No rate cut: SBI,ICICI stocks battered

Interest rate sensitive counters including ICICI Bank,DLF,M&M took a beating on bourses.

Interest rate sensitive stocks including ICICI Bank,DLF,M&M took a beating on bourses today as investors,who were expecting the RBI to ease its tight monetary policy,were disappointed with the central bank maintaining status quo.

According to market experts,rate sensitive sectors had been gaining strengths in anticipation of a rate cut. The recent 75 basis points cut in cash reserve ratio had also pushed the share prices of companies associated with these sectors.

By keeping interest rates unchanged today the RBI dashed investors’ hopes and today’s fall was attributed to profit booking trend,they noted.

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“Markets were expecting a rate cut from the central bank and hence,were disappointed by the announcement of status quo. Banking stocks were the worst hit as they tanked in unison on the policy announcement,” Bonanza Portfolio Senior Research Analyst Shanu Goel said.

Shares of realty major DLF closed 4.76 per cent down over yesterday’s close. HDIL shed 3.72 per cent,Unitech declined 3.24 per cent and Oberoi Realty lost 1.83 per cent.

Following the sharp losses registered in these stocks,the BSE Realty index closed 2.66 per cent lower at 1,821.35 points today.

In the financial space,Bank of India lost 4.13 per cent,Canara Bank fell by 3.84 per cent,HDFC Bank plunged 3.05 per cent,ICICI Bank declined by 2.47 per cent,SBI dropped by 2.21 per cent. IDBI Bank was the worst hit losing 4.46 per cent in the session.

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However,some experts felt the RBI policy review was along expected lines. “RBI’s move was in line with expectations and it has maintained a status quo on rates given that it had already just cut CRR on Friday to address the increase liquidity strain in the market,” ICICI Prudential AMC Head Fixed Income Chaitanya Pande said.

We continue to believe that RBI will initiate rate action only in the first quarter of next fiscal,he noted.

These losses pushed the BSE Banking index down 2.60 per cent and it closed at 12,203.29 points.

In the auto pack,Ashok Leyland declined by 3.68 per cent,Mahindra & Mahindra lost 1.58 per cent and Bajaj Auto fell by 1.41 per cent. Hit by losses,the BSE Auto index lost 0.70 per cent to end the day at 10,132.48 points.

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The Reserve Bank today kept the interest rate unchanged for now. The benchmark policy interest rate (repo rate) at which RBI lends to banks has been kept unchanged at 8.5 per cent. The cash reserve ratio,the portion of deposits banks need to keep with RBI,has also been retained at 4.75 per cent. But this rate was reduced on March 10 by 0.75 percentage points to infuse Rs 48,000 crore in the system to ease liquidity.

In the broader market,the BSE benchmark Sensex closed at 17,675.85 points,down 1.36 per cent.