Markets subdued as traders wait for rate hike

With strong indications of a rate hike by the Reserve Bank of India (RBI), Indian equities markets were trading subdued Tuesday morning.

RBI Governor D. Subbarao is expected to announce rate hikes when he conducts the first quarterly review of the monetary policy for this fiscal at his Mint Road headquarters here.

An indication came from the review of the macroeconomic and monetary developments for the first quarter Monday, in which the apex bank said inflationary pressures will remain in the short term due to high wage costs and support prices, despite near-normal monsoon.

The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE), which opened at 18,898.19 points, was ruling at 18,873.96 points, up 2.67 points or 0.01 percent from its previous close at 18,871.29 points.

If the RBI hikes rates, it would be the 11th time it does that since January 2010 and could result in commercial banks passing on the increase to lenders by making loans to individuals and companies that much costlier.

The 50-scrip S&P CNX Nifty of the National Stock Exchange was also trading lacklustre at 5,681.35 points, up 0.02 percent.

Broader markets too were tardy. The BSE midcap index was ruling 0.24 percent up and the BSE smallcap index was trading higher by a similar quantum.

The market breadth at the BSE was almost mixed with 1,155 stocks advancing, 991 on the decline and 111 remaining unchanged.

Interest rate sensitive stocks like banking and auto stocks were trading weak, while some consumer durables scrips saw gains.

Asian markets were mostly in the green.

The Japanese Nikkei Thursday was ruling 0.72 percent higher at 10,122.44 points.

The Hang Seng of the Hong Kong stock exchange was ruling 0.94 percent higher at 22,502.65 points, while the Chinese Shanghai composite index was trading flat at 2,690.33 points.


Keywords: Reserve Bank of India (RBI), Indian equities markets,monetary policy,macroeconomic ,monetary developments,CNX Nifty ,National Stock Exchange ,Broader markets,BSE midcap index ,scrips saw gains,Asian markets