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The benchmark BSE Sensex today fell for the third straight day and ended 24 points lower after the RBI surprised investors with a rate hike and Maruti Suzuki shares tanked 8 per cent on lower-than-expected earnings.
After a higher start, the BSE Sensex plunged to the day's low of 20,554.28 soon after RBI Governor Raghuram Rajan hiked the repo rate by 0.25 per cent in a bid to curb inflation.
After tumbling over 153 points intra-day, markets digested the rate hike and most rate-sensitive banking and auto stocks gained on value-buying and on comments that RBI may pause rates going forward, said traders.
The 30-share BSE Sensex concluded the day at 20,683.51, down 23.94 points, or 0.12 per cent. The gauge has now lost 690 points in three straight sessions.
Also, the 50-share National Stock Exchange Nifty index declined 9.60 points, or 0.16 per cent, to end at 6,126.25, after touching a low of 6,085.95.
"This (rate hike) was against our expectation and a heavy street consensus of no change in rates...However, while we think RBI's action today is in some way part fallout from its aggressive December guidance, we think it has softened its guidance in this round and actually revealed its inclination to stay on hold in the coming months," Barclays said.
Maruti Suzuki led 13 BSE Sensex constituents lower. The car maker posted a 35.87 per cent increase in net profit to Rs 681.15 crore for the third quarter but its shares plunged 8 per cent. "Its results were in line with estimates on the topline and operating margins front but the bottomline came below our expectations," said brokerage ICICIdirect.com
A weakening Asian trend further influenced the domestic market sentiment. Yesterday, the index had fallen the most in five months amid a rout in emerging-markets on fears the US Fed would dial back its monthly bond purchases by another USD 10 billion. Investors avoided heavy bets ahead of the 2-day Federal Open Market Committee meet, which starts later today.
Sectorally, the BSE Teck sector index suffered the most by losing 1.06 per cent, followed by IT index (1.06 per cent), Healthcare index (0.79 per cent) and Bankex (0.30 per cent).
* BSE index falls 0.12 pct; NSE ends 0.16 pct lower
* Indian shares suffer biggest sales by foreign investors