CIO at Mirae Asset Global Investments (India) says, “I think that the policy was on expected lines and they will wait for further data to cut interest rates. Having said that, I believe we may see RBI cutting repo rates by another 50 basis points in the next one year.” On Tuesday, RBI in its first bi-monthly monetary policy statement, 2015-16 kept repo rates unchanged at 7.5%. Earlier RBI had slashed repo rates by 25 basis points each in January and March respectively.
However interest rate sensitive sectors like banking and real estate posted losses. The Bank Nifty closed at 18,469.30 down by 0.73% or 136.15 points. Among the big losers were Axis Bank which fell by 1.69%, ICICI Bank down 1.2%, Kotak Mahindra Bank which slipped 0.99% and SBI, which dipped 0.97%.
The BSE Realty was the worst performing sector in the sectoral indices and lost 1.62% to close at 1,771.05. Among realty scrips, Omaxe fell by 3.21%, DLF was down 2.99%, Indiabulls Real Estate lost 2.76% and Unitech dipped 2.56% on the BSE.
Andrew Holland, CEO of Ambit Investment Advisors said, “We were expecting the RBI governor to cut interest rates. Despite Tuesday’s status quo policy, we believe the RBI will cut key policy rates sooner rather than later. The equity market was disappointed as there was no major takeaway from the policy. The only thing which helped Indian markets were strong European markets on Tuesday.”
Foreign portfolio investor (FPIs) were net buyers to the tune of $23 million in the cash segment, showed provisional data from stock exchanges. Foreign funds have purchased over $ 6 billion so far in calendar 2015. “I think India will continue to witness inflows from foreign players because even now we remain in a sweet-spot. However, there might be some re-allocation of money,” concluded Agrawal.