Report on Stocks

A day after recording one of its best sessions in recent years, the Indian stock market tanked on Friday after the Reserve Bank of India hiked the repo rate by 25 basis points, citing inflationary pressures.

The bulls, who went on a rampage on Thursday, after the U.S. Federal Reserve decided to maintain the pace of its economic stimulus, chose to cut down positions on Friday.

Following the central bank's rate decision, the repo rate now stands at 7.5%. The bank left the CRR unchanged at 4%, evan as it reduced the minimum daily manintenance of cash reserve ratio from 99% to 95%, effective from the fortnight begging September 21.

It was widely expected that the apex bank will leave rate unchanged. The RBI, however, reduced the Marginal Standing Facility (MSF) rate by 75 basis points, as expected.

Welcoming the RBI governor Raghuram Rajan's decision to cut MSF by 75 basis points, C Rangarajan, Chairman, Prime Minister's Economic Advisory Council, said that the 25 basis points hike in repo rate will not impact growth.

The BSE benchmark Sensex, which plummeted nearly 600 points to 20,051.43 after the central bank announced the rate hike, recovered some lost ground amid high volatility in afternoon trade, and eventually ended the session with a loss of 392.93 points or 1.85% at 20,263.71.

The Nifty index of the National Stock Exchange closed at 6012.10, nearly 80 points off the day's low of 5932.85, recording a loss of 103.45 points or 1.69%. The Nifty touched a high of 6130.95 in early trades.

Bank stocks, which had great session on Thursday, were among the most prominent losers. Realty stocks ended sharply lower. Automobile, capital goods, PSU and metal stocks too mostly closed weak. Information technology, healthcare and power stocks found some support.

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