Indian Stocks Plunge After RBI Keeps Key Rates Unchanged, Lowers Growth Estimate

Indian stock markets ended lower for the fifth straight session on Tuesday after the central bank left its key rates unchanged in its first quarter monetary policy review and cut its growth forecast for the fiscal year.

The benchmark BSE Sensex plunged 1.20 percent, or 235.85 points, to 19,357.43. The 50 share NSE Nifty declined 1.21 percent, or 70.75 points, to 5,760.90.

The Reserve Bank of India (RBI) kept its policy repo rate and the cash reserve ratio (CRR) unchanged as widely expected at 7.25 percent and 4 percent, respectively. The central bank also revised the Asia's third largest economy's growth projection for 2013-14 to 5.5 percent, down from its prior estimate of 5.7 percent provided in May, citing global growth concerns. RBI also said that the recent liquidity tightening measures will be rolled back in a calibrated manner.

"The policy statement is slightly more dovish than what we had expected. We expect that within two months, the cash tightening steps will be faded out, and monetary easing will resume. We are expecting another 50 basis points cut in the repo rate in 2013," Sujan Hajra, chief economist at Anand Rathi in Mumbai, told Reuters.

All the 13 BSE sectoral indices, except IT, ended with losses. Realty, oil and gas, power and PSU sectors experienced selling pressure.

Realty sector plunged 3.84 percent to 1344.52. DLF tumbled 7.22 percent and HDIL plunged 4.36 percent while Unitech declined 3.79 percent.

In the Midcap space, Havells India tumbled 13.31 percent and Punj Lloyd slumped 9.96 percent while Raymond declined 9.48 percent.

The overall market breadth is negative with 1542 declines against 724 advanced on the BSE.

Meanwhile, Asian markets mostly advanced on Tuesday as investors' exercised caution ahead of the US Federal Reserve's policy decision later this week. Japan's benchmark Nikkei 225 surged 1.53 percent and China's Shanghai Composite gained 0.70 percent, while Hong Kong's Hang Seng advanced 0.48 percent and South Korea's KOSPI gained 0.90 percent.