Rate sensitives drag Sensex below 19K

The Sensex fell at the close, slipping below 19000 levels, weighed by rate sensitive sectors like banks and realty, which were under pressure after RBI’s move

Major headlines

RBI hikes repo, reverse repo rates by 25 basis points

Poor Q3 results drag Hindustan Unilever

Sterlite Industries Q3 consolidated net profit up 60% yoy



Indian indices

Though Reserve Bank of India’s move was on expected lines with the markets, it failed to pull the key benchmark indices higher at the close. The indices slipped in red in the second half of trade dragged lower by rate sensitive sectors like banks and realty, which were under pressure after RBI’s decision.

The RBI raised repo rate and reverse repo rate by 25 basis points to 6.25% and to 5.5% respectively while the CRR was left unchanged. The GDP growth forecast has been retained at 8.5% with upward bias while WPI inflation forecast has been raised from 5.5% to 7% for FY11. Rising inflation concerns and likely slow down in economic growth spooked Indian indices, with Sensex below 19000 levels and Nifty below 5700 mark. The benchmark indices witnessed extreme volatility today.

Traded turnover was far higher than the average turnover seen in last few sessions, mainly ahead of derivates contracts expiry on Thursday (January 27, 2011). Total traded turnover reported by exchanges at Rs2,22,692.3 crore, including Rs2,06,028.02 crore from F&O segment. It showed that lot of shorts triggered in rate sensitives - particularly in private banks and mainly ahead of expiry.

The Sensex started the trade 76 points higher at 19227 on account of strong global indices. The index was trading with gains before the announcement of the central bank’s policy. In the mid-morning session, the Sensex hit the day’s high of 19341 after the RBI hiked key rates in line with the market expectations. Rate sensitive sectors witnessed selling pressure after the RBI’s move, which dragged the index lower in the afternoon trade. The Sensex hit the day’s low of 18949 in late trade as selling intensified in banks, FMCG, healthcare, realty and auto stocks.

The Sensex fell 182 points to close at 18969 and the Nifty shut at 5687, down by 56 points.

Market sentiment

The market breadth stood negative as trailing shares outnumbered the advancing ones. Out of the 3,007 stocks traded on the BSE, 1,652 fell while 1,207 advanced whereas 148 stocks traded unchanged.

Viewing volumes

Wind turbine major - Suzlon Energy was traded the most, with over 0.26 crore shares changing hands on the BSE, followed by second largest developer - Unitech (0.26 crore shares), realty major - Indiabulls Real Estate (0.21 crore shares), India's leading steel company - Tata Steel (0.20 crore shares) and the country's third largest property developer - Housing Development & Infrastructure (0.19 crore shares).

Sectoral & stock screening

Ten sectors ended lower, while rest three closed higher. BSE Bankex was under pressure after RBI’s move and fell the most by 2.34%, followed by BSE FMCG down by 1.67% and BSE HC lost by 1.25%. On the gainers’ side - BSE Consumer Durables (CD) rose the most by 1.73%, while BSE Capital Goods (CG) and BSE Power surged by 0.28% each.

Among 'A' group stocks, top three gainers - Bharat Petroleum Corporation gained by 4.92%, IL&FS Transportation Networks rose by 3.73% and Motherson Sumi Systems advanced by 3.72%. Top three losers - Hindustan Unilever slid by 5.45%, Jaypee Infratech declined by 4.97% and Rural Electrification Corporation lost by 4.32%.

Global signals

The European markets traded mixed, after Britain's economy unexpectedly shrank in the fourth quarter and Spanish banks retreated after a recent strong run.

The Asian markets closed on a mixed note. Jakarta Composite rose by 2.63%, while Shanghai Composite ended 0.68% lower.

The US stock index futures point to a weaker opening on the Wall Street ahead of consumer confidence data.

Market Outlook: In the US, Consumer Confidence Index will be out.