Sensex, Nifty tank as RBI keeps lending rate unchanged; Paytm tumbles 10%; SBI jumps 4%

Domestic equity markets ended with big cuts on Thursday following RBI's in-line monetary policy. However, sharp selling in financial and rate-sensitive counters dragged the market lower, barring the PSU lenders. Weekly expiry of F&O contracts also added to the volatility of Dalal Street.
 
The 30-share pack BSE Sensex gyrated in a range of 1,250 points but finally settled at Rs 71,428.43, plunging 723.57 points, or 1 per cent. NSE's Nifty50, which scaled 22,000 during the session, tumbled 213 points 0.97 per cent, to end the session at 21,717.95. In the broader markets, the BSE midcap index ended marginally up, while the smallcap index shed half-a-per cent.

Markets traded under pressure on the weekly expiry day. After the flat start, Nifty slipped sharply lower in the first half however it tried to trim losses in the middle but sustained decline in the private banking majors continues to weigh on the sentiment. Most sectors traded in sync with the move, said Ajit Mishra, SVP - Technical Research at Religare Broking.

"The fresh decline in the private banking majors and select heavyweights like ITC has again pushed the Nifty to its crucial support zone of short term moving average i.e. 20 DEMA. And, a decisive close below 21,600 would again push the bulls on the back foot. We thus suggest hedging the existing longs and waiting for clarity," he said.

On a sectoral front, the Nifty private bank index tanked 2.6 per cent, while the Nifty FMCG and Financial Services indices were down 2 per cent each. The Nifty auto index lost 1.25 per cent for the day. Among the gainers, The Nifty PSU Bank and media indices gained 2 per cent each, while the Nifty oil & gas index added about a per cent.

In the Nifty50 pack, Kotak Mahindra Bank declined 3.5 per cent, while Britannia Industries and Axis Bank shed more than 3 per cent each. Nestle India, Eicher Motors, ICICI Bank, UPL and ITC were other key laggards. On the contrary, State Bank of India gained 3.65 per cent, while Bharat Petroleum was up 3.35 per cent. Power Grid also rose 3 per cent for the day.

Though FY25 GDP growth forecast has improved, the RBI remains vigilant on inflation & banking liquidity. The incomplete transmission of the cumulative 250 bps and the inflation ruling above the target level adds uncertainty about the timing of the interest rate reduction, said Vinod Nair, Head of Research, Geojit Financial Services.
 
"The ripple effect was seen in the government 10yr yield, which inched higher. A large pocket of the market slid into red like FMCG, banks, and auto. FMCG got higher impacted by weak Q3 results and downgrade in volume growth, in the near-term, due to weak rural demand," he said.

A total of 3,945 shares were traded on BSE on Thursday, of which 2,192 settled with cuts. 1,649 stocks ended the session with cuts while 104 shares remained unchanged. During the day, 376 shares hit their upper circuit, whereas 292 shares tested the lower circuit levels for the day.

Selling intensified after the RBI's monetary policy announcement in the first half with heavy selling in private banking scrips leading the slump, said  Prashanth Tapse, Senior VP (Research), Mehta Equities. "Banking industry has been facing liquidity issues in recent times and with the central bank's decision showing no signs of interest rate cut in the near term, investors slashed their positions in financial stocks," he said.

In the broader markets, Garware Hi-Tech Films hit an upper circuit of 20 per cent, while SH Kelkar & Company surged about 16 per cent for the day. Supriya Lifesciences gained over 13 per cent and The New India Assurance Company rose about 12 per cent. MTNL added over 10 per cent for the day.

Among the laggards, Fino Payment Banks tanked about 11 per cent, while One97 Communications and 3i Infotech dropped 10 per cent each. Borosil Renewables declined 9 per cent, while Mrs Bector's Food Specialities ended 8 per cent lower for the day. UCO Bank and Indian Overseas Bank slumped 7 per cent each.

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