Sensex slips below 17k after RBI announces new measures

The BSE Sensex and the Nifty hit the day's low after the Reserve Bank announced a slew of measures to attract capital in the country. But, clearly markets were disappointed, as evident from the initial reaction.

The Sensex and the Nifty slipped in to the red, while the rupee traded off the day's high. At 2.42 p.m., the Sensex traded 63 points or 0.4 per cent lower at 16,910, while the Nifty was down 25 points to 5,121.

"Somehow there was a built-up of expectations that there would be a grand announcement... may be of a sovereign bond issue," Sajid Chenoy of JP Morgan told NDTV Profit.
Markets were anticipating announcements that would perhaps give a boost to the economy, and support the rupee. But, RBI's measures turned out to be a move to support the currency, and not the broader economy.

"The attempt has been to open up the capital flows into the country. All this will have some impact on capital inflows in the country, and thereby on the value of the rupee," C Rangarajan, chairman of the PM's economic advisory council told NDTV Profit.

In a note, brokerage firm UBS said, “Nifty flat, rupee up just 45 basis points... much ado about nothing."

Meanwhile, here's what the RBI announced to help revive the rupee and the economy.
                          
The external commercial borrowing limit has been hiked by $10 billion for new projects/refinancing. The government securities limit has been hiked to $20 billion from $15 billion. Sovereign wealth funds and pension funds can now invest in Indian bonds.