The Sensex and Nifty closed slightly lower on Tuesday, snapping three sessions of gains, as investors booked profit after the central bank kept its policy interest rate unchanged, as was widely expected.
The broader NSE index ended down 33.1 points or 0.38 per cent at 8,678.25, while the benchmark BSE index closed 97.41 points or 0.35 per cent lower at 28,085.16.
Both the indexes dropped as much as 0.8 per cent earlier in the session.
Barring consumer durables, all other BSE sectoral indices ended down. Among them, oil & gas index fell the most by 0.88 per cent, healthcare 0.71 per cent, metal 0.69 per cent and FMCG 0.58 per cent, while consumer durables index was up 0.45 per cent.
Top five Sensex gainers were Coal India (+1.48%), ONGC (+1.33%), State Bank of India (+0.67%), HUL (+0.5%) and Axis Bank (+0.5%), while the major losers were Lupin (-5.03%), HDFC (-1.81%), Hero MotoCorp (-1.43%), Power Grid (-1.35%) and M&M (-1.13%).
Monetary policy review
Outgoing Reserve Bank of India Governor Raghuram Rajan kept both interest rates and the cash reserve ratio on hold, leaving it to his successor to decide if inflation is subsiding enough after the monsoon season to make a cut.
“Policy was in line with our expectations. It was Rajan's last policy and we weren't expecting anything dramatic given what the target for inflation and growth is,” said Sanjeev Bhasin, executive VP - markets at India Infoline.
Expectations are running high, however, for a 25 basis point cut in the repo rate to 6.25 per cent in the final three months of this year.
“We expect the new governor now to definitely cut rates in the next policy by around 25 basis points because I expect second-half should play out on account of moderating inflation post good monsoon,” Bhasin said.