RBI inaction spooks markets; Sensex drops sharply

Published: Monday, June 18, 2012, 15:13 [IST]

The decision by the Reserve Bank of India to hold interest and CRR rates steady spooked markets, which saw a sharp sell off in trade today.

The BSE Sensex shed - points, while the NSE Nifty shed - points. The markets began the day on a buoyant note, as shares rallied across Asia on reports that the pro-bailout parties are set to form the government in Greece.

However, the RBI Monetary Policy which was declared at 11.00 am sent shockwaves through the markets, which were largely expecting a 25 to 50 basis points cut in the repo rate and at least a 25 basis points cut in the CRR.

In Europe, shares began on a buoyant note, however, reports that Spain's borrowing costs had increased saw selling pressure emerge. The UK's FTSE was trading in the red, while the German DAX and the French CAC were trading in the green.

Banking stocks bore the brunt of RBI inaction with State Bank of India, Punjab National Bank, Bank of Baroda and Axis Bank dropping sharply. With the Greece elections and the Monetary Policy now out of the way, all eyes would be on the Federal Open Market Committee meeting and the press conference thereafter. Any hints of quantitative easing could spark a fresh rally across global markets.

GoodReturns.in

Story first published: Monday, June 18, 2012, 15:13 [IST]

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