Sensex, Nifty Choppy After RBI Keeps Rates Steady

BSE Sensex and Nifty came under renewed selling pressure in afternoon trade. The Reserve Bank of India (RBI) held interest rates steady as widely expected at its policy review on Tuesday, but said it could cut interest rates by early next year depending on whether inflation eases further and on fiscal developments.

"A change in the monetary policy stance at the current juncture is premature," the RBI said in its statement.

Markets recovered after falling briefly as sentiment improved on hopes that RBI would cut interest rates early next year.

The RBI kept interest rates unchanged at 8.0 per cent on Tuesday as widely expected, staying focused on containing inflation while adopting a more dovish tone in response to the government's call for help to revive economic growth.

Traders said a rate cut in early 2015 was more or less certain now unless global commodity prices moved adversely.

At 1:55 pm, Sensex was down 104 points to 28,454 while Nifty fell 35 points to 8,521. Selling pressure was seen in rate sensitive banking, real estate and auto stocks.

Among major Nifty losers, DLF, M&M, HDFC and IndusInd Bank fell between 1.5 per cent and 2 per cent.  PSU oil marketing companies IOC, HPCL and BPCL fell 2-3 per cent after the government hiked excise duty on petrol and diesel.

The excise duty on petrol was hiked by Rs 2.25/litre and diesel by Rs 1/litre, a move that could bring in additional Rs 4,000 crore for the government.

(With Agency Inputs)