Raghuram sparks sell-off; BSE Sensex weak, pharma gains

3:35 pm Bankers' view:
Bank of Baroda is pleased that the RBI policy has targeted inflation as the real villain. Ranjan Dhawan, ED, Bank of Baroda said the repo rate hike and liquidity easing measures were as per his expectations.

''The real deposit rates have been negative for sometime to come and one of the consequences was that the deposit accretion was very low, and there was flight to gold.'' The flight to gold in-turn had an adverse impact on the current account deficit (CAD).

3:20 pm Update:
Tata Motors , India's largest automaker by revenue, is looking to raise prices by 1 percent-1.5 percent across its range of commercial and passenger vehicles, following similar moves by rival carmakers, reports Reuters. The price increase comes on the back of higher input costs, a company spokeswoman said on Friday.

On Thursday, Hyundai Motor's India unit said it would raise prices by Rs 4,000 to Rs 20,000 for most of its vehicles, citing a weaker rupee and inflation. General Motors and Toyota Motor Corp have also raised prices in the country.

There has been no respite from selling as market gears up for the weekend. The Sensex is still down 441.09 points or 2.14 percent at 20205.55, and the Nifty is 5991.55, down 124.00 points or 2.03 percent. About 815 shares have advanced, 1400 shares declined, and 112 shares are unchanged.

Bank and realty stocks are reeling under selling pressure as investor grow concerned over RBI's mid-quarter credit policy review. The central bank has hiked repo rate by 25 basis points to 7.5 percent, but the bank left cash reserve ratio unchanged at 4 percent though the minimum CRR requirement is cut from 99 percent to 95 percent.

ICICI Bank, L&T, Sesa Goa, HUL and SBI are major losers in the Sensex. Meanwhile, GAIL, NTPC, Sun Pharma, Wipro and BHEL.

Nirmal Jain of IIFL feels that there is nothing in the RBI crdit policy which is so big negative that market has to react but market is always sensitive.

"Yesterday also it overreacted and it is again overreacting today as well. 25 bps repo rate does not make much of a difference in any case because the short-term rates have been much higher. And to my mind I think what market would have expected is easing of liquidity in liquidity adjustment facility (LAF) and marginal standing facility (MSF) window which policy very clearly says that we can do it anytime and not necessarily on the policy day," Jain said in an interview to CNBC-TV18.

02:55pm Outperformer Jet Airways shares gained 1.7 percent. Citi says buy the stock with a target price of Rs 715. According to the brokerage house, Tata-SIA venture won't impact FY14-15 financials of the company. Tata's and Singapore Airline on Thursday have inked a memorandum of understanding (MoU) to launch a new full service airline with initial capital of a USD 100 million. The Tata's will hold 51 percent and Singapore Airlines will get 49 percent.

02:45pm Market Expert The Sensex is down 438.75 points or 2.13 percent at 20207.89, and the Nifty is down 128.75 points or 2.11 percent at 5986.80. India's economic situation is not exciting and inflation continues to be a very large concern for us, so, in this scenario, RBI policy is balanced and pragmatic, Tushar Pradhan, CIO, HSBC AMC said.

The policy announcement didn't auger well for the market and it corrected. But, Pradhan feels going ahead market will take cues from the fact that RBI is quite accommodating from a growth point of view. He further added that from valuations perspective, the market has not hit the bottom yet. "We should see markets trade in a range before we take any direction. But looking at the overall economic cycle, we are closer to the bottom rather than closer to the peak," he told CNBC-TV18 in an interview.

02:30pm Major losers Realty stocks hit the most on unexpected hike in repo rate; the BSE Realty Index fell 6 percent. DLF , the realty major, crashed 11 percent. IDFC , Punjab National Bank , IndusInd Bank , Ranbaxy Labs , ICICI Bank , L&T, Hindustan Unilever and State Bank of India are biggest losers among frontliners. However, Sun Pharma , Wipro , GAIL , Dr Reddys Labs , GAIL, Lupin and Power Grid outperformed. HCL Technologies is the biggest gainer, rising 4 percent after the Foreign Investment Promotion Board hike FDI limit in the company.

