Besides the losers in the Sensex pack, most of the rate-sensitive stocks also lost considerable ground as the policy rate cut failed to lift investors' spirit
Domestic equity markets ended lower on Wednesday despite RBI's 35 bps rate cut as cut in GDP forecast to 6.9% for this fiscal, benign inflation outlook and fears of global slowdown dampened the investors' sentiment.
Key benchmark indices S&P BSE Sensex touched an intraday low of 36,610.57 before closing 286.35 points, or 0.77%, lower at 36690.50, whereas broader NSE Nifty touched a low of 10835.90 intraday and closed 92.75 points, or 0.85%, lower at 10855.50.
Dhiraj Relli, MD & CEO, HDFC Securities, said, This (rate cut) induces some uncertainty in market expectations on the quantum of rate changes expected henceforth. The overall tone of the monetary policy was dovish with slowing growth - both on the global and domestic front - being a major concern."
According to Relli, the main focus is now on improving the rate transmission of the bank lending rates, which by far has not shown the commensurate extent of easing.
Sahaj Agarwal, head of derivatives, Kotak Securities said, "Nifty has broken strong support levels of 11000 and continues to remain under pressure. With the dollar weakening and global markets being under pressure expect volatility to remain high. On the downside, support is seen at 10600-10830. Expect consolidation in the near term before the market decides its further course of action. IT and select consumption stocks trade with a positive bias while metal and PSU banking remain under significant pressure."
Besides the losers in the Sensex pack, most of the rate-sensitive stocks also lost considerable ground as the policy rate cut failed to lift investors' spirit.
Automobile stocks, which have been intense selling pressure over past several sessions, continued their downward spiral, with Mahindra & Mahindra tumbling over 5.5% and Tata Motors falling 4.2%. Sector leader Maruti also ended around a percent lower.
Investors also hammered realty stocks at will as Indiabulls Real Estate crashed over 16%, while DLF eased 1.75% and Godrej Properties declined 1.3%.
Several banking stocks also came under hammering. Bank of Baroda dropped 6.7%, PNB plunged 5.2%, Bank of India ost 4.4% and SBI was down 4.1%.
However, market experts feel the rate cut could rate-sensitive companies in the medium term.
Romesh Tiwari, head of research, CapitalAim , "I see an immediate positive impact on real estate, two-wheeler, and consumer durable companies ahead of the festival season."
Hero MotoCorp, TVS Suzuki, DLF, Asian Paints and Godrej Properties are some of the stocks that are likely to benefit from the rate cut.
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