Some stability likely
The bulls managed to overcome huge volatility in the market to close flat and with benchmark Sensex closing above the 14k mark on back of short covering in derivatives segment. NSE Nifty reversed its loss and closed 3 points higher after the wild intra-day gyrations for the fourth straight trading session kept the bulls under control for most part of the day. Value buying was also seen in metal and Power stocks aiding the recovery in the market. Wipro, REL and Hindalco were the major gainers among the 50 Nifty scrips. While, Bajaj Auto, HDFC bank and Maruti were among the major losers.
Banking and Real Estate stocks were in line of fire after RBI raised the amount of cash lenders must set aside to cover deposits for the second time in as many months to curb inflation. In a surprising move RBI last evening hiked the CRR currently at 5.5% by 50bps effective in two stages from 17th February and 3rd March 2007. This is likely to suck out Rs140bn liquidity from the market. The move seems to emanate from RBI’s concern on rising inflation and sustained high credit growth. Finally, NSE Nifty closed higher by 3 points at 4047 and BSE 30-share Sensex closed down by 81 points at 14010 after hitting a low of 13805 and a high of 14036.61.
Among the Banking stocks, ICICI Bank was down by 4% to Rs914, SBI was down by 6% to Rs1102, Canara Bank was down by 5% to Rs210 and Bank of India lost over 4% to Rs169.
Even the Real Estate stocks fell sharply, Bombay Dyeing was down by over 4% to Rs581, Parsvnath Developers fell by over 1% to Rs294 and Akruti Nirman was down by over 6% to Rs420.
Short covering was also seen among the FMCG stocks. Britannia was up by over 6% to Rs1268, McDowell was up by 4% to Rs816 and ITC added 0.5% to Rs174. Others like Dabur and Marico gained by over 1% each.
Auto stocks tumbled sharply under pressure. Tata Motors lost 2% to Rs850; Maruti slipped by 4% to Rs857and Bajaj Auto was down by 1% to Rs3014.