Mumbai: The BSE Sensex snapped four-day winning streak on Thursday, losing as much as 297 points intraday after the RBI's dovish tone in its monetary policy review and left policy rates unchanged. Even profit booking ahead of big event Union Budget 2012-13 (on Friday) may be another reason for driving the Nifty below 5400 level.
The most worried point for the market today is that high expectations from RBI. The central bank said high inflation, high fiscal deficit, rupee depreciation and high oil prices globally forced him to stay away from cutting policy rates. Prime Minister's economic advisory panel chief says overall inflation close to 7 per cent is very discomforting. Economic Survey said the Indian rupee depreciated by 12.4 per cent on monthly basis in FY12 and the Brent crude is trading around USD 125 a barrel.
So market experts sceptical about rate in next policy meet as well - schedule to be announced on April 17, which was the major reason for the market falling sharply today. They believe the rate cut will be possible only if oil prices start falling.
Morgan Stanley is of the opinion that equity market participants may be disappointed at the lack of a rate cut. It believes that the next cut will come in April depending upon crude prices.
The 30-share BSE Sensex fell 243.45 points or 1.36 per cent, to close at 17,675.85, weighed down by 22 components. Meanwhile, the 50-share NSE Nifty shed 83.40 points or 1.53 per cent to 5,380.50 led by sell-off in banks & financials, oil & gas, capital goods, realty and telecom stocks.
Now the market is eyeing Union Budget with lot of expectations. Consensus estimates for fiscal deficit for FY12 stands at 5.1-5.4 per cent and net borrowing in the range of Rs 4.2-4.5 lakh crore.
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