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Markets flat after RBI holds rates
Tue, 1 Apr 11:30 am

After opening firm, the Indian indices are trading flat in the morning session after the Reserve Bank of India (RBI), in its first bi-monthly policy, maintained status quo regarding all key policy rates. The buying interest is highest in software and energy stocks while the selling pressure is highest engineering and banking stocks.

The BSE-Sensex is trading down 30 points and the NSE-Nifty is trading down 10 points. The BSE Mid Cap index is trading down 0.1% and the BSE Small Cap index is trading up 0.2%. The rupee is trading at 59.92 to the US dollar.

The Reserve Bank of India (RBI) has, in its first bi-monthly monetary policy, left all key interest rates unchanged. The benchmark repo rate, at which the RBI lends to banks, remains at 8% while the reverse repo rate remains at 7%. The cash reserve ratio (CRR) was maintained at 4%. Consequently, the marginal standing facility (MSF) rate and the bank rate, both remain unchanged at 9% each. The RBI will henceforth announce its monetary policy every two months.

Most telecom stocks are trading lower today. Tata Communications and Tata Teleservices are leading the losses. As per news reports, the country's largest telecom firm Bharti Airtel is restructuring its landmark outsourcing deal with tech giant IBM. The ten year US$ 2 bn deal which was signed between the two firms in 2004 is up for renewal and Bharti is looking to diversify its IT vendors in order to reduce costs. Indian IT firms Tata Consultancy Services (TCS) and Tech Mahindra are expected to be the likely beneficiaries. IBM is expected to end up with a deal of about US$ 400-500 m in size after the contract is restructured while TCS and Tech Mahindra could pick up a significant part of the remaining portion. Bharti Airtel is trading lower by 1.1% today.

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