Market chat: RBI rate cut fails to cheer market

The benchmark indexes Sensex and the Nifty fell around 1 percent each on Monday, with weak global cues and caution ahead of the RBI policy review weighing on sentiment. Though, the expectations are high from RBI’s governor Raghuram Rajan to cut its key repo rate to a four-year low to support the domestic economy at a time when consumer inflation is at a record low.

Foreign portfolio investors (FPIs) net sold shares worth Rs 1,922.16 crore during the week, including provisional figure of September 24, according to Sebi data. Markets remained closed on Friday for Eid.

The major losers were Tata Motors (4 per cent), Coal India (2.75 per cent), Infosys (2.62 per cent), Vedanta (2.57 per cent), Sun Pharma (2.50 per cent) and Tata Motors (3.84 per cent).

Small-cap and Mid-indices were also sharply lower between 1.21 percent and 1.57 percent.

The market breadth turned negative as 1,590 stocks ended in the red while 1,136 finished higher and 131 ruled steady.

“If RBI provides a neutral or a dovish stance it will be positive for the market”. Investors failed to draw any sense of relief with Niti Aayog vice-chair man Arvind Panagariya’s statement that the economy is now in a much better shape than before and backs the idea of aggressive rate cuts. ICICI Bank, the nation’s largest private lender, closed unchanged at 268.55 rupees. “Given the volatility in the global currency and the likelihood of a USA rate hike by Dec-15, the commentary is likely to be hawkish and may not be taken positively by the market”.

The S&P BSE healthcare index tumbled by 80.25 points, FMCG index decreased by 66.32 points and power index dwindled by 57.92 points.

Achin Goel, head, wealth management and financial planning, Bonanza Portfolio, said, “Outcome of RBI’s monetary policy meet on Tuesday will decide the trend of the markets in the near term”.

In forward market today, premium for dollar declined further on sustained receivings from exporters.

SBI shares have fallen about 10% in the last six months.