Key Indian equity indices fell on Thursday as the Reserve Bank of India (RBI) lowered the country's growth projection for 2019-20 to 7.2 per cent.Accordingly, the equity market had a flat start in line with sluggish global cues only to slide during the mid session. The S&P BSE Sensex fell 192.40 points or 0.49 per cent to 38,684.72 points, while the NSE Nifty50 declined 45.95 points or 0.39 per cent at 11,598 points.On sector-specific basis, gains were made by BSE Healthcare, Auto and Realty indices, while top losers were BSE IT, Oil & Gas and Energy indices."Market consolidated as the outcome from RBI monetary policy was in line with expectation with a 25 bps cut in rate," said Vinod Nair, Head of Research, Geojit Financial Services."Investors turned cautious about the downward revision in the GDP growth to 7.2 per cent for FY20 while premium valuation and concerns over monsoon further impacted the sentiment. However, dovish view by global central banks and a likely better results in Q4FY19 can stabilise the market in the near future."In its first monetary policy review of the current fiscal, the RBI noted signs of weakness in domestic investment activity as reflected in a slowdown in production and imports of capital goods.
Consequently, it lowered the country's growth projection for 2019-20 to 7.2 per cent."We witnessed some recovery post the RBI monetary policy. But it was clearly a short-lived bounce-back as the outcome of RBI cutting the repo rate by 25 bps was already discounted in the prices," said Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel Broking. "Today's decline was just a natural extension of yesterday's profit booking. So many stocks had entered an extremely overbought territory; so they needed to cool off a bit and this is what we have seen in the last couple of days." In terms of investment, the foreign institutional investors sold stocks worth Rs 226.19 crore, while the domestic institutional investors sold stocks worth Rs 1,206.16 crore.According to Deepak Jasani of HDFC Securities, the weakness also came on the back of the RBI not changing its stance in the monetary policy to accommodative from neutral. The RBI's Monetary Policy Committee (MPC) has decided to maintain the "neutral" stance it had adopted at its previous policy review in February, when it had shifted away from its earlier stance of "calibrated tightening". A "neutral" stance allows the central bank to move either way on rates.