Indian equity benchmarks fell for the third consecutive session on Wednesday, plunging more than 2% after the Reserve Bank of India (RBI) announced a surprise repo rate hike at an unscheduled meeting. The markets were already on pins and needles as they awaited the results of the US Federal Reserve meeting later tonight, which is expected to result in a 50 basis point rate rise.
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The Nifty50 has formed a long bear candle on the daily chart as it decisively gave up important support at 16,900-16,800 levels, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
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The chart pattern also suggests a downside breakout of the index’s broader high-low range of around 17,400-16,900, which is “not a good sign and could spell more in the short term”, he said.
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Sensex crashed 1306.96 points or 2.29% to 55,669.03 and Nifty fell by 391.50 points or 2.29% to 16,677.60 in the previous session. Sensex touched a high of 57,184.21 and a low of 55,501.60, respectively. There were 3 stocks advancing against 27 stocks declining on the index. Nifty traded in a range of 17,132.85 and 16,623.95. There were 5 stocks advancing against 45 stocks declining on the index.
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Broader Indices
The broader indices ended in red with the BSE Midcap index falling 2.63%, while the Small cap index was down by 2.11%. The top losing sectoral indices on the BSE were Consumer Durables down by 3.88%, Realty down by 3.31%, Consumer Disc down by 3.01%, Healthcare down by 2.92% and Metal down by 2.89%, while there were no gaining sectoral indices on the BSE.
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India VIX Index
Nifty or India VIX, a gauge of the market’s expectation of volatility over the near term, rose 7.86% to 21.88 on Wednesday.
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SGX Nifty
The trends on SGX Nifty indicate a negative opening for the index in India with a 91-points loss. The Nifty futures were trading at 16,841.00 on the Singaporean Exchange around 06:40 hours IST.
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Support and Resistance levels
The key support level for the Nifty is placed at 16,490, followed by 16,303. If the index moves up, the key resistance levels to watch out for are 16,999 and 17,320, according to pivot charts.
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The S&P 500 rose 124.69 points, or 3%, to 4,300.17.
The Dow Jones Industrial Average rose 932.27 points, or 2.8%, to 34,061.06.
The Nasdaq rose 401.10 points, or 3.2%, to 12,964.86.
The Russell 2000 index of smaller companies rose 51.07 points, or 2.7%, to 1,949.92.
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Asian Markets
Asian markets finished mixed on Wednesday. The Shanghai Composite gained 2.41%, while the Hang Seng led the Nikkei 225 lower. They fell 1.14% and 0.11% respectively.
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European Markets
European markets finished broadly lower yesterday with shares in France leading the region. The CAC 40 was down 1.24% while London’s FTSE 100 was off 0.90% and Germany’s DAX was lower by 0.49%.
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Major News Headlines
RBI raises CRR by 50 bps to 4.5% from May 21 to tighten liquidity
The Reserve Bank of India (RBI) on May 4 announced an increase in cash reserve ratio (CRR) by 50 basis points to 4.5%, effective May 21, in a bid to tighten the liquidity. The move is effective from the beginning fortnight of May 21. The withdrawal of liquidity through hiked CRR could be around Rs 87,000 crore. The announcement was made by RBI Governor Shaktikanta Das after an off-cycle meeting of the rate-setting panel – the Monetary Policy Committee (MPC). Cash Reserve Ratio (CRR) is a percentage of a bank’s total deposits that are needed to maintain liquid cash.
RBI raises repo rate by 40 bps to 4.40% says Governor Shaktikanta Das
RBI Governor Shaktikanta Das in a surprise statement on May 4, announced that the MPC has decided to raise the repo rate by 40 basis points with immediate effect in a bid to curb inflation, which has remained above the upper band of 6% for the last three months. The Governor said that there was a spike in March retail CPI, and April CPI is expected to elevate. “If this scenario unfolds it can deanchor expectations and impact growth,” he said, adding that the situation is dynamic and fast changes and actions have to be tailored. The Monetary Policy Committee (MPC) held an off-cycle meeting from May 2 to May 4 and voted to increase repo rates by 40 basis points.
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S V INVESTMENTS bought 8,00,000 shares in Asian Granito India Limited at Rs 2.30 per share on the NSE.
SANSKRUTI COMMOTRADE LLP bought 6,12,000 shares in ASL Industries Limited at Rs 38.00 per share on the NSE.
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SIXTEENTH STREET ASIAN GEMS FUND bought 10,00,000 shares in BLS Intl Servs Limited at Rs 358.25 per share on the NSE.
SWETSAM STOCK HOLDING PRIVATE LIMITED bought 90,000 shares in Cupid Limited at Rs 342.34 per share on the NSE.
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IDBI TRUSTEESHIP SERVICES LTD sold 21,10,000 shares in Future Mkt Networks Limited at Rs 4.84 per share on the NSE.
SHIKHAR SINGH sold 27,869 shares in Hisar Metal Ind. Limited at Rs 141.92 per share on the NSE.
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ABAKKUS GROWTH FUND-2 bought 20,05,000 shares in J.Kumar Infraprojects Limited at Rs 225.10 per share on the NSE.
UMESH PURUSHOTTAM CHAMDIA HUF bought 90,000 shares in Swaraj Suiting Limited at Rs 83.84 per share on the NSE.
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Foreign institutional investors (FIIs) sold shares worth a net Rs 3,288.18 crore, while domestic institutional investors (DIIs) bought shares worth a net Rs 1,338 crore in the Indian equity market on May 4, as per provisional data available on the NSE.
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No stock/security has been put under the F&O ban for May 5. Securities in the ban period under the F&O segment include companies in which the security has crossed 95% of the market-wide position limit.