02:15pm The market plummeted today after RBI surprised the street by raising repo rate by 25 basis points, weighed down majorly by rate sensitives. The Sensex is down 522.75 points or 2.53 percent at 20123.89, and the Nifty is down 157.15 points or 2.57 percent at 5958.40.

High inflation prompted the central bank to hike repo rate by 25 basis points to 7.5 percent, but the bank left cash reserve ratio unchanged at 4 percent though the minimum CRR requirment is cut from 99 percent to 95 percent. Marginal Standing facility (MSF) rate is also cut by 75 basis points to 9.5 percent. Governor Raghuram Rajan says that RBI will watch the inflation rate for 6-12 months and would like to bring the rate down to below the RBI's aim of 5 percent.

A repo rate hike by 25 basis points does not make much of a difference because the short-term rates have been much higher, says Nirmal Jain, chairman, IIFL. According to him, easing of liquidity due to reduced marginal standing facility (MSF) window will have a much better impact on the market or at least on banks' sentiment. So the market reaction right now is just kneejerk, he says.

2:00 pm Market outlook:
Nirmal Jain of IIFL feels that there is nothing in the RBI crdit policy which is so big negative that market has to react but market is always sensitive.

"Yesterday also it overreacted and it is again overreacting today as well. 25 bps repo rate does not make much of a difference in any case because the short-term rates have been much higher. And to my mind I think what market would have expected is easing of liquidity in liquidity adjustment facility (LAF) and marginal standing facility (MSF) window which policy very clearly says that we can do it anytime and not necessarily on the policy day," Jain said in an interview to CNBC-TV18.

1:50 pm: Buzzer:
Shares of JP Associates falls 8 percent in intraday trade on Friday on concerns that Gujarat High Court issued notice to Jaypee Cement and UltraTech Cement , based on a public interest litigation filed by local villagers. The PIL allege that the cement factory in Kutch has encroached upon village land and is dumping waste in the area. The bench said that any deal between the two companies will be subject to the outcome of the PIL.

1:35 pm Raghuram's speech:
Reserve Bank of India governor Raghuram Rajan cautioned Indian market against celebrating the US Fed decision not to cut back on its bond purchases. At the same time, India is now better prepared for the expected cut in Fed bond buying, whenever that happens. He was speaking at the post-monetary policy press conference.

Rajan said, however, the RBI was not contemplating any reduction in cash reserve ratio, saying "CRR was peanuts in the overall scheme of things." Also, he said banks were exaggerating problems being caused by the recent tightening of CRR norms. He added he expected banks to set lending rates "appropriate to their cost of funding." But it looks unlikely that banks will reduce their lending rates anytime soon, given the struggle to attract deposits.

Raghuram Rajan's maiden credit policy just could not continue the euphoria that the market had been riding on Ben Bernanke's comments yesterday. Post RBI's surprise move of hiking repo rate by 25 basis points, sell-off in the market knocked down indices. The Sensex is down 420.78 points or 2.04 percent at 20225.86, and the Nifty is at 5989.90 down 125.65 points or 2.05 percent.

About 649 shares have advanced, 1402 shares declined, and 105 shares are unchanged. All rate sensitive stocks are bleeding as RBI decided to hike repo rate by 25 basis points while pharma and technology stocks are still on buyers' radar. Laggards of the day are ICICI Bank , L&T, SBI , HUL and ONGC . DLF is down 11 percent. Sun Pharma , Wipro , Gail, Dr Reddy's Lab are gainers in the Sensex.

