The party on the Dalal Street came to an end after the RBI Governor in a surprising move announced hike in interest rates and increased the repo rate by 25 basis points to 7.5% from 7.25% and reverse repo report to 6.5% from 6.25%. Reacting to the news, benchmark indices wiped out majority of gains made in the previous session on Thursday with rate sensitive stocks leading the decline. The 50-share index closed at 6,012.10, down 103.45 points or 1.69% and touched intraday high of 6,130.95 and a low of 5,932.85. The S&P BSE Sensex closed at 20263.71 down by 382.93 points declining by 1.85%.
The RBI decision to hike the repo rate came as a nasty surprise for equity investors, who were expecting the new governor to take a positive view of the economy. The S&P BSE Sensex cracked over 500 points, while the 50-share Nifty index slipped below its crucial psychological support level of 6100 in trades by plunging around 3%. But off day’s lows the market appeared to be somewhat convinced by newly appointed RBI governor Raghuram Rajan’s defense of the 25 basis point repo rate hike.
Yet, the mood appeared sour as investors see interest rates climbing near term because of the RBI’s renewed war on inflation. Bank and realty shares were the worst performers as these sectors are most sensitive to interest rate movements. Except CNX Pharma (0.20%) all the other sectoral indices faced the brunt of harsh reality of the economy and leading among the losers was the CNX Realty (-7.47%) followed by CNX PSU Bank (-4.35%), Bank Nifty (-4.14%), CNX Finance (-3.33%) and CNX Service (-2.14%).
Market breadth was totally in contrast to the yesterday’s picture on NSE as 362 stocks gained against 810 declined and 64 remained unchanged.
Out of 50 stocks of Nifty index, 20 advanced and 30 declined.
Top Five Nifty gainers: Reliance Infrastructure (5.16%), Ultra Cement Co. (5.00%), GAIL (4.19%), HCL Technologies (3.65%) and Ambuja Cement (3.31%) were among the top Nifty gainers.
Top Five Nifty Losers: While realty and banking stocks faced the heat today, DLF was the biggest Nifty loser today plunging by -11.99% and followed by PNB (-7.51%), Bank of Baroda (-5.43%), IndusInd Bank (-5.16%) and J P Associates (-5.07%).
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