Markets dip on RBI policy review but remain in the green

The Indian markets continue to trade in the green zone, though they slipped in the late afternoon trade when the RBI announced its mid-quarter review policy.

The RBI has maintained its key policy rates – CRR, SLR, Repo and Reverse Repo Rate – as is. The unchanged stance on the key policy rates augurs well for the Indian market, as there will not be any rate hikes. Also, the central bank clearly stated that the downside risk in growth has increased, and with inflation giving some relief, further rate hike will not be warranted.

Investors will keep a watch on the rupee that lost 2% yesterday at 52.65 against the dollar, after the RBI’s new policy annoucement to curb speculation in the currency market.

Asian shares too continued to trade positively for the first time in the last 4 days, after the US released better-than-expected economic data, indicating that the economy is gaining strength. This further helped investor confidence globally. However, fears over the Euro zone debt crisis persist among investors.

The European markets opened on a positive note, with marginal gains. They extended the gains from the previous session. The signs of an improving US economy improved investor sentiment.

Back home, all the BSE sectoral indices barring IT are trading positively, with gains between 0.5%-2.5% each.

Except for a few companies, all the Sensex shares are trading positively. Tata Motors, Bharti Airtel, M&M and ONGC are leading, with gains between 2%-3% each.

The IT stocks remained among the losers. Infosys, TCS and Wipro were trading down by 0.5-1.5% each due to the appreciation in the rupee.

The market breadth, which indicates the overall health of the market, is positive. On the BSE, 1439 shares rose and 1042 shares fell. 122 shares remained unchanged.

We expect the markets to remain positive for the rest of the day, and advise readers to play with caution.