12:59pm Repo Rate hike possible?
The Reserve Bank of India (RBI) in all probability will hike repo rates further, believes Samiran Chakrabarty of Standard Chartered. Speaking to CNBC-TV18 just a few minutes after the RBI hiked the repo rates by 25 basis points (bps) , Chakrabarty says the central bank governor Raghuram Rajan has made inflation his top priority, and this focus would drive all the policy actions going ahead.

''For the time being, I think withdrawal of the cumulative measures on liquidity would go to the backburner. Nobody is going to be too bothered by the pace at which they are getting withdrawn. The focus will come back completely on repo rate and more repo rates hikes are definitely possible,'' adds Chakrabarty. Pratip Chaudhuri, chairman of State Bank of India expects bank rate and lending rates to go higher. Meanwhile, the Sensex is down 378.63 points or 1.83 percent at 20268.01, and the Nifty is down 112.70 points or 1.84 percent at 6002.85.

12:50pm Economist talks C Rangarajan, Chairman, Prime Minister's Economic Advisory Council, welcomes RBI governor Raghuram Rajan's move to reduce marginal standing facility, or MSF, rate. However, he cautions, one cannot let the guard on the rupee slip and nor can the concerns on inflation be forgotten. He feels that is the reason why the repo rate was raised. He does not think growth will be impacted by the 25 basis points repo rate hike.

He feels in the coming months, inflation is likely to come down on the back of the good monsoon across the country. But if it doesn't then there is a possibility that more measures will be introduced to tame inflation. According to him, PMEAC's estimate of 5.5 percent wholesale price index, or WPI, inflation by FY14-end looks valid. RBI had estimated FY14-end WPI inflation at 5 percent.

12:40pm Slight Recovery The market recovered from its day's low on Raghuram Rajan's comments post his first monetary policy review. He says that the central bank will ease liquidity measures as soon as market conditions allow. Open market operation (OMC) window will slowly be tapered once economy improves, he adds. The Sensex is down 376.93 points or 1.83 percent at 20269.71, which was down as much as 595 points to touch an intraday low of 20646.64 immediately after RBI policy. The Nifty is down 112 points or 1.83 percent at 6003.55.

12:30pm Movers & Shakers India's largest lenders State Bank of India, ICICI Bank and HDFC Bank crashed 5 percent each. L&T and Maruti too are down 5 percent. However, only five stocks gained in the Sensex, which are Sun Pharma (up 2.4 percent), Wipro (up 1.57 percent), Dr Reddys Labs (1.02 percent), GAIL (up 1.2 percent)and BHEL (up 0.79 percent).

12:15pm Investors are selling in the market today with the both equity benchmarks falling over 2.5 percent after the RBI surprised investors with its monetary policy review. The Sensex is down 522.27 points or 2.53 percent at 20124.37, and the Nifty is down 161.05 points or 2.63 percent at 5954.50. Reserve Bank of India hiked repo rate -- the rate at which the RBI lends money to commercial banks -- by 25 bps to 7.5 percent, which was the surprising move for the street. The central bank cut marginal standing facility rate (MSF) by 75 bps to 9.5 percent.

"RBI has reduced the MSF rate and hiked repo rate with the objective to normalize conduct and operations of monetary policy. RBI takes the note of slowdown in growth due to fall in investments and consumptions and hence widening the output gap which in turn can put downward pressure on inflation," says Kunal Shah, fund manager of debt at Kotak Mahindra Old Mutual Life Insurance. Rate sensitives got butchered quite badly with the Bankex and Realty falling 5.5 percent followed by Capital Goods with 3.5 percent loss.

12:00 pm Market check:
The Sensex is down 508.54 points or 2.46 percent at 20138.10, and the Nifty down 159.90 points or 2.61 percent at 5955.65. About 587 shares have advanced, 1349 shares declined, and 92 shares are unchanged.

11:55 am Comments on RBI policy: HSBC says that the RBI policy has clearly surprised the market. Economic situation in India is not exciting and RBI policy is balanced and pragmatic.

