In a late sell-off, equity benchmarks shed nearly one percent with the Nifty closing below 7800 on Monday – the first trading day of October series – as investors turned cautious ahead of much awaited RBI policy.
The 30-share BSE Sensex dropped 246.66 points or 0.95 percent to 25616.84 and the 50-share NSE Nifty plunged 72.80 points or 0.93 percent to 7795.70. The fall in broader markets was less compared to benchmarks. The BSE Midcap and Smallcap indices lost 0.2 percent each.
Analysts expect the RBI governor Raghuram Rajan to cut repo rate by 25 basis points, citing lower CPI inflation. However, there may be a slight possibility of no rate cut due to RBI’s accommodative stance, analysts say. According to them, a 25 bps rate cut may have already priced in.
Pramod Gubbi of Ambit says even if RBI cuts rates tomorrow , relief rally will be shortlived. The Nifty will form a base at 7500 if global cues disappoint, he adds.
Banking stocks erased gains in late trade ahead of monetary policy. Majors State Bank of India and ICICI Bank closed flat. Axis Bank was down 1.3 percent and HDFC Bank declined 0.4 percent. Housing finance company HDFC dropped 0.66 percent.
Tata Motors was the biggest loser on Sensex, down 6 percent, which may be seeing ripple effect caused by Volkswagen as company owns luxury car brand Jaguar Land Rover. The German car maker’s board members today suspended R&D heads of passenger cars, Audi & Porsche. Additionally, German prosecutors today launched probe against company’s former VW CEO Winterkorn w.r.t emissions rigging at company.
Pharma stocks were in focus today. Sun Pharma plunged 3.4 percent after the USFDA revoked its earlier approval of anti-epilepsy drug Levetiracetam NDA to Sun Pharma Advanced Research Company (SPARC) on account of compliance issues at the Halol plant. SPARC was down 2.6 percent.
However, Dr Reddy’s Labs surged 5.5 percent, the biggest gainer on benchmarks after the company launched Nexium generic Esomeprazole in the US. The drug is used in treatment of gastroesophageal reflux disease (GERD) in adults and children ages 1 & older. Lupin was another gainer with 2.2 percent.
Adani Enterprises gained 0.25 percent after it added into CNX Nifty today. Larsen & Toubro was down 2.2 percent despite getting water & waste-infra orders worth Rs 1,509 crore.
UltraTech Cement lost 3 percent after CREDAI NCR says they will not buy cement from the company as they alleged that cement companies have increased prices by 40 percent in the recent past. CREDAI NCR president says the region consumes 12 to 15 million tonnes of cement annually.
Metals and mining stocks also saw selling pressure. Vedanta, Tata Steel and Coal India were down 3-4 percent.
Among others, Infosys, ITC, Wipro, Bharti Airtel and BHEL lost 1-3 percent while TCS (up 0.6 percent) and HUL (1.4 percent) were gainers.
MCX gained 1.7 percent as Sebi formally took over commodities segment post the merger of FMC with Sebi.
On the global front, Japan’s Nikkei and Singapore’s Straits Times were dowm more than 1 percent amid thin trade in Asia with several key markets shut for holidays. China data continued to remain weak as industrial profits declined 8.8 percent year-on-year in August. European equities drift in the red with the FTSE, CAC and DAX losing 1 percent each after weak lead from Asia.