The headline indices Sensex and Nifty ended lower on Wednesday afternoon, despite central bank RBI cutting interest rate by 35 bps amid a slowdown in demand and investments. The Sensex slumped by more than 286 points to 36,690.50, while the Nifty closed near the 10,850-mark. The stock market witnessed a highly volatile session with the 30-share Sensex swinging 494 points with an intra-day low of 36,610.57 and a high of 37,104.79. The broader NSE Nifty also fell 92.75 points or 0.85 per cent to 10,855.50. During the day, Nifty hit a low of 10,835.90 and a high of 10,975.65.
"For the first time in a decade, we witnessed an aggressive rate cut in a credit policy," Shrikant Chouhan, Head Technical Research, Kotak Securities said adding that the the markets closed lower as domestic worries kept investors worried, despite strength in world markets. PSU bank, Metals and Auto Indices were draggers, whereas IT and Pharmaceuticals tried to pull the index higher. The RBI cut interest rate by an unusual 35 basis points to a nine-year low in an attempt to boost the slowing economy, making it the fourth consecutive rate cut by the central bank. The RBI also reduced its growth projection for the Indian economy to 6.9 per cent for the current financial year, from 7 per cent forecast in June, due to a slowdown in demand and investments.
According to technical analyst Milan Vaishnav, it would be improper to dedicate a specific reason for today's downside. "It is just that the FII selling has continued and the weak technical setup has prevented us from getting a long-awaited pullback. This has made the oversold markets even more deeply oversold at current levels," Milan Vaishnav, CMT, MSTA Consulting Technical Analyst, at Gemstone Equity Research & Advisory Services told Financial Express Online.
Many interest rate-sensitive stocks ended on a negative note, with BSE auto, bankex, finance and realty indices shedding up to 2.10 per cent. M&M (5.62%), Tata Steel (4.75%), Tata Motors (4,2%), SBI (3.75%), Vedanta (3.02%), were among the biggest losers in the Sensex pack. Shares of Axis Bank, ITC, RIL, Maruti, L&T, HDFC twins and Kotak Bank ended up to 3% lower on Wednesday. HUL, Yes Bank, Hero MotoCorp, IndusInd Bank, Sun Pharma, Tech Mahindra and Infosys ended in the green, jumping up to 1.95 per cent. Meanwhile, the Indian rupee slumped 2 paise to 70.84 against the US dollar.