Monday 18 June 2012

RBI stuns markets; Sensex plunges 244 pts in volatile trade





Mumbai: With RBI dashing hopes of interest rate cut, the Sensex plunged by 244 points making investors poorer by Rs 75,000 crore, after shares notched up handsome gains in early trade on the victory of pro-reforms parties in Greece elections.

Between the two key events - Greece election results and RBI keeping interest rates unchanged - the 30-scrip BSE Index had a roller-coaster ride of 400 points. It first went up by 160 points and crossed the 17,000 mark for the first time in over six weeks.

However, the shares moved in the opposite direction after the Reserve Bank poured cold water on widespread expectations of at least 0.25 percent cut in the interest rates. Banks, realty and auto stocks bore the brunt as investors fled the rate-sensitive counters.

With 28 counters in the 30-share Sensex closing with losses, the index ended at 16,705.83, down 244 points or 1.44 percent over its previous close.

"Markets corrected as RBI disappointed street on both repo as well as CRR rates. It did not cut rates whereas street was expecting minimum 25 bps rate cut in repo as well as CRR," said Kishor P Ostwal, CMD, CNI Research.

On the contrary, Asian stocks closed with up to 1.8 percent gains while European indices were trading up to 1 percent up in initial trades on improved sentiments after the pro-reforms parties won the the Greek polls, alleviating fears of the troubled nation exiting the Eurozone.

The investor mood in domestic markets was further soured as the rupee again breached the 56-level.

While the news of rating agency Fitch lowering India's credit rating outlook to negative came after the market hours, it left a nagging worry among the market participants.

The losses in Sensex were led by SBI (4.36 percent), Sterlite (4.34 percent), ICICI Bank (3.34 percent), HDFC Bank (2.71 percent) and Dr Reddy (2.38 percent). There was no support from heavyweights, ITC and Reliance which fell in 1-2 percent range.

The NSE wide-based Nifty also plunged by 74.80 points or 1.46 percent to 5,064.25.

Key benchmark indices in China, Hong Kong, Taiwan, Japan, Singapore and South Korea were up by 0.40 percent to 1.77 percent.

European markets pared initial gains and were trading still slightly higher as key indices in France, Germany and London inched up by 0.13 percent to 0.83 percent.

Among the 30-share Sensex, only two counters Tata Steel (1.29 percent) and Bajaj Auto (0.94 percent) ended higher.

Major losers included SBI (4.36 percent), Sterlite (4.34 percent), ICICI Bank (3.34 percent), HDFC Bank (2.71 percent), Dr Reddy's Lab (2.38 percent), ITC (2.04 percent), Gail (2.01 percent), BHEL (1.92 percent), Jindal Steel (1.80 percent), Tata Power (1.55 percent), Maruti Suzuki (1.49 percent), HDFC (1.21 percent), Cipla (1.13 percent), TCS (1.12 percent) and RIL (1.09 percent).

Market capitalisation across nearly 2,700 stocks stocks today fell to Rs 59.01 lakh crore from from Rs 56.76 lakh crore, registering a drop of Rs 75,000 crore.

The market breadth turned negative as 1,688 stocks closed with losses while 1,001 ended with gains.

Among the sectoral indices, the BSE-Bankex fell by 3.16 percent, followed by the BSE-Realty (2.78 percent), the BSE-FMCG (1.68 percent), the BSE-PSU (1.39 percent), the BSE-Power (1.29 percent), the BSE-Capital Goods (1.07 percent) and the BSE-Metal (1.01 percent).

However, the total turnover rose to Rs 1,942.50 crore from the last Friday's level of Rs 1,722.99 crore.

"Market has witnessed a sharp selloff today on the policy announcement, however further downside cannot be ruled out," said Shanu Goel, Senior Research Analyst, Bonanza Portfolio.

Meanwhile, Foreign institutional investors bought shares worth a net Rs 339 crore on last Friday as per provisional figures from the stock exchange taking a total to Rs 2,129.60 crore in last eight days since June 6.

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