RBI action spooks market; Sensex ends 353 points lower

Overall sentiment was disturbed after the RBI’s hawkish stance. The Sensex plunges 353 points and the Nifty falls by 105 points at the close

Major headlines

RBI hikes repo, reverse repo by 50 bps

BHEL Q1 net profit surges 22%

Maruti Suzuki Q1 net profit soars 18%



Indian indices

The Reserve Bank of India ( RBI)’s higher-than-expected rate hike of 50 basis points was quite surprising. Concerns over the aggressive stance taken by the RBI against inflation will hurt the Indian economy and corporate profits, led to heavy selling across the board. Rate sensitive shares took heavy beating, pushing the key benchmark indices lower all throughout the day. Out of 30 Sensex stocks, only one managed to rise - TCS up by 0.40%. Major heavyweight losers like Reliance Communications, BHEL, DLF, L&T, ICICI Bank, SBI, RIL also dragged markets.

Sensex movements: Positive Asian cues lifted the Sensex higher by 27 points at 18898 in the opening trade and suddenly hit the day’s high of 18945. The index traded in a tight range ahead of RBI’s policy outcome. Later when the RBI declared its policy, the index fell sharply as the rate hike was steeper-than-expected. The Sensex weakened as the session progressed and touched the day’s low 18482 in last half hour of trade. The Sensex tanked 353 points to close at 18518 and the Nifty settled at 5575, down by 105 points.

Market sentiment

The market breadth stood extremely weak. Of the 3,004 stocks traded on the BSE, 1,000 (33%) advanced while 1,887 (63%) declined. However, 117 (4%) stocks remained unchanged.

Viewing volumes

A large Indian business conglomerate - Lanco Infratech was traded the most, with over 0.66 crore shares changing hands on the BSE. It was followed by a major Indian telecommunication company - Reliance Communications (0.58 crore shares), wind turbine major - Suzlon Energy (0.46 crore shares), India's second largest real estate developer - Unitech (0.28 crore shares) and India's leading integrated infrastructure finance player - IDFC (0.17 crore shares).

Sectoral & stock screening

All the sectors closed on a negative note. BSE Realty was the major loser, declining by 3.55%, followed by BSE Capital Goods (CG) down by 3.49% and BSE Bankex slipped by 2.46%. Rest of the sectors lost in the range of 0.10 - 2.14%.

In the 'A' group stocks, top three gainers were - Glenmark Pharmaceuticals surged by 2.63%, Aurobindo Pharma rose by 2.46% and Manappuram General Finance & Leasing gained by 1.38%. Top three losers were - Lanco Intratech dropped by 6.19%, IDFC slipped by 5.90% and Reliance Communications fell by 5.53%.

Global signals

The European stocks extended their losses on Tuesday as results from an Italian debt auction reignited concerns over the euro zone debt crisis.

The Asian markets finished higher on Tuesday on robust quarterly earnings.

The US stock index futures pointed to a higher opening for equities on the Wall Street on Tuesday.

Market Outlook: US Consumer Confidence Index and New Home Sales will be released on Tuesday.