Realty stocks were the major casualty of the surprise interest rate hike announced by the central bank on Friday. BSE Realty index was down 3.8% on Monday, while benchmark indices fell by around 1%.
The 30-share BSE Sensex was down by 167.66 points or 0.95% to end the day at 17,410.57. S&P CNX Nifty of National Stock Exchange lost 57.60 points or 1.09% to close at 5,205.20. ?The rate hike was expected, though the market was unsure about its timing”, says Krishna Sanghavi, head of equities at Kotak Mahindra Mutual Fund. While the rate hike is already priced into the markets, he expects a further rate hike in the RBI credit policy in April as a measure to control inflation.
Foreign institutional investors continued their buying spree despite the rate hike. FIIs were net buyers to the tune of Rs 300 crore, according to the provisional BSE figures. This month alone, FIIs bought stocks worth more than $3 billion.
On Friday, Reserve Bank of India increased the repo and reverse repo rates by 25 basis points to 5% and 3.5%, respectively.
BSE Health Care index was the only sectoral index to end on a positive note, while realty and metal remained the worst performers. Market experts are keenly waiting for the earnings season next month before taking fresh positions. ?Markets are likely to take major directions only after the earnings season starts from April,? added Sanghavi. However, interest rate-sensitive sectors like auto, realty and banking are likely to remain under pressure in the coming days, felt analysts.
Ahead of the expiry of March futures on Thursday, huge turnover was witnessed in the NSE derivatives segment which stood at over Rs 1.02 lakh crore, up 35% over Friday?s turnover, while the average daily turnover in the last six months stood at about Rs 76,600 crore. TS Harihar, head of institutional derivatives, ICICI Securities, said rollovers on Monday were over 30%, but were likely to go up in the coming days. ?Rollovers should be at 70% on the expiry of March derivatives series on Thursday? he added. While the NSE cash segment reported a turnover of over Rs 12,400 crore, down 7.23% against previous session, the average daily turnover in the last six months stood at about Rs 15,400 crore.
Most Asian markets ended the day on a negative terrain. Hong Kong’s Hang Seng lost 2.1%, to 20,933.25 and South Korea’s Kospi Index ended flat at 1,672.67. Japanese markets were closed for a national holiday. However, China?s Shanghai Se Composite IX benchmark added 0.2 %. Asia markets are likely to take cues on the Greece debt problems from the forthcoming meeting of European Union leaders, later this week.