Profit booking after rate cut subdues market
Mumbai, Feb 7 (IANS) The Indian equity market failed to hold on to early gains made on the back of the Reserve Bank of India’s (RBI) suprise rate cut and ended on a flat to positive note on Thursday.
Analysts said profit-booking was the main reason for the fall.
Interest-sensitive auto stocks gained over 1 per cent while key banking stocks gained 0.04 per cent. But energy stocks closed in the red.
The market turned volatile after the RBI monetary policy announcement as investors started booking profits from the recent rally. Vinod Nair of Geojit Financial Services said the change in stance to neutral was in line with expectations but the rate cut was a surprise.
The S&P BSE Sensex closed 4.14 points (0.01 per cent) down at 36,971.09 from its previous close of 36,975.23. The Nify, however, settled 6.95 points higher (0.06 per cent) at 11,069.40.
"(RBI Governor) Shaktikanta Das gave a double dovish whammy. The repo rates were cut by 25 bps from 6.50 per cent to 6.25 per cent with immediate effect and the stance of the monetary policy was also shifted from ‘calibrated tightening’ to ‘neutral’, said Jaikishan Parmar of Angel Broking.
Among the reasons for the cut, said Parmar, was cooling of the consumer price index (CPI) inflation at 2.2 per cent, weak index of industrial production (IIP) and core sector numbers and the dovish approach adopted by the US Federal Reserve at its January meeting.
Sun Pharma led the gains on the BSE Sensex gaining over 4 per cent, while Bajaj Auto, Tata Motors, Tata Motors (DVR) and Hero MotoCorp increased in the 2-3 per cent range.
The index losers were Reliance Industries, Power Grid, HDFC, Larsen and Tubro and IndusInd Bank.