Sensex slips 200 pts as RBI keeps repo rate unchanged

The BSE Sensex dropped 200 points following the RBI kept repo rate unchanged and cut GDP forecast significantly. While announcing the half-yearly monetary policy review, the central bank said they cut cash reserve ratio by 25 basis points to 4.25 percent that to pre-empt prospective liquidity strain.

But the fall in rupee and equities was attributed majorly to unchanged in repo rate. Analysts were expecting at least 25 basis points cut in repo rate - a rate at which the banks borrow money from central bank.

Another negative was that the Reserve Bank has cut gross domestic product to 5.8 percent from 6.5 percent for current financial year 2012-13 and raised inflation projection to 7.5 percent from 7 percent earlier for the same period.

The BSE benchmark was down 189 points to 18,447 and the NSE benchmark fell 64.65 points to 5,601.

Even the Indian rupee, which appreciated to 53.88, fell by 9 to 54.17 against the US dollar.

Country's largest lenders State Bank of India and ICICI Bank tumbled 2.75 percent each. HDFC Bank was down 0.4 percent and HDFC fell 1 percent.

Engineering conglomerate Larsen & Toubro dropped 2.8 percent and commercial vehicle maker Tata Motors tanked 4 percent.

Realty stocks too hit quite badly post no change in repo rate. DLF, Unitech, Indiabulls Real and HDIL plunged 3-4 percent.

Index heavyweights Reliance Industries and ITC were down 0.8 percent.

Two-wheeler maker Hero Motocorp tanked more than 2 percent whereas shares of Infosys, HUL, Dr Reddy's Labs and Bharti outperformed, gaining 0.3-0.9 percent.

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At 10:30 hours IST: Nifty flat to positive; Rupee rises above 54/USD

Indian equity benchmarks gained somewhat strength amid choppy trade, helped by banking and financials stocks ahead of monetary policy review by the Reserve Bank of India. The Indian rupee too appreciated by 18 paise to 53.90 against the US dollar, may be on policy rate cut hopes.

The 30-share BSE Sensex rose 41.21 points to 18,677.03 and the 50-share NSE Nifty went up 10.70 points to 5,676.30.

Analysts on an average expect the central bank to cut cash reserve ratio by 25 basis points but the repo rate cut, if it happens, will be positive for the market.

Hiren Ved, Director and CIO of Alchemy Capital Management believes a 25 basis point or so CRR cut is more likely given the current liquidity situation. "A repo rate, if it were to happen, will be taken positively by the market," he told CNBC-TV18 in an interview.

Country's largest private sector lender ICICI Bank jumped 1.3 percent while its rival State Bank of India was up 0.8 percent. HDFC and HDFC Bank gained 0.5 percent.

Software services exporter Infosys went up 1 percent and telecom operator Bharti Airtel climbed 1.5 percent. FMCG major Hindustan Unilever bounced back with 0.9 percent gains.

Drug producer Dr Reddy's Labs rose 1 percent ahead of second quarter earnings today whereas top car maker Maruti Suzuki fell 1 percent ahead of earnings.

Cigarette major ITC and private oil & gas company Reliance Industries declined 0.4-0.6 percent on profit booking.

Two-wheeler manufacturer Hero Motocorp and commercial vehicle maker Tata Motors were down 1.25 percent and 0.88 percent, respectively.

State-owned power equipment producer BHEL shed another 1 percent on disappointing numbers.

At 9:20 hours IST: Sensex volatile; banks gains ahead of RBI policy

The BSE Sensex was directionless in early trade on Tuesday as investors awaited the decision of Reserve Bank of India that will announce its half-yearly monetary policy review.

The 30-share BSE Sensex fell 5 points to 18630 and the 50-share NSE Nifty was flat at 5,665.95.

Banking and financials stocks were on buyers' radar on hopes of cut in policy rates today. Top lenders State Bank of India and ICICI Bank rose 0.6-0.8 percent while housing finance company HDFC was up 0.5 percent.

Majority of analysts feel the central bank may cut repo rate by 25 basis points and cash reserve ratio by 25 basis points.

Sajiid Chinoy of JPMorgan believes a 25 bps rate cut is likely today, though it remains a close call. "In addition, given tight interbank liquidity, a 25 bps CRR cannot be ruled out to facilitate monetary transmission, though we remain more agnostic on the mix of instruments that could be used in the easing," he adds.

Power equipment maker BHEL shed another 1.5 percent following 6 percent decline yesterday post disappointing numbers in Q2FY13.

Country's largest car maker Maruti Suzuki dropped 1 percent ahead of quarterly earnings today.

Shares of Reliance Industries, ITC, ONGC, Coal India, Sun Pharma and Hero Motocorp were marginally under pressure.

Grasim was up 0.5 percent as its net profit jumped 48 percent year-on-year to Rs 620 crore in the second quarter of FY13.

In the second line shares, Suzlon Energy moved up 1.5 percent as the company submitted corporate debt restructuring (CDR) proposal with senior secured lenders.

Orbit Corporation gained 3 percent as its net profit almost doubled YoY to Rs 8.6 crore in Q2FY13.

Bharat Electronics tanked 5 percent as its net profit declined to Rs 80.2 crore in second quarter from Rs 125 crore YoY.

S Kumars tanked 4 percent after company's US subsidiary filed voluntary petition for bankruptcy.

SKS Microfinance plunged nearly 5 percent on higher than expected loss in the quarter. The company reported a loss of Rs 262 crore in Q2 as against loss of Rs 38 crore in previous quarter and loss of Rs 384 crore in a year ago quarter.

Colgate rose 1.5 percent as its net profit increased to Rs 145 crore in Q2 from Rs 99.5 crore in a year ago period. 

IRB Infrastructure rose 3 percent ahead of numbers today,

Geometric and Firstsource bounced back with over 1 percent gains.

United Spirits climbed over 3 percent after yesterday's sharp fall.