Nifty, Sensex, Bank Nifty show first signs of reversal – Wednesday closing report
A close below 8,890 in Nifty and below 19,600 in Bank Nifty will confirm the downtrend
The market was supercharged on Wednesday before trading started on the news of unanticipated rate cut by Reserve Bank of India (RBI). The indices opened sharply higher at their lifetime highs and moved higher. However, selling started immediately. The indices moved gradually lower. After around 2.20pm, the benchmarks made a sharp plunge into the red zone. They hit the day’s low and closed near to it, thus abruptly breaking the trend of past four days of upmove.
S&P BSE Sensex opened at 29,937 while NSE’s CNX Nifty opened at 9,109. Sensex hit its high at 30,025 while Nifty hit the high of 9,119. Sensex moved lower to the level of 29,289 and closed at 29,381 (down 213 points or 0.72%). Nifty hit a low of 8,894 and closed at 8,923 (down 74 points or 0.82%). Nifty managed closed just 12 points above the support of 8,910 we mentioned in Tuesday’s closing report. Bank Nifty opened at 20,542, which was the day’s high it moved to the low of 19,555 and closed at 19,644 (down 317 points or 1.59%). NSE recorded huge volume of 125.91 crore shares. India VIX fell 1.90% to close at 15.1975.
The Reserve Bank, in a surprise move, reduced repo rate under the liquidity adjustment facility by 25 basis points to 7.5% from 7.75% with immediate effect. Cash reserve ratio (CRR) of scheduled banks remained unchanged at 4% of net demand and time liabilities.
The RBI said that the need to act outside the policy review cycle is prompted by two factors. First, while the next bi-monthly policy statement will be issued on 7 April 2015 the still weak state of certain sectors of the economy, as well as the global trend towards easing, suggests that any policy action should be anticipatory once sufficient data support the policy stance, the central bank said. Second, with the release of the agreement on the monetary policy framework, it is appropriate for the Reserve Bank to offer guidance on how it will implement the mandate, the central bank said.
The HSBC Services Purchasing Managers' Index (PMI) rose to 53.9 in February from 52.4, its highest since June 2014. Strong new business growth was the primary factor cited by survey respondents for the increase in activity.
Telecom companies are likely to commit $13 billion or over Rs80,000 crore in the ongoing spectrum auction with Idea Cellular being the "most exposed" in the race as a bulk of its licences are getting expired soon, global ratings agency Fitch has said.
Coming back to stock markets, Alstom T&D (9.06%) was the top gainer in ‘A’ group on the BSE. The stock hit its 52-week high today.
Bhushan Steel (8.00%) was the top loser in ‘A’ group on the BSE. STCI Finance has invoked 176,000 shares in Bhushan Steel that were pledged by Bhushan Infrastructure to overcome losses from the fall in stock prices in the last one week.
Sun Pharma (6.62%) was the top gainer in the Sensex 30 pack. It hit its 52-week high today. Sun Pharma entered into an agreement whereby it will acquire GSK’s opiates business in Australia. Currently, GSK opiates business, including related manufacturing sites in Latrobe (in the State of Tasmania) and Port Fairy (in the State of Victoria) and its portfolio of opiates products along with inventory, will be transferred to a subsidiary of
Sun Pharma. GSK’s product portfolio consists of poppy-derived opiate raw materials, used primarily in the making of analgesics to treat moderate to severe pain. Sesa Sterlite (4.11%) was the top loser in the Sensex 30 stock.
On Tuesday, US indices closed in the red.
Except for Shanghai Composite (0.51%), KLSE Composite (0.24%) and Taiwan Weighted (0.17%) all the other Asian indices closed in the red. SET Composite index of Thailand was the top loser.
China's monthly HSBC purchasing managers' index for the services sector was 52, a slight increase from the six-month low of 51.8 in January.
Japan's Markit's monthly index of the services sector fell from 51.3 in January to 48.5, the lowest reading since April. Australia's GDP grew at an annual pace of 2.5%, matching estimates, data showed today.
European indices were trading in the red. US Futures too were trading lower. Monthly monetary policy review from the European Central Bank is scheduled tomorrow.