A close below 8450 will pull the market down sharply
We had mentioned in Monday’s closing report that a close below 8,500 on NSE’s CNX Nifty may lead to a strong decline. The 50-stock index opened marginally higher but made a quick move into the negative. It stayed in the red for almost the entire session. The Nifty broke the 8,500 support but recovered and closed marginally in the red.
The S&P BSE Sensex, which opened at 28,225.04 points, closed at 28,071.93 points -- down 115.13 points or 0.41% from the previous day's close at 28,187.06 points.
The Reserve Bank of India (RBI), in its third monetary policy review, kept the repurchase rate, or its short-term lending rate, unchanged at 7.25%. Accordingly, the reverse repo rate, or the short-term borrowing rate, was unchanged at 6.25%. The cash reserve ratio (CRR), or the liquid money banks have to compulsorily hold, stood unchanged at 4%.
The decision to maintain the status-quo disappointed investors, as a general consensus had appeared that showed that the current review might be the last chance that RBI had to cut rates in this calendar year.
Markets are doubtful over the RBI's ability for a future easing of the monetary policy in the hindsight that inflation might spiral up again and the US Fed's decision on its own rates is coming up in September.
Sector-wise, healthy buying was observed in metal, automobile and banking stocks. However, consumer durables, oil and gas, information technology (IT), capital goods and technology, entertainment and media (TECK) sectors came under selling pressure.
The S&P BSE metal index zoomed by 230.82 points, the automobile index rose 193.07 points and the banking index went up 103.12 points.
The S&P BSE consumer durables index declined by 86.33 points, followed by the oil and gas index which receded by 68.23 points, IT index decreased by 65.22 points, capital goods index fell by 64.39 points and the TECK index was lower by 40.25 points.
Major Sensex gainers during Tuesday's trade were Tata Steel, up 3.39% at Rs.256.40; Hindalco Inds, up 3.36% at Rs.109.30; Coal India, up 2.82% at Rs.442.85; State Bank of India (SBI), up 2.54% at Rs.288.20; and Mahindra and Mahindra (M&M), up 2.18% at Rs.1,362.85.
The major Sensex losers were Hero MotoCorp, down 2.73% at Rs.2,624.25; Gail, down 2.53% at Rs.345.10, ONGC, down 2.40% at Rs.266.90; Wipro, down 2.16% at Rs.558.20; and Tata Motors, down 1.85% at Rs.380.95.
The top gainers and losers in the major indices are given in the table below:
Among the Asian markets, Japan's Nikkei was down 0.14% and Hong Kong's Hang Seng inched down by 0.02%. China's Shanghai Composite Index was higher by 3.69%. European markets are trading down and US pre-market futures is weak.