After a gap-up opening, the index showed selling pressure but after the Reserve Bank of India (RBI) hiked repo rate and CRR , the Index breached its major support level i.e. 16,800 level and closed the session with a loss of 391.50 points. Banknifty closed the session at 35264.55 level with a loss of 899.20 points.
All the sectoral indices ended in the red with auto, bank, FMCG, power, metal,realty, healthcare, capital goods indices down 1-3 percent. VIX is also closedat 21.88 with a gain of 7.80 percent.
At close, the Sensex was down 1,306.96 points or 2.29 percent at 55,669.03. Nifty was down 391.50 points or 2.29 percent at 16,677.60. About 825 shares have advanced, 2454 shares declined, and 98 shares are unchanged.
Forty-six out of Nifty50 stocks ended in red which suggest broad-based selling Among top laggards were Apollo Hospitals, Adani Ports, Hindalco Industries, Bajaj Finance and Bajaj Finserv. Gainers were ONGC, Britannia Industries, Power Grid Corporation, NTPC and Kotak Mahindra Bank.
Palak Kothari, Research Associate, Choice Broking said, Technically, the Index has formed a Bearish Engulfing candlestick pattern which indicates downsidemovement for the upcoming session. On a daily chart, the index has given breakdown of neckline of Head and Shoulder Pattern which suggest southward direction for the index. The index has beentrading below the 21*50-Days Simple Moving Averages indicating weakness fordownside movement. However, the momentum indicators STOCHASTIC is trading with negativecrossover on a daily Charts which indicates downside movement can be seen.
The Nifty has breached the support zone of 16,800 and given closing below the samenow 16,560 is the immediate support for the index, while on the upside 17,000 may act as an immediate hurdle for the index. On the other hand, Bank Nifty has support at 34,800 levels while resistance at 36,500 levels.
Mohit Nigam, Head - PMS, Hem Securities said, the benchmark Indices tumbled 2 percent after surprise rate hike by RBI. USD INR gained immediately while markets fell after this announcement. FOMC meeting outcome will also come today, so we believe this volatility will remain at elevated levels in coming sessions too. Investors should be cautious in these markets and can use these dips to make fresh positions in fundamentally sound stocks.
Immediate support and resistance for Nifty are 16,500 and 17,000 respectively. Immediate support and resistance for Nifty are 34,500 and 36,000 respectively, Nigam added.
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd, said, Ahead of the Fed meeting in the US, the Reserve Bank has created a stir in the Indian markets by suddenly increasing interest rates. The prime rate has been increased by 40 basis points and the CRR has also been increased by 50 basis points. Behind this, we saw a sudden drop in the benchmark indices. Finally, the market closed below the crucial level of 16,800 on the back of a negative result, which would push the market further down to 16,400/16,200 in the near term. On the upside, 16,800/16,900 would act as the biggest hurdle. Reducing weak long positions is advisable near the 16,800 levels and contra buying is recommended only around 16,200 and below.
Prashanth Tapse, Vice President (Research), Mehta Equities Ltd, said “The benchmarks collapse as RBI suddenly hikes repo-rates. The benchmarks tumbled hard in today's session after a surprise move by the RBI to raise repo-rates by 40 basis points. The street was already nervous as Fed Chairman Jerome Powell already hinted towards half-a-point rate hike in today's meeting outcome scheduled late at night. Hence, investors likely to feel the heat in the short term as central banks across the globe try to curb inflation by hiking interest rates. Technically, Nifty has already given up 16,807 support. Below 16,807, the next key level to watch is 16,597 mark. Expect waterfall of selling below 16,597 mark towards 15,900-15,921 mark”.
Rupee rises 8 paise to close at 76.40 against US dollar
The rupee appreciated 8 paise to settle at 76.40 (provisional) against the US dollar on Wednesday following RBI's surprise rate hike ahead of the US Federal Reserve's policy decision.
At the interbank forex market, the domestic unit opened at 76.46 against the US dollar. It moved in the range of 76.17 to 76.58 during the session.
The rupee finally closed at 76.40, registering a rise of 8 paise over its previous close.
On Monday, the rupee had settled at 76.48 against the US dollar.
The forex market was closed on Tuesday on account of Id-Ul-Fitr.
The RBI on Wednesday after an unscheduled MPC meeting hiked the benchmark lending rate by 40 basis points (bps) to 4.40 percent to contain inflation that has remained stubbornly above the target of 6 percent for the last three months.
Gold falls by Rs 134, silver declines Rs 169
Gold prices declined by Rs 134 to Rs 50,601 per 10 grams in the national capital on Wednesday in line with global trends, according to HDFC Securities.
In the previous trade, the precious metal had settled at Rs 50,735 per 10 grams. Silver also declined by Rs 169 to Rs 62,787 per kg from Rs 62,956 per kg in the previous trade.
(With inputs from Reuters)