Morgan Stanley agrees that the MSF rate reduction is a surprise and hike in repo rate is a good move. Repo move takes away market hope for rollback of tightening. Hike in repo and language on inflation focus is hawkish,'' it said. SIAM is concerned that the repo rate hike may dampen festive season auto sales. Ashok Leyland feels that appropriate measures have been taken by RBI.

11:45 am Market outlook:
There is absolutely no fundamental reason for the market to see new highs, says Prabhat Awasthi of Nomura Financial Advisory & Securities. On the contrary, taking a bearish view, Awasthi says that investors should use the current rally to pare down their equity positions by booking profits. Most analysts, however, were bullish on the fact that the market could rally anywhere between 3 to 5 percent. Meanwhile, on specific stocks, Awasthi maintains caution on PSU banks and prefers private banks and has recently upgraded metal stocks.

11:30 am Opinion:
Welcoming RBI's move on reducing MSF rate, C Rangarajan, Chairman of the Prime Minister's Economic Advisory Council said that there is a possibility of further action if inflation doesn't ease. Speaking to CNBC-TV18, he said that growth will not be affected by 25 bps repo rate hike.  "PMEAC's estimate of 5.5 percent WPI inflation by FY14-end looks valid. Impact of good monsoon may possibly be felt on food inflation," he added.

11.15 am Market check:
The Sensex is down 502.56 points or 2.43 percent at 20144.08, and the Nifty down 152.00 points or 2.49 percent at 5963.55. About 579 shares have advanced, 1153 shares declined, and 102 shares are unchanged. Banking stocks have not taken the monetary policy by new Governor chief Raghuram Rajan. Bank Nifty is down 6.6 percent HDFC twins, SBI , ICICI Bank and Kotak Mahindra losing around 5-6 percent each.

The market has erased some of its yesterday's gains as the Sensex is down 239.17 points or 1.16 percent  at 20407.47, and the Nifty down 47.15 points or 0.77 percent at 6068.40. About 756 shares have advanced, 946 shares declined, and 111 shares are unchanged. The Reserve Bank of India has cut marginal standing facility (MSF) by 75 basis points in its mid quarter monetary policy review .

Reserve Bank Governor Raghuram Rajan also hiked repo rate by  25 basis points. Majority of the bankers and economists that CNBC-TV18 spoke to expect Reserve Bank Governor Raghuram Rajan to partially roll back the measures taken in July to prop up the rupee.  Wipro , TCS , Sun Pharma and GAIL are top gainers in the Sensex. while banking stocks take a knock on the credit policy.

10:45am Stocks In News HCL Technologies and Axis Bank gained 1-2 percent post FIPB cleared proposals of both companies to increase FII investment limit. Axis Bank's proposal was to up FII investment limit to 62 percent from 49 percent while HCL Tech's proposal was to hike foreign direct investment limit in the company to 74 percent from 49 percent.

Ranbaxy Labs is the biggest loser on the Nifty with the stock falling 5 percent as Actavis (Watson) has filed for a generic version of Absorica. This brand is being promoted by Ranbaxy in the US and has a 3-year exclusivity on it. Kotak says with a import alert on Mohali, there is significant dependant on Absorica for their US growth.

10:30am Movers & Shakers BHEL is the biggest gainer in the Sensex, rising more than 2 percent followed by Sun Pharma and Wipro with 1.7 percent gains. Bluechips like Reliance Industries , TCS , State Bank of India and Tata Motors gained nearly 1 percent. However, country's largest private sector lender ICICI Bank fell more than 1 percent. Shares of Larsen & Toubro, ONGC , Hindustan Unilever , Sesa Bank, Bajaj Auto , Hero MotoCorp and Maruti declined 1-2 percent.

10:15am The market remained rangebound ahead of first RBI policy review from new RBI governor Raghuram Rajan. The Fed euphoria ended in previous session with 684 points rally on the Sensex. The Sensex today is down 29.96 points at 20616.68, and the Nifty is down 5.75 points at 6109.80. Experts do not expect any rate cut from Rajan. The guidance from him will be important, they feel.

