Sensex slips on RBI rate cut, weaker manufacturing data
The benchmark Indian equity indices, after opening higher and going up to a record peak, traded marginally lower in the afternoon after a report showing weaker manufacturing activity and RBI repo rate hike
The benchmark Indian equity indices, after opening higher and going up to a record peak, traded marginally lower in the afternoon after a report showing weaker manufacturing activity and RBI repo rate hike. The Nikkei Manufacturing Purchasing Managers` Index decreased to 52.3 in July from June`s 53.1. Sensex slipped from record high to end 84.96 points lower at 37,521.62 as RBI hiked rates and Nifty ended 10.30 points to 11,346.20.
Sensex and benchmark Nifty had touched all-time high of 37,711.87 points and 11,390.55 points respectively, earlier in the day. However, following the manufacturing data release and the RBI announcement the gains did not last. Coal India, Lupin, Infratel, Dr. Reddy's and IOC helped Nifty from falling further. However, healthcare, consumer durables and oil, PSU banks and gas stocks were doing well. However, private banks and auto stocks were under selling pressure.
The RBI also raised its inflation projection for the second half of the year to 4.8 percent from 4.7 percent projected in June. The RBI expects inflation to go up to 5 percent in the first quarter of the next fiscal year. The RBI also voiced concerns over spiralling crude oil prices. The oil price hike affected the market adversely. RBI however remained bullish on strong economic activity supported by the monsoon and robust rural demand due to MSP hike. Five out of 6 MPC members voted in favour of a rate hike.
The Sensex opened at 37,643.87 points. The RBI has raised its repo rate by 25 basis point to 6.5 per cent in its third monetary policy review this year. The review has attracted negative reactions from the investors.