Nifty slips below 5200 on unexpected hike in key rates

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The benchmark Nifty started the day with huge gap down, reacting to the unexpected hike in repo and reverse repo rates by 25 bps each by RBI. The central bank announced this hike ahead of Monetary Policy for 2010-11 on April 20.

However, the Nifty managed to recover more than 30 points and get back above the 5200 after initial reaction. Experts believe that the markets will settle down after the knee-jerk reaction.

Nandan Chakraborty of Enam said, "This will obviously affect interest rate sensitives in the near-term. The quantum of hike has been on the expected lines hence the markets are likely to settle down after the initial reaction." 

At 9:02 hours IST, the Nifty was trading at 5212, down 50 points and the Sensex was at 17424, down 153 points. 

The CNX Midacp went down 68 points to 7533 and the BSE Smallcap fell 64 points to 8430. The market breadth was negative; about 104 shares advanced while 659 shares declined on the NSE.

Among the frontliners, Unitech, ICICI Bank, DLF, HDFC, Jaiprakash Associates, Suzlon, Cairn, SAIL, SBI, Reliance Capital, Axis Bank and Tata Steel were seeing selling pressure.

However, Bharti Airtel gained 1.8%, as it has tied up USD 8.3 billion loan for Zain buy.

Cipla rose 0.5%, as it will replace Sun Pharma in the Sensex from May 3.

Midcap & Smallcap space:

HDIL, Dena Bank, Indiabulls Real, Ackruti City, United Bank of India and Bank of India were down 0.5-3%.

S Kumars was down 1.7% and Apollo Tyres down 2%.

NMDC tumbled 3% at Rs 349.

Global cues:

Asian markets declined on IMF debt warning and weakness in commodities. Hang Seng was down 1.9%. Kospi and Taiwan were down 1.1% each. Straits Times fell 0.5%. Shanghai was flat. Japan's Nikkei shut today.

IMF's John Lipsky, first deputy managing director said, "Advanced economies face 'acute' challenges tackling public debt.  All G7 countries, except Canada and Germany, will have debt-to-GDP ratios close to or exceeding 100% by 2014."