The stock markets were volatile today following the Reserve Bank policy review meet where Guv Raghuram Rajan announced that the cbank will keep key rate unchanged but reduced SLR to infuse liquidity in the financial system. The effect on BSE Sensex was immediate with the index plunging over 130 points in the afternoon trade.
The Sensex moved into the negative zone following the RBI policy but rose over 108 points after that, only to trade 160 points down later. It was trading 0.53 per cent, down 136.49 points at 25,586.87 at 1230 hrs. Raghuram Rajan RBI policy review: Read Full Speech
Similarly, the wide-based National Stock Exchange index Nifty was trading down 37.90 points, or 0.49 per cent, at 7,645.75.
Brokers said RBI's surprise move to slash SLR by 0.50 per cent to boost liquidity in the financial system seemed to boost trading sentiments for a while. But the trend reversed later.
In its policy review, RBI kept the key interest rate unchanged. It left the short-term lending rate or repo rate unchanged at 8 per cent, and the cash reserve ratio static at 4 per cent but slashed statutory liquidity ratio (SLR) by 0.5 per cent to unlock about Rs 40,000 crore into the system.