Sensex Closes Lower After RBI Keeps Rates Unchanged

Mumbai, Oct 9 (PTI) Benchmark Sensex reversed its gains and closed lower by 167 points on Wednesday due to profit-taking in select blue-chips in the last hour even as the RBI took the first step towards a rate cut in its monetary policy review.

Erasing its early gains, the 30-share BSE Sensex fell 167.71 points or 0.21 per cent to close at 81,467.1. The index opened higher and later surged 684.4 points to hit an intraday high of 82,319.21 as RBI Governor Shaktikanta Das left the interest rate unchanged but changed the stance to neutral. However, sharp gains in blue-chips attracted profit taking by cautious investors ahead of the start of earnings season on Thursday.

The NSE Nifty dropped 31.20 points or 0.12 per cent to end at 24,981.95. In the intraday trade, it jumped 220.9 points or 0.88 per cent to hit a high of 25,234.05.

The Reserve Bank of India (RBI) kept its key interest rate unchanged on Wednesday but took the first step towards a rate cut as it eased its relatively hawkish policy stance to 'neutral'.

The monetary policy committee, which included three RBI officials and an equal number of new external members, voted five-to-one to keep the benchmark repurchase or repo rate - which governs the interest rate of home, auto, corporate and other loans - at 6.5 per cent for a 10th straight policy meeting.

Among the 30 Sensex companies, ITC, Nestle India, Hindustan Unilever, Reliance Industries, Larsen & Toubro and HDFC Bank were among the major laggards.

On the contrary, Tata Motors, Tech Mahindra, State Bank of India, Maruti Suzuki India, Bajaj Finance, Axis Bank, Bajaj Finserv and Bharti Airtel were among the gainers.

"An upward revision in Q3FY25 inflation reiterates that the sticky inflation continues to remain a concern for the RBI and led investors to book profit towards the close. The volatility in input prices and the impact on margin dragged the FMCG stocks," Vinod Nair, Head of Research, Geojit Financial Services said.

The change in RBI's stance to neutral was favourable and expected, but the commentary is not pointing to a rate cut in the near term, Nair added.

In the broader market, the BSE midcap gauge jumped 1.06 per cent and smallcap index climbed 1.21 per cent.

Sector-wise, realty surged by 2.21 per cent, while healthcare climbed by 1.68 per cent, Power by 1.18 per cent, Consumer Discretionary by 1.09 per cent, Industrials by 0.96 per cent and Auto by 0.84 per cent.

On the other hand, FMCG fell 1.31 per cent, Energy (0.78 per cent), Oil & Gas (0.64 per cent) and Metal went down by 0.08 per cent.

Torrent Power shares jumped over 6 per cent to settle at Rs 1,935.20 apiece, after the company said it has secured a contract from the Maharashtra government to supply 2,000 megawatt energy storage capacity from its upcoming plant in the state.

During the day, it surged 9.16 per cent to hit its 52-week high of Rs 1,983.70 apiece on the exchange.

Interest rate-sensitive auto, banking, realty and financial services stocks rallied post-RBI monetary policy decision.

SpiceJet's shares rose nearly 5 per cent to end at Rs 65.76 per piece after the budget carrier said it has amicably settled a USD 132-million dispute with aircraft leasing firm Babcock & Brown Aircraft Management (BBAM).

"Markets lost ground in the second half and slipped into the red on selective profit-taking as investors resorted to caution in the run-up to the start of the second quarter earnings season," Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said.

For markets to perform well going ahead, strong conviction is required and earnings season will be the key thing to look out for over the next few weeks, Tapse added.

Despite late selling and profit-taking by investors, the market capitalisation of BSE-listed firms soared by Rs 2.63 lakh crore to Rs 4,62,14,144.39 crore (USD 5.50 trillion).

A total of 2,705 stocks advanced, while 1,248 declined and 96 remained unchanged on the BSE.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 5,729.60 crore on Tuesday, while Domestic Institutional Investors (DIIs) bought equities worth Rs 7,000.68 crore, according to exchange data.

In Asian markets, Shanghai, Hong Kong, and Seoul settled in negative territory while Tokyo quoted in the positive territory. European markets were trading higher in mid-session deals. US markets ended with gains in overnight deals on Tuesday.

Global oil benchmark Brent Crude climbed 0.87 per cent to USD 77.85 a barrel in futures trade.