* BSE index down 1 pct; NSE down 1.2 pct
* RBI leaves interest rates unchanged, cuts CRR by 25 bps
* Increases banks' provisioning against restructured assets
MUMBAI, Oct 30 India's main stock indexes
dropped around 1 percent each on Tuesday after the central bank
left interest rates on hold and signalled no easing action would
be taken until the first few months of 2013, denting shares of
lenders such as SBI.
Banks, especially state-owned ones, were further hurt after
the Reserve Bank of India also increased the amount of
provisioning against restructured assets for the sector to 2.75
percent from 2 percent, as part of its monetary policy review.
By keeping the repo rate unchanged at 8 percent, the RBI
defied political pressure from the government for lower rates,
sending in Asia.
The falls came even after the RBI cut the cash reserve
ratio, or the amount of deposits that lenders must keep with the
central bank, by 25 basis points to 4.25 percent.
"There was definitely lot of expectations in the markets for
a rate cut, but people will have to wait for some more time. It
is disappointing for the markets," said Srividhya Rajesh, a fund
manager at Sundaram Mutual Fund in the city of Chennai.
"Whatever the government has announced on the reforms front,
if they get implemented that will give some comfort to the RBI.
They are waiting for that to happen."
India's BSE index fell 1 percent, while the
50-share NSE index lost 1.2 percent as of 0800 GMT.
State-run lenders were among the leading decliners: State
Bank of India fell 4.1 percent, while Punjab National
Bank slipped 3.7 percent.
Private sector banks were also hit, with ICICI Bank
down 2.2 percent even as a cut in the CRR should
benefit the sector by freeing up funds that earned no interest
when deposited at the central bank.
Interest-rate sensitive property shares also slipped: DLF
fell 2.6 percent while Housing Development and
Infrastructure Ltd lost 5 percent.
Auto shares, another rate sensitive sector, also declined,
with Tata Motors falling 4.2 percent.
Some analysts had hoped a rate cut ahead of the Diwali
holidays in November would have boosted sales of big ticket
(Reporting by Manoj Dharra and Abhishek Vishnoi; Editing by