The BSE becnhmark Sensex snapped a 4-day rally despite RBI rate cut announcement to fall 213 point to close at 29380.13 on Wednesday. In a volatile trading day, the index touched lifetime high of 30,024.74 points while NSE’s Nifty also touched lifetime high of 9,119.20 points in early trade.
BSE index fell as much as 1 pct after earlier rising 1.46 pct to mark record high during the day.
Traders say some foreign investors may be booking profits after recent rally. Foreign investors have bought Indian equities worth $4.48 billion. Falls in India markets also track lower Asian shares as investors grow cautious before upcoming central bank meetings and U.S. jobs data
The benchmark indices touched new highs on Wednesday after the Reserve Bank of India (RBI) surprised markets with a 25 basis points rate cut.
The RBI in a statement said, “Disinflation is evolving along the path set out by the Reserve Bank in January, 2014 and, in fact, at a faster pace than earlier envisaged.”
Raghu Kumar, Cofounder RKSV
The RBI’s surprise decision to cut the repo rate by 25 basis points provided a temporary boost to the markets as the Sensex finally crossed the all important psychological mark of 30,000. However, at around 2 pm, it remained clear that the markets were hesitant on the complete implications of the repo rate cut on future market conditions and the markets continued trending sideways. Traders booked their profits and the Sensex fell a staggering 600 points from its day high.
That being said, the markets should pick up this next week from where this morning’s bull run left off. Once the complete picture is factored into the markets, seeing how the RBI is comfortable with inflation levels and feels confident that it will be able to fight inflationary pressures, we can expect the markets to continue a bull run in the next few weeks as the Sensex crosses the all important 30,000 mark comfortably.
All sectoral indices were trading in the green. BSE Realty was the top gainer with gains of 2.3%. BSE Bankex and BSE Capital Goods were trading 1.8% and 1% higher, respectively.
Among individual stocks, SBI (2.2%), ICICI Bank (1.9%) and HDFC (1.8%) were the top Sensex gainers.
Equity brokers said sentiments were buoyed largely on the back of RBI’s surprise move to cut repo rate by 0.25 per cent to 7.5 per cent, accelerating buying activity, particularly in interest-sensitive stocks.