Interest sensitive stocks continue to fall as RBI rate cut fails to cheer them

Mumbai: Interest sensitive stocks ended in the red on second consecutive day after a brief surge on day one as the Reserve Bank of India rate cut fails to cheer them. The 30-share benchmark index tumbled 239 points with the crash driven by low performing banking, metal and realty stocks.

The central bank had on August 2 slashed key lending rate or repo rate by 25 basis points to 6 per cent. This was first rate cut of 2017-18 in Asia by a central bank and second by RBI since its October 2016 policy meet.

The markets had factored in the five-year low retail inflation figure of 1.54 per cent for June and reacted positively to it thus taking the indices to new peaks. Market was expecting a much more 'accomodative' policy stance and a higher than 25 bps cut in repo rate given the favourable macro-economic indicators.

Majority of economists had predicted a 25 bps rate cut in repo. However a section also projected a 50 bps cut as they think that after August 2 policy meet, the RBI will close monetary easing cycle as it has already changed its stance in January from 'accommodative' to 'neutral'.

At closing hours on Thursday, the barometer was trading 239 points down at 32,237.88 after it recovered from an intra-day low of 32,194.58. On Wednesday, Sensex ended the day a near 100 points lower.