Sensex Below 18K

Equity benchmarks extended sell-off on the back of further fall in European markets, reacting to Greek's debt worries. Nifty has broken the 5400 mark - at three-week low, dragged down by heavyweights like TCS, Bharti Airtel, Reliance Industries, Infosys, Wipro, L&T and HDFC Bank, which fell 1-3%. Metal, cement, auto, select healthcare and private banking companies' shares too were adding pressure on the market.

The 50-share NSE Nifty was trading at 5,391, down 56 points and the 30-share BSE Sensex tumbled 172 points to 17,960 on further build up in shorts. European markets like France's CAC, Germany's DAX and Britain's FTSE fell 1-2%.

Nifty recovers on expected rate hikes

Indian equity benchmarks showed some recovery post the RBI policy event as hike in key policy rates by 25 basis points was on the expected lines. The market has already been discounted these hikes.
Central bank Reserve Bank of India has hiked repo (rate at which RBI lends money to banks) and reverse repo (rate at which RBI borrows money from banks) rates by 25 basis points each - on expected lines - to 7.5% and 6.5%, respectively. Cash Reserve Ratio was unchanged.

BSE Sensex was trading at 18,096, down 35 points and NSE Nifty fell 16 points to 5,431.

Food inflation dives marginally

Food inflation has seen a marginal decline in the week ended June 4 from the numbers in the previous week. From the 9.01% figure where food inflation stood on week before June 4, the numbers have fallen to 8.69%.
The fuel inflation, however, is up by a few points at 12.84% versus the 12.46% on a week on week basis.

Here are the highlights:
June 4 Primary Articles Index up 2% (WoW)
June 4 Fuel Group Inflation At 12.84% Vs 12.46% (WoW)
June 4 Fuel Group Index down 0.5% (WoW)
June 4 Food Articles Inflation At 8.96% Vs 9.01% (WoW)
June 4 Food Articles Index up 0.5% (WoW)

Reserve Bank ups repo

Continuing with its anti-inflationary stance, the Reserve Bank of India (RBI), in its mid-quarter policy review, hiked repo and reverse repo rates by 25 basis points (bps) each.

This takes repo (rate at which it lends to banks) to 7.5% and reverse repo (rate at which it borrows) to 6.5%. This is in line with a CNBC-TV18 poll. The cash reserve ratio (amount of funds that banks have to keep with RBI), however, has been left unchanged at 6%.

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