Downward revision in GDP growth forecast for FY19-20 to 7 per cent from earlier 7.2 per cent, no measure to address liquidity crisis and higher inflation expectation by the Reserve Bank led to profit taking after the monetary policy announcement on Thursday.
The Sensex and Nifty-50 fell close to 1.5 per cent with financials taking a huge cut. Sensex fell 553.82 points or 1.38 per cent to 39,529.72 while the Nifty-50 fell 177.90 points or 1.48 per cent to 11,843.75. In the broader market Mid-Cap fell 1.77 per cent while Small-Cap fell 1.60 per cent.
Among the sectoral indices Nifty Bank fell 2.32 per cent while Nifty PSU Bank fell 4.90 per cent. Among other rate sensitive indices Auto outperformed with a fall 0.89 per cent, Realty fell 1.75 per cent and IT fell just 0.58 per cent.
Among the top losers in the Nifty-50 were GAIL (-11.49 per cent), Indiabulls Housing Finance (-7.73 per cent), IndusInd Bank (-6.84 per cent), Yes Bank (-5.86 per cent) and SBI (-4.57 per cent).
The market fell across the board on account of both foreign portfolio investors (-Rs 1448 crore) and domestic institutions (-650.84 crore) turning net sellers.
Technical View
Sneha Seth, Derivatives Analyst, Angel Broking said, "As the day began, we saw index correcting below 12,000 and then halted ahead RBI policy outcome. The selling pressure accelerated as Monetary Policy Committee cut the repo rate by 25 bps to 5.75 per cent. Eventually, the benchmark index concluded the session near the lowest point."
"Surprisingly, Regardless of the fall in the market, the volatility index was merely down 0.64 per cent keeping further moves in the market quite open. Going ahead, 11,750-11,770 shall act as immediate support zone; whereas, 12,000-12,040 is a hurdle now," Seth said.
Nagaraj Shetti - Technical Research Analyst, HDFC securities said, "The recent all time high of 12,103 levels could now be considered as a near term top reversal pattern in the Nifty. The short term trend of Nifty is down. Next lower levels to be watched is 11,600 in the next few sessions."
Market View
Ravi Kumar, CEO and Co-founder at Upstox, said, "Though the markets have not cheered it immediately, the RBI’s 25 bps interest rate cut is a noteworthy development. Being 3rd rate cut since February, this is the clearest indication that the RBI is deeply concerned about growth. The RBI, which has now changed its stance to 'accommodative, now seems more than ready to use interest rates and liquidity to boost demand”.
