Mumbai: Market benchmark Sensex slipped from its initial gains and was trading lower by 17.92 points at 24,806.91 in late morning deals after RBI Governor Raghuram Rajan left the key policy rates unchanged.
After the announcement, the BSE banking index was down 0.43 percent as stocks of SBI, ICICI Bank, Axis Bank and HDFC Bank retreated by up to 1.30 percent. However, there was no immediate knee-jerk reaction to the RBI's monetary policy stand as the central bank was widely expected to maintain status quo and wait for cues from the Budget that would provide key macroeconomic direction.
The repo or short term lending rate remains unchanged at 6.75 percent and the reverse repo rate at 7.75 percent. The Sensex opened higher at 24,868.83 and hovered between 24,892.53 and 24,763.28 before quoting 24,806.91 at 1105 hours, down 17.92 points from the last close.
The 50-share Nifty also declined by 15.35 points or 0.20 percent to 7,540.60 at 1105 hours. Major losers were Tata Steel by 3.45 percent, ONGC 2.38 percent, NTPC 1.43 percent, Coal India 1.40 percent, Reliance 1.25 percent, BHEL 1.17 percent and Sun Pharma by 1.01 percent.
Expecting an uptick in growth, RBI Governor Raghuram Rajan said he expects 7.6 percent GDP growth next fiscal "notwithstanding significant headwinds" and based this on normal monsoons, the large positive terms of trade gains, improving real incomes of households and lower input costs of firms.
Foreign portfolio investors (FPIs) bought shares worth Rs 253.88 crore, as per provisional data released. Overseas, Asian markets were trading lower on fresh weakness in oil. But Chinese stocks edged higher after the country's central bank injected more liquidity. US stocks overnight pared sharp opening losses to finish nearly unchanged.