Tuesday, the Indian market saw a sharp intra-day rebound on the back of gains in European stocks and US index futures, but the recovery proved short-lived. Nevertheless, the market cut most of its early losses on expectations of a further softening of lending rates.
In its annual credit policy, the Reserve Bank of India slashed short-term lending (repo) and borrowing (reverse repo) rates by 25 basis points each to shore up faltering growth, but scaled down its growth target in FY10 to 6 percent. The policy action was on expected lines and banks are expected to bring down their lending and deposit rates considerably after reviewing their asset liability conditions.
Earlier in the day, the benchmark BSE Sensex opened lower at 10,765 on the back of a sharp set back on Wall Street overnight amid renewed worries about the health of the US financial system. Thereafter, the Sensex recovered to 11,069 in the afternoon, but gave back all its gains in the last hour to finish at 10,898, down 81 points or 0.74% over the previous close. Likewise, the S&P CNX Nifty closed at 3,365, down 12 points or 0.34%.
While the broad-based BSE- 500 index moved down 0.63% in line with the benchmarks, the mid-cap index slipped a modest 0.16% and the small-cap index bucked the declining trend with a 0.42% rise. The market breadth, however, remained slightly negative, as decliners outnumbered advancers by 1281 to 1231. Sector-wise, banking, auto and capital good stocks bore the brunt of the selling, while realty, defensive FMCG and stocks in the healthcare sector closed firm.
Among the major decliners, Tata Steel plunged 7.06%, Maruti Suzuki slumped 5.38%, Tata Motors tumbled 5.18% and Sterlite Industries fell 4.21%. ICICI Bank, Larsen & Toubro, State Bank of India, Reliance Infrastructure, Mahindra & Mahindra and Infosys were the other top losers.
However, Bharti Airtel rallied 4.35%, Hindalco Industries rose 3.83% and Sun Pharma ended up 3.15%. DLF, Tata Power, ITC, HDFC Bank, Hindustan Unilever, Reliance Communication, Graism Industries, NTPC and Wipro also ended in the green.
Realty stocks led the gainers on hopes of improved demand for housing after the central bank asked banks to review their benchmark prime lending rates. Among the major gainers in this sector, Anant Raj Industries climbed nearly 10%, Indiabulls Real Estate rallied 5.44%, DLF gained 2.84%, Parsvnath added 1.14% and Sobha Developers moved up 0.97%.
However, Unitech fell 3.44% after the National Stock Exchange banned traders from taking fresh positions in the stock in the derivatives segment as derivative contracts on Unitech exceeded 95% of the market-wide position limit.
Sugar stocks closed mixed after sugar futures continued its slide for the sixth straight session on Tuesday on increased supplies in the spot market. State-owned oil companies HPCL and IOC closed firm, but BPCL slipped 0.26% after crude oil price tumbled more than 8% in New York trading on Monday.
National Aluminum rose 1.49% despite reports that it has suffered a production loss of over one lakh tonnes of Bauxite in eastern India as mining operations remain suspended following an attach by Maoist rebels on its mines earlier this month.
ICICI Bank slumped 6.51% amid changes at the top management level of its group firms ICICI Prudential and private equity firm ICICI Ventures.
ICSA India fell 3.63% after the company disclosed that G Bala Reddy, chairman & managing director of the company, has pledged more than 19.57 lakh shares representing 4.17% of the equity capital of the company.
Sesa Goa closed down 0.86% on reports about its plans to spend Rs.300 crore on rasing production by as much as 30% this year. Escorts drifted down 2.30% on reporting a 19.2% fall in net profit for the March quarter year-over-year.
TCS retreated 1.55% despite a liberal 1: 1 bonus issue. Similarly, Axis Bank tumbled 3.22% despite reporting significant growth in net profit for the March quarter as an 81% increase in its gross performing assets to nearly Rs.900 crore weighed on sentiment.
Wind-turbine maker Suzlon Energy shed nearly 2% on reporting a net loss of Rs.52.3 crore for the nine-month period ending December 2008 compared to a net profit of Rs 565.28 crore in the year-ago period.
Hexaware Technologies advanced 2.41% after it has announced a global partnership with Greenplum. Matrix Laboratories rose 0.42% after the Clinton HIV/AIDS Initiative and UNITAID selected the company as the primary supplier of five antiretroviral drugs used in second-line HIV/AIDS treatment regimens.
Seamec gained 5% on reporting a net profit of Rs 61.95 crore in the March quarter compared to a net loss of Rs 17.02 crore in the same quarter last year. Dish TV surged up 7.43% after a block deal of 15.12 lakh shares was executed on the Bombay Stock Exchange.
Reliance topped the traded value with a turnover of Rs 283.45 crore followed by Reliance Capital (Rs 255.26 crore), Educomp Solutions (Rs 205 crore), ICICI Bank (Rs 202.80 crore) and HDIL (Rs 187.23 crore).
Cals Refineries led the traded volume with trades of around 2.63 crore shares followed by Unitech (2 crore), Suzlon (1.70 crore), Reliance Natural Resources (1.56 crore) and HDIL (1.40 crore).
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