Sensex, Nifty under pressure; Midcap, Smallcap outperform

"With GDP growth projected at 7.8 percent in FY 2016,  India’s growth-inflation dynamics is on a more balanced footing now. Also we believe RBI has already set the platform to lower lending rates by providing ample liquidity and cutting repo rate. This should improve the corporate earnings profile and help in revival of the capex cycle which bodes well for the equity market," he adds.

01:00pm Market Check

The market continued to see selling pressure in afternoon trade led by banking & financials, auto, FMCG and pharma stocks. The Sensex declined 191.31 points to 28313.15 and the Nifty fell 62 points to 8597.90.

However, the broader markets outperformed benchmarks with the BSE Midcap and Smallcap indices rising 0.2 percent and 0.5 percent, respectively. About 1302 shares have advanced, 1199 shares declined, and 179 shares are unchanged on the BSE. Meanwhile, the Reserve Bank kept interest rates on hold at 7.50 percent today, waiting for more clarity on inflation after heavy rains raised uncertainty about food prices and seeking to grant banks more time to reflect its previous rate cuts.

The Reserve Bank of India's rate decisions are driven by domestic factors and the US Federal Reserve will not be the key factor while determining future rate moves, its chief Raghuram Rajan said after its annual policy review today. The country has adequate buffer against the impact from the Fed policy, Rajan added.

The central bank is also waiting to see policy transmission take place and banks over time will be forced to match markets and bring down rates, he added.