Nifty is headed for 5,350 and below, unless the Reserve Bank of India springs a surprise at its policy review meeting on Thursday

The Reserve Bank of India's (RBI) possible move to cap rising inflation with a 25 basis point rate hike pulled the market lower today.

The market opened lower, as nervousness took centre-stage ahead of the RBI's policy review, due tomorrow. The Sensex started the day 10 points lower at 18,299 and the Nifty opened at 5,494, seven points down from its previous close. Selling was seen in realty, banking, consumer durables and IT stocks, in early trade.

The market was range-bound till mid-morning, after which buying in select stocks lifted it marginally, although the key indices were still negative. The market touched the day's high with the Sensex at 18,309 and the Nifty at 5,499. However, across-the-board selling and key European indices trading in the red, pulled the domestic indices southwards in post-noon trade.

The market fell to its intra-day low in the last hour, with the Sensex losing 198 points to 18,111 and the Nifty at 5,439, down 62 points. The benchmarks managed a close above those levels, the Sensex ended at 18,132 a fall of 176 points and the Nifty settled at 5,448, a loss of 53 points.

The Nifty traded below yesterday's closing throughout the session and ended at a 14-day closing low. The Nifty has hit a lower intra-day low and closed below the first support of 5,450. The downtrend will be confirmed if the Nifty hits a lower low and lower close below 5,415. After that it could quickly fall to 5,350 and below. What can reverse the decline is a surprise move by the RBI not to tighten rates.

The advance-decline ratio on the National Stock Exchange was 475:917.

Among the broader indices, the BSE Mid-cap index declined 0.55% and the BSE Small-cap index fell by 0.59%.

In the sectoral space, BSE Bankex (down 1.58%), BSE Realty (down 1.34%), BSE IT (down 1.25%), BSE Power (down 1.10%) and BSE Consumer Durables (down 1.09%) were the top losers. BSE Fast Moving Consumer Goods (up 0.14%) and BSE Healthcare (up 0.02%) were the only sectoral gainers.

DLF (down 2.80%), Wipro (down 2.78%), State Bank of India (down 2.33%), ICICI Bank (down 2.10%) and Jaiprakash Associates (down 2.02%) ended at the bottom of the Sensex list. Reliance Infrastructure (up 1.46%), Tata Motors (up 0.96%), Hindustan Unilever (up 0.52%), Hero Honda (up 0.20%) and ITC (up 0.13%) were the top performers on the benchmark.



Rain Commodities had announced a sub-division of one equity share of Rs10 each into five equity shares of Rs2 each on 12th May. The record date has been fixed on 16 June 2011. The stock was down 8.17% on the NSE today.

Markets in Asia settled mixed as the Chinese central bank's rate tightening on Tuesday resulted in the Shanghai Composite settling in the red. While stocks in Seoul ended higher, the South Korean central bank said it is open to more rate hikes as prices remain higher. The continuation of the debt crisis in Europe also weighed on investors.

The Jakarta Composite gained 0.56%, the KLSE Composite rose 0.50%, the Nikkei Composite was up 0.28%, the Seoul Composite climbed 0.47% and the Taiwan Weighted added 0.03%. On the other hand, the Shanghai Composite tanked 0.90%, the Hang Seng declined 0.68% and the Straits Times shed 0.08%.

Back home, foreign institutional investors were net sellers of stocks worth Rs798.53 crore on Tuesday. On the other hand, domestic institutional investors were net buyers of shares worth Rs610.72 crore.

The home ministry has given unconditional approval to Reliance Industries (RIL) for the sale of a 30% stake in 23 oil and gas properties, including the Mukesh Ambani-led company's showpiece KG-D6 block, to UK's BP Plc for $7.2 billion. RIL brought in BP to leverage Europe's second biggest firm's expertise in producing oil and gas from deep-sea areas.

RIL has been facing sub-surface technical problems at its eastern offshore KG-D6 fields, where production has fallen from 61.5 million metric standard cubic metres per day (mmscmd) to about 48 mmscmd, far below the targeted 69 mmscmd. The stock fell 1.40% to Rs900.75 per share on the Bombay Stock Exchange (BSE) today.

Following the Supreme Court asking the Central Bureau of Investigation to explain the whereabouts of the Rs200 crore bribe that was allegedly routed to Sun TV in the telecom spectrum allocation scam, CBI sources said they would write to the Enforcement Directorate (ED) to initiate the process to attach the property or equity shares worth Rs200 crore of DB Realty. The DB Realty stock fell 0.67% to Rs74.15 on the BSE.