The US Federal Reserve's move to not taper its bond buying program has given the Reserve Bank room to ease some of the rupee volatility curbing measures, says UR Bhat, managing director, Dalton Cap. He feels RBI should ensure that there is some liquidity in the system when the Fed taper actually happens.

"I think there is a possibility that the RBI might reverse some of the draconian measures like the 300 points increase they did on the micro, small and medium enterprises (MSME) and also on the method of competition of cash reserve ratio (CRR) that effectively increases CRR by almost 1 percent," he told CNBC-TV18 in an interview. He expects the Indian rupee to see some pressure in the near-term. Meanwhile, the rupee fell 36 paise to 62.13 against the US dollar.

10 am: Buzzers: Shares of Axis Bank and HCL Technologies gained more than 2 percent as Foreign Investment Promotion Board (FIPB) cleared proposals of these companies to increase FII investment limit. In case of Axis Bank, the board approved proposal to raise foreign shareholding limit to 62 percent from 49 percent earlier. The bank had sought for increase in FDI limit after foreign investment in the bank reached to 49 percent.

9:45 am FII view:
US Federal Reserve's move of continuing with the monetary stimulus triggered a huge rally across global markets. Majority of investors were expecting a modest reduction in monthly purchase of bonds, but zero taper decision has surpised emerging market investors, Michael Kurtz, Global Head of Equity Strategy & Chief Strategist, Asia Ex-Japan, Nomura said.

Economies grappling with huge current account deficit (CAD) like India, this relief is temporary and this liquidity powered rally may be short-lived , he told CNBC-TV18 in an interview. The next key event for Indian market would be RBI governor Raghuram Rajan's debut monetary policy, scheduled tomorrow. Kurtz feels Fed decision's gives the apex bank room to reverse some tightening and it may unwind some short-term liquidity measures.

9:30 am Movers and loers:
Tata Power , NTPC , M&M, BHEl and HDFC are top gainers in the Sensex. The laggards are Sesa Goa , L&T, Tata Motors , Jindal Steel and Hindalco . Ranbaxy loses another 5 percent as  its only drug making facility, US-based Ohm Laboratories, is learnt to be under surveillance of the US Food and Drug Administration (FDA).

The market has opened lower as investors seem to be cautious ahead of the RBI monetary policy review to be announced today at 11am. The Sensex is down 25.59 points or 0.12 percent at 20621.05, and the Nifty is down 10.90 points or 0.18 percent at 6104.65. About 214 shares have advanced, 112 shares declined, and 29 shares are unchanged. Reserve Bank Governor Raghuram Rajan will be announcing his first credit policy. Most market analysts are expecting the central bank to scale back the liquidity tightening measures announced in July.

Meanwhile, the Indian rupee opened with a marginal loss of 22 paise at 62.05 per dollar ahead of RBI policy against 61.78 on Thursrday. Himanshu Arora, Religare said, "Dollar is likely to continue its slide which may attract foreign funds into the country, pushing rupee higher. In the wake of the Fed's recent move, RBI may rollback its cash tightening measures to support the rupee. RBI is expected to keep the policy rate and the CRR unchanged. The range for the day is seen between 61.20-62.10/USD."

The dollar recovered a tad but gains are limited on continued low interest rates in the US. The euro continues its good run at 1.35/USD and the yen trades at 99.58/USD. The Wall Street party takes a breather as the Dow, S&P snap 4-day rally as the Fed euphoria on the tapering of quantitative easing fizzles. Asian equities open weak in thin trade as China, HongKong, South Korea and Taiwan markets are shut for trade today.

In commodities, crude prices slide on comments from the Iranian president seeking better relations with the West and also as Libyan crude production gets back on track. From precious metals space- gold prices rallied nearly 5 percent higher and hit 1-week highs on the Fed surprise, although giving up some gains in early trade this morning.