Nifty breaches 8650, Sensex falls 190 pts post RBI policy

Moneycontrol Bureau12:58 pm RBI policy analysis: As expected RBI maintained its status quo on the policy rate with an accommodating standpoint, Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services said.Despite increase in CPI trajectory, RBI maintained the target at 5 percent for March 2017, but with an increasing risk from 7th pay commission and global uncertainties. "Due to which today we are seeing some correction in interest rate sensitive stocks. The governor highlighted a concern that in spite of improvement in liquidity and reduction in cost of funds, the customers have been largely refrained from this benefit. On a positive note RBI has provisioned the forthcoming FCNR redemption, which will provide stability in the currency market," Nair said.12:53 pm FCNR redemptions: Allaying fears of market disruption in view of USD 20 billion worth of redemptions in foreign deposit accounts in the coming months, the Reserve Bank today said it will continue with domestic liquidity operations and foreign exchange interventions to ensure smooth repayments.

In the Third Bi-monthly Policy Statement for 2016-17, RBI Governor Raghuram Rajan said that as regards the management of the imminent FCNR(B) redemptions, the central bank has been frontloading liquidity provision through open market operations and spot interventions/deliveries of forward purchases.

"The Reserve Bank will continue with both domestic liquidity operations and foreign exchange interventions that should also enable management of the FCNR(B) redemptions without market disruptions," he said.

12:48 pm Anti-dumping duty: India today slapped anti-dumping duty on import of hot-rolled steel products from six nations, including China and South Korea, in a bid to shield domestic manufacturers against cheaper inward shipments.

An anti-dumping duty of USD 474-557 per tonne was imposed on 'hot-rolled flat products of alloy or non-alloy steel' import from China, Japan, South Korea, Russia, Brazil and Indonesia, the Department of Revenue in the Ministry of Finance said in a notification.

The duty would be in force for six months till February 7, 2017.

The anti-dumping duty was imposed on recommendation of the Directorate General of Anti Dumping (DGAD).

12:43 pm HDFC's Mistry on rate transmission: On Rajan's worry regarding the various stumbling blocks in transmission of previous rates cuts by banks, Mistry said one possible reason for the slow transmission could be the incremental funding with banks is coming largely from high cost fixed deposits compared to low-cost current and saving account. Only when the incremental cost of funding reduces will banks have the opportunity to pass on benefit of lower interest rates to customers, Mistry says.12:40 pm Europe opens: European stocks opened slightly lower as investors paused for breath as oil prices retreated and US markets closed lower overnight.

The pan-European STOXX 600 was down 0.18 percent.

European markets have been moving higher since the Brexit vote in late June caused turmoil in financial markets with easy monetary policy from central banks in the region helping stocks. But markets in the US closing lower on Monday as the Federal Reserve moves in the opposite direction towards an interest rate hike.12:35 pm Policy reactions: "RBI keeping the status quo is in line with the inflationary pressure and achieving sustainable growth on the economy. RBI in past has taken considerable steps to infuse liquidity in the market however the banks have not passed on the benefits of rate cuts to home buyers. We expect RBI to relax its monetary policies in near future to boost sentiments and ease the burden of EMIs on customers," Aman Agarwal, Director, KV Developers & Governing Council Member NAREDCO said.12:30 pm Godrej Properties Q1 misses estimates: Profit grew by 9.2 percent to Rs 43 crore in April-June quarter compared with Rs 40 crore in year-ago period.Revenue jumped 52.6 percent to Rs 303.8 crore on yearly basis.Profit was estimated at Rs 51 crore on revenue of Rs 482 crore and operating profit was expected at Rs 75 crore with margin at 16 percent.EBITDA increased 8.3 percent to Rs 39.7 crore and margin at 13.1 percent for the quarter.12:22 pm Nifty breaches 8650: Equity benchmarks extended fall on profit booking after the Reserve Bank of India announced monetary policy.The Sensex shed 189.65 points or 0.67 percent to 27992.92 and the Nifty declined 62.25 points or 0.71 percent to 8649.10.About two shares declined for every share rising on the BSE.12:20 pm RBI on GST: The passage of the Goods and Services Tax (GST) Bill augurs well for the growing political consensus for economic reforms.While timely implementation of GST will be challenging, there is no doubt that it should raise returns to investment across much of the economy, even while strengthening government finances over the medium-term. This should boost business sentiment and eventually investment.12:16 pm Losers: HDFC, ITC, HDFC Bank, Asian Paints and Mahindra & Mahindra were top five contributors to Sensex' fall, down between 1 percent and 2 percent.12:11 pm Lupin falls ahead of Q1 earnings: Pharma major Lupin's first quarter (April-June) profit is seen rising 48 percent year-on-year to Rs 777.8 crore and revenue may increase 38 percent to Rs 4,347.1 crore on strong US business, according to average of estimates of analysts polled by CNBC-TV18.

Operating profit (EBITDA - earnings before interest, tax, depreciation and amortisation) is likely to jump 64.6 percent to Rs 1,344.2 crore and margin may expand 500 basis points to 31 percent compared with year-ago period.12:08 pm Reaction on policy: "In the coming months, the disinflationary impact will be upheld by a favorable monsoon and structural policy reforms instituted by the government. Hence, notwithstanding the current pause, this will engender 50-100 bps space for incremental monetary easing before end of FY17," Rana Kapoor, MD & CEO, YES Bank said.Also read - RBI Policy LIVE: No rate action in line with expectations, says Keki Mistry12:00 pm Market Check: Equity benchmarks traded near day's low in noon trade with the Nifty struggling below 8700 level after the Reserve Bank of India kept policy rates unchanged, saying monetary policy stance remains accommodative.

The 30-share BSE Sensex was down 110.46 points to 28072.11 and the 50-share NSE Nifty declined 39.35 points to 8672. About 1343 shares declined against 1047 advancing shares on the BSE.The RBI has kept repo rate, at which banks borrow money from the central bank, unchanged at 6.5 percent and cash reserve ratio at 4 percent. It also retained FY17 GDP growth forecast at 7.6 percent.

"The stance of monetary policy remains accommodative and will continue to emphasise the adequate provision of liquidity," the RBI said, adding risks to the inflation target of 5 percent for March 2017 continue to be on the upside.Nifty Bank index fell marginally and PSU Bank index pared gains.