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Shares declined marginally on Tuesday registering a third-straight day of declines, after the Reserve Bank of India unexpectedly raised the repurchase rate by 25 basis points.
Further, profit-booking in sectors like technology further dragged down share prices as investors remain cautious ahead of the conclusion of the two-day US Federal Reserve’s meet to decide the fate of its stimulus package – the third quantitative easing.
Markets reacted sharply to the rate-hike announcement by the Indian central bank falling by over 150 points during the first half of the session. However, stocks recovered soon on short-covering encouraged by the rebound in the rupee, which ended its three-day slide
“Markets were already bad as there was a lot of capitulation across sectors in the last few trading sessions. So the bounce-back was merely technical where the markets had not built up any positions on the positive news and the negative news got discounted,” said Nirmal Rungta, director and head – private client group, CIMB Securities.
On Tuesday, the BSE Sensex ended the day at 20,683 down 0.1% while NSE Nifty closed at 6,126 down 0.2% from its previous close.
Stocks of the technology sector were down slightly more than one% while the healthcare sector stocks were down 0.8%.
The decline in the index was led by stocks Maruti Suzuki, which was down 8.1%, after the company announced plans for a Gujarat plant to be owned by Suzuki Motor Corp.
Axis Bank saw the second highest decline among the Sensex stocks, down 3.3% followed by Sun Pharma and Infosys which fell 2.4 and 1.5%, respectively.
