RBI’s interest rate hike spooks market

Today's major news

RBI increases repo, reverse repo rate by 25 basis points

Forex reserves up at $279.708 billion

Larsen & Toubro wins order worth Rs977 crore; the stock closes 0.22% lower

Post-market summary

Global signals

European indices fell on Monday, March 22, 2010 with banking and commodities stocks falling the most as investors concerns over further monetary tightening by the emerging markets after India’s central bank hiked the key benchmark interest rate on Friday. At the time of writing this report, FTSE 100 was down by 0.95%.

Among the major Asian indices, all the indices closed lower except Shanghai Composite that closed marginally higher. SGX Nifty closed 77 points lower.

US stock futures opened lower on Monday signaling a negative opening for the Wall Street. Pharma, healthcare and insurance companies are in spotlight after the House of Representatives gave final approval to a sweeping healthcare bill.

Indian indices

After rallying in the last week, the domestic indices loses its four day winning streak to close lower on Monday after the Reserve Bank of India unexpectedly hiked the repo and the reverse repo rate by 25 basis points. This triggered the selling in the interest rate sensitive stocks like realty, banking and auto, combined with late selling pressure in metal stocks after metal prices fell on London Metal exchange. Worry of over Greece debt crisis added the fuel.

Taking lead from the weak global markets, the Sensex opened 97 points lower at 17,481, however, it recovered some of its losses and touched the day’s high of 17,559. But continuous selling pressure in realty and late sell-off in the metal stocks dragged the Sensex to the day’s low of 17,337. At the finishing line, the Sensex closed at 17410, 168 points lower over its yesterday’s close; the Nifty closed 58 points lower at 5205.

Market sentiment

The market breadth was negative as 63% of the stocks declined while 34% of the stocks advanced. Of the 2,918 stocks traded on the BSE, 1,851 stocks declined, whereas 987 stocks advanced. Eighty stocks closed unchanged.

Sectoral & stock screening

All the 13 sector indices on the BSE closed in red except BSE Health Care index that closed marginally higher by 0.26%. RBI hiking the key benchmark interest rates dragged down the interest rate sensitive realty sector by 3.88%, while the fall in the price of metals on London Metal Exchange dragged BSE Metal down by 1.96%.

On stocks’ front, the top three gainers were Max India (up 2.60%), Chambal Fertilisers (up 2.54%) and Divis Laboratories (up 2.50%). The top three losers were Indiabulls Real Estate (down 6.68%), Housing Development & infrastructure Ltd (HDIL) (down 5.78%) and Gujarat Mineral Development Corporation (GMDC) (down 4.66%)

Viewing volumes

Ispat Industries was the most actively traded share with over 0.46 crore shares changing hands on the BSE, followed by India’s second largest realty company — Unitech (0.44 crore shares), wind turbine major — Suzlon Energy (0.28 crore shares). The top loser of A group was Indiabulls Real Estate (0.21 crore shares) and the second biggest loser of A group was Housing Development & infrastructure Ltd (HDIL; 0.20 crore shares).