Taking Stock | Sensex falls 215 points, Nifty below 18,600 amid volatility after RBI rate hike

The Indian equity market continued to remain under pressure for the fourth straight session on December 7 after the Reserve Bank of India raised the interest rates for the fifth consecutive time in this calendar year, continuing its fight against inflation.

At close, the Sensex was down 215.68 points, or 0.34 percent, at 62,410.68, and the Nifty was down 82.30 points, or 0.44 percent, at 18,560.50.

Earlier in the day, the RBI's monetary policy committee hiked the key repo rate by 35 bps as expected to 6.25 percent and maintained the stance at “withdrawal of accommodation”.

The market started on a cautious note ahead of the meeting and slipped into negative terrain after the policy announcement to remain rangebound through the session. Last-hour selling pushed the indices to near the day’s low.

"As the economy deals with the global headwinds, the RBI has become more realistic, lowering FY23 GDP growth forecast from 7 percent to 6.8 percent," said Vinod Nair, Head of Research at Geojit Financial.

"The focus remains on fighting inflation which will lead to an increase in interest rates in the future. Along with a global slowdown, corporate earnings forecasts for H2FY23 and FY24 can downgrade. The market is currently trading at premium valuations, a slowing earnings growth will impact market sentiment."

Also Read - RBI lowers GDP growth forecast for FY23 to 6.8% from 7%

Stocks and sectors

NTPC, Bajaj Finserv, Tata Motors, SBI Life Insurance and IndusInd Bank were among the top Nifty losers. The gainers included Asian Paints, BPCL, HUL, Larsen and Toubro and Axis Bank.

Among sectors, except Nifty FMCG and PSU bank all indices ended in the red. The energy index was down a percent, while auto, information technology, metal and pharma indices were down 0.5 percent each.

BSE midcap and smallcap indices fell 0.4 percent each.

On the BSE, power, metal and realty indices were down a percent each. Auto, healthcare and information technology indices each ended 0.5 percent lower. Capital goods and FMCG indices added 0.8 percent each.

Among individual stocks, a volume spike of more than 800 percent was seen in Siemens, HDFC AMC and Delta Corp.

A short build-up was seen in Delta Crop, Jubilant FoodWorks and Manappuram Finance, while a long build-up was seen in Siemens, HDFC AMC and Power Finance Corporation.

More than 150 stocks touched their 52-week high on the BSE. These included AIA Engineering, BLKashyap And Sons, Cummins India, IDBI Bank, ITD Cementation India, ION Exchange and UCO Bank.

Also Read: Another rate hike coming in February?

Outlook for December 8

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities

The market extended losses for the fourth straight session as investors dumped realty and automobile stocks on worries that higher EMI outgo after the RBI's repo rate hike could dent demand.

Though the rate hike was along expected lines, the RBI showing no signs of letting off in its fight against inflation raised concerns that more hikes could be in the offing, which would hurt growth.

Technically, on intraday charts, the Nifty was still holding a lower top formation and also made a small bearish candle on the daily charts, which is broadly negative.

For traders, as long as the index is trading below 18,650, the correction wave is likely to continue. Below the same, the index could slide to 18,500-18,425. On the other hand, above 18,650, it could move to 18,750-18,800.

Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas

The Nifty saw volatile action on December 7 and closed below 18,600, which is a breach of the first line of defence. Going ahead 18,500 will decide the course of action for the index.

If that is also breached on a closing basis, the index will get into a short- term consolidation. Till then, the bulls have the potential to fight back. On the higher side, the immediate resistance zone shifts downward to 18,650-18,670.

The Bank Nifty, on the other hand, is still holding on to its short-term support zone of 43,000-42,900.

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