Market benchmark Sensex fell further after the Reserve Bank cut repo rate of 25 basis points, which was in line with market expectations, and was trading lower by 322 points at 25,077.13, while the broader NSE Nifty slipped below the crucial 7,700-mark. RBI Governor Raghuram Rajan also took a host of measures on the liquidity front, starting with the narrowing of policy rate corridor to 0.50 per cent from the earlier 1 percentage point, which resulted in the reverse repo rate—at which banks can park excess funds with the bank—being reset at 6 per cent.
Stating that the inflation objectives are closer to being realised and price rise will hover around the 5 per cent mark for the remainder of the fiscal, Rajan reaffirmed that the monetary policy will continue to remain accommodative to address the growth concerns.
The 30-share index, which had lost over 125 points in the opening trade, dropped further to quote 322.52 points or 1.27 per cent to 25,077.13 soon after RBI announced its first bi-monthly monetary review for 2016-17. The barometer had gained over 130 points in the previous session.
The wider National Stock Exchange index Nifty cracked below the crucial 7,700-mark by plunging 93.70 points or 1.21 per cent to 7,665.10. Brokers said the RBI’s decision to cut repo rate by 0.25 per cent to 6.5 per cent was largely in line with market expectations and failed to boost sentiment.
They added that no change in Cash Reserve Ratio (CRR), too had its bearing. The BSE banking index was trading 1.76 per cent lower at 18,124.90. On similar lines, the BSE Realty index was quoting 1.47 per cent down at 1,238.67 points.
Among rate sensitive scrips, ICICI Bank topped the list by falling 3.29 per cent, followed by SBI by 2.95 per cent, Axis Bank 1.26 per cent and HDFC Bank 0.31 per cent.