The Reserve Bank of India has cut Cash Reserve Ratio by 25 basis points to 4.25% this morning and has left Repo rate unchanged once again. The RBI's move will result in an infusion of Rs 17,500 crore into the banking system. The central bank has cut fiscal 2013 GDP growth forecast to 5.8% and raised inflation projection for FY 2013 to 7.5%.
Following the central bank's statement, the market declined this morning, dragging down the key indices Sensex and Nifty well off the day's highs.
The Sensex, which declined to 18,490.81, is currently down 122.66 points or 0.66% at 18,513.16. The Nifty is down 47.60 points or 0.8% at 5618.
Rate sensitive bank and automobile stocks have drifted down sharply. Realty stocks, which seemed to find some support, are easing down as well. Capital goods and consumer durables stocks are among the other major losers.
Power, metal and oil stocks are edging lower on selling pressure. Select FMCG, information technology and healthcare stocks are finding modest support. Midcap and smallcap stocks are mostly subdued.
In the banking space, ICICI Bank, State Bank of India, Union Bank of India, Yes Bank, Axis Bank, Bank of India, Bank of Baroda, Canara Bank, IDBI Bank, Kotak Bank and Punjab National Bank are down 1% - 3%. HDFC Bank, faring better, is down just marginally at present.
Andhra Bank, Allahabad Bank, Dena Bank, Indian Overseas Bank, Oriental Bank of Commerce, Syndicate Bank and Uco Bank, which are not part of the Bankex, are also trading sharply lower now.
Among automobile stocks, Hero Motocorp, Maruti Suzuki and Tata Motors are down 1.4% - 3%. Bajaj Auto is down 0.7%, while Mahindra & Mahindra is trading marginally down. Ashok Leyland is bucking the trend and trading slightly up.
Realty stocks DLF, DB Realty, HDIL, Indiabulls Real Estate, Prestige Estates, Sobha Developers and Unitech are down sharply on selling pressure.
Among capital goods stocks, heavyweights Larsen & Toubro and BHEL are down 2.3% and 1%, respectively. Bharat Electronics is down more than 4% on disappointing results. Siemens, Thermax and Crompton Greaves are also trading notably lower at present.
Hindalco, Tata Steel, Sterlite Industries, Tata Power, Jindal Steel, Coal India, Cipla, Sun Pharmaceutical Industries, ITC, Reliance Industries and ONGC are trading lower by 0.5% - 1.5%.
Dr Reddy's Laboratories is trading firm with a gain of a little over 1%. Bharti Airtel, Infosys and Hindustan Unilever are up 0.5% - 0.8% and Tata Consultancy Services is trading marginally up.