RBI’s caution on inflation spooks markets (Second Lead)
By IANSTuesday, January 25, 2011
MUMBAI - Indian equities markets, especially front-line stocks, were spooked after the Reserve Bank of India, having increased key lending rates by 25 basis points Tuesday, hinted at more rate hikes to rein in high inflation.
Reserve Bank of India (RBI) Governor Duvvuri Subbarao hiked the repurchase or repo rate to 6.5 percent from 6.25 percent and reverse repo rate to 5.5 percent from 5.25 percent. Other rates like cash reserve ratio and statutory liquidity ratio remained unaltered.
The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE), which opened at 19,227.42 points, closed at 18,968.62 points (provisional) - down 182.66 points or 0.95 percent from its previous close at 19,151.28 points.
The Sensex had climbed 189.71 points post-rate hike to 19,340.99 points.
The 50-scrip S&P CNX Nifty of the National Stock Exchange too followed a similar trajectory, ending 1.01 percent lower at 5,685.25 points.
Broader markets too edged lower with the BSE midcap index closing 0.42 percent down and the BSE smallcap index ending 0.29 percent lower.
Banking stocks were among the top losers, followed by FMCG, realty and healthcare scrips.
