RBI Bats For Inflation Rather Than Slowdown

The Indian markets have lost all their morning gains as the RBI shocked them with a status quo stand on rate cuts. In an unexpected move, the central banker has kept the Repo rate and CRR unchanged on the back of high core inflation, which remains a major concern for the economy. According to a statement given in the RBI's review note, India's annual consumer price inflation (CPI) remained unchanged in May at 10.36%. After the announcement, the markets crashed immediately, taking the Sensex and Nifty down by 1% each.

The RBI's stand has hurt the interest rate-sensitive sectors such as Bankex and Realty, which are the top losers among the BSE sectoral indices. The two indices are down by 2.36% and 2.09% respectively. All the others are down in the range of 0.12%-1.09%.

The Asian markets continue to trade on a positive note on the back of positive news from Greece. The Greek opinion polls have brought some hope among investors over the austerity measure plans and the country remaining in the Euro zone.

The European markets opened in the green zone post the Greek election results, extending last week's gains. The major indices, FTSE, CAC and DAX, are up by 1.17%, 1.08% and 1.11% respectively. The poll results, which were declared yesterday, indicated that the New Democracy party had gained 29.7% of votes in the country’s second attempt in two months to form a government. The anti-austerity Syriza party was projected to finish second with 26.9% votes, followed by the formerly ruling Pasok party with 12.3%. The markets expect that the New Democracy and Pasok parties will probably join hands to hold majority.

Realty stocks too are under pressure as housing loan interest rates will continue to remain higher. Scrips like DLF, Indiabulls Real Estate, HDIL and Unitech are trading  lower by 3.84%, 3.20%, 2.29% and 2.56% respectively.

Allcargo Global Logistics is trading higher by 6% at Rs 135 on the back of its buyback plan. The company has announced that a board meeting will be held on Jun 20 to consider and approve the proposal.

The market breadth, which indicates the overall health of the market, is negative as of now. On the BSE, 1473 shares declined, 969 shares advanced and 132 shares remain unchanged.

The RBI's move, or rather its stasis, has definitely hurt the investors' sentiments, and this will keep the mood negative for today.