Last hour selloff drags Sensex in red zone, Nifty below 11,100

Possible profit booking by investors, especially after the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) announced a surprise rate cut, could not shore up the market.

Last hour selloff pushed the Sensex in the red territory, while the Nifty was back below 11,100 after hitting this level for a brief period.

The Bank Nifty gave up most gains after the RBI policy announcement; HDFC Bank was the stock which dragged the index most.

In the broader markets, the Nifty Midcap index outperformed peers and ended with gains of around a percent.

The Monetary Policy Committee (MPC) on expected lines changed its policy stance to ‘neutral’ from ‘calibrated tightening’ in its meeting on Thursday and also slashed repo rate by 25 bps.

Consequently, the reverse repo rate under the liquidity adjustment facility or LAF stands adjusted to 6.0 percent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.5 percent.

This was the first policy by the new RBI Governor Shaktikanta Das, who also heads the monetary policy committee. The decision to change the monetary policy stance was unanimous. The next meeting of the MPC is scheduled from April 2 to 4, 2019.

Experts advise investors to stay with sectors like banking, discretionary consumption, heavily indebted sectors like steel, power, real estate and infra which are likely to be key beneficiaries of the rate cut.

“The change in policy stance and rate cut are in line with expectations. We expect another 50 bps cut in 2019. We expect this to be positive for the debt market with RBI’s guidance of continued OMO. Deposit and lending rates, however, may not correct immediately and commensurately as deposit growth rate is lagging credit growth by 500 bps,” Sujan Hajra, Chief Economist, Anand Rathi Financial Services said in a statement.

At the close of market hours, the Sensex was down 4.14 points or 0.01% at 36971.09, and the Nifty up 6.90 points or 0.06% at 11069.40. The market breadth was narrow as 1392 shares advanced, against a decline of 1132 shares, while 162 shares were unchanged.

Sun Pharma, Bajaj Auto, and Zee Entertainment gained the most, while RIL, Power Grid, and JSW Steel lost the most.

Stocks in the News

Shares of Anil Ambani-led Reliance Group stocks continued to trade lower, with Reliance Infra shedding over 55 percent in this week so far.

Sun Pharma’s shares gained 4 percent after its subsidiary Taro posted strong results.

Grasim gained 3 percent after margins for December quarter were in line with estimates.

Siemens’ shares jumped 4 percent as the Street cheered its strong results.

Cipla’s shares rose over 1 percent even as the company saw a drop of 17 percent in its Q3 profit.

Lupin’s shares fell 2 percent as investors turned wary of observations issued by the US Food and Drug Administration for its Pithampur unit.

Share price of Cummins India slipped 4 percent despite company posted better numbers for the third quarter ended December 2018.

Share price of Vodafone Idea rose 8 percent despite company’s net loss widening in the quarter ended December 2018.

Global Markets

European stocks were lower as investors continued to react to corporate results. Stoxx 600 was down around 0.2 percent.

Stocks in Asia were mixed on Thursday amid hopes of some progress on US-China trade talks front. Nikkei 225 slipped 0.59 percent to close at 20,751.28 while the Topix declined 0.83 percent to finish its trading day at 1,569.03.