By IANS
New Delhi : Despite a positive opening, Indian shares ended in the red Tuesday, as sentiments were dampened by the freeze on interest rates in the quarterly review of monetary and credit policy by the Reserve bank of India.
The 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE) opened the day at 18,346.49 points compared with the previous day’s close at 18,152.78 and was ruling at 18,476.12 after the first 20 minutes of trading.
At that level, the key index that had surged to a high of 18,467.07, was up 323.34 points, or 1.78 percent, as the stakeholders awaited the central bank announcement of the monetary policy review, expected around noon.
But soon after Reserve Bank of India (RBI) Governor Y. Venugopal Reddy unveiled the review, trading was marked by high volatility, and finally closed with the index closing with a loss of 60.84 points, or 0.34 percent.
Curiously, only five of the 13 sector-specific indices of the BSE closed in the red, including those for automobiles, banking, consumer goods and realty, while the remaining eight closed with gains.
Both the BSE mid-cap and the small-cap indices also ended on a positive note, with a gain of 0.43 percent and 0.72 percent, respectively. In addition, the advances and declines among group ‘A’ shares were also evenly matched at 111:105.
A similar trend was witnessed in the basket of Sensex shares, where a majority of 17 registered advances while the remaining 13 declined, led by ICICI Bank, down 4.19 percent, and State Bank of India, down 3.58 percent.
Hindustan Unilever, on the other hand, led the gainers, up 3.96 percent, followed by Hindustan Aluminium, up 3.42 percent, Cipla, up 3.33 percent, and Infosys Technologies, up 3.20 percent.
“The decision by the reserve bank to keep its key rates unchanged has clearly affected sentiments. Banking stocks especially came under selling pressures,” said an analyst with a leading brokerage in Mumbai.
In the policy review, the central bank left unchanged its benchmark bank rate, the reverse repo rate, the repo rate and cash reserve ratio (CRR) in a bid to manage liquidity and keep inflationary expectations under check.
While the bank rate is currently pegged at 6 percent, the reverse repo rate and the repo rate have been notified at 6 percent and 7.75 percent, respectively. The cash reserve ratio stands at 7.5 percent.
When trading began Friday, all the 13 industry-specific indices of the bourse were ruling in the positive territory, led by that for fast-moving consumer goods, up 2.96 percent, followed by 2.87 percent for the IT index.
Even among the 30 Sensex stocks, only two scrips – Bajaj Auto and ICICI Bank – were trading in the red. All the remaining 28 were in the positive territory, led by Oil and Natural Gas Corp.
The key index had closed Monday with a loss of 208.88 points, or 1.14 percent.