For those watching the stock price movements before, during and after the RBI Governor’s announcement of the repo rate cut by 25 basis points today leaving the cash reserve ratio (CRR) untouched, it was a revelation to see how much the market dances to his tune, particularly when he is about to make key policy announcements.
RBI Governor D. Subbarao’ announcement on repo rate cut by 25 basis points had already been factored in by the market. But there were some feeble hopes as well of cut in CRR, which he left unchanged, dampening the market mood.
In a span of one hour — from 11 a.m. to 12 noon — the BSE Sensex swung violently losing nearly 160 points and recovering almost the entire loss.
Just as the announcement of the RBI Governor’s decision was flashed across the TV screen, the market, already weak in the wake of the cautious stance RBI took yesterday on rate cut because of inflation, tanked by about 160 points.
Financial, auto stocks
Much of the hit was taken by financial stocks and automobile companies with HDFC Bank, Bajaj Auto, HDFC, ICICI Bank, Tata Motors, M&M, BHEL and SBI being the biggest losers.
While SBI was down to Rs 2,217, a loss of 3.58 per cent, Tata Motors was trading at Rs 289.45, a loss of 2.36 per cent.
ICICI Bank was trading at Rs 1,141.65, down by 2.57 per cent, HDFC at Rs 849.55 (-1.68 per cent), Bajaj Auto was quoting at Rs 1,830.10 (-1.59 per cent) and BHEL was trading at Rs 188.85, down by 1.49 per cent.
Maruti, ITC, TCS, Wipro, ONGC, Hero Motocorp, Sterlite Industries, L&T, M&M, and Cipla were also among the losers.
Stocks in the green at that time were NTPC, which was trading at Rs 162.65, a gain of 1.53 per cent, Bharti Airtel trading at Rs 319.90, up by 1.01 per cent, Infosys which gained 0.88 per cent to trade at Rs 2,307.05, Sun Pharma that was up by 0.59 per cent at Rs 972.20, Jindal Steel which was trading at Rs 307.40, up by 0.57 per cent, and HUL was up by 0.31 per cent at Rs 574.10.
Losses recovered
But after the RBI Governor explained his perception of the economy, reasons for the repo rate cut, the market took time to digest, though immediately after his speech, the index was able to cover some of its loss.
In fact at around 11.25 a.m., the BSE Sensex was able to trim its loss to around 67 points, though there was no dramatic shift in the list of stocks that were in the green, though their ranking had shifted a bit.
I nstead of NTPC, Bharti Airtel topped the gainers’ list at Rs 320.85, a gain of 1.31 per cent. RIL, with a 1.16 per cent gain came second at Rs 812.10.
NTPC lost some of its gains but still was up by 1.12 per cent at Rs 162. Jindal Steel was trading at Rs 308.45 (+ 0.92 per cent), Infosys at Rs 2,305 ( up by 0.79 per cent) and L&T that covered much ground to trade at Rs 1,563.30, a gain of 0.71 per cent.
Major losers
The major losers more or less kept their place.
HDFC Bank was down by 0.94 per cent at Rs 685.65, HDFC shed 1.21 per cent to trade at Rs 853.65, Bajaj Auto lost 1.55 per cent to trade at Rs 1,830.75, ICICI Bank lost 1.6 per cent at Rs 1,153, Tata Motors shed 1.84 per cent at Rs 291 and SBI continued to be the biggest loser, shedding 2.48 per cent to trade at Rs 2,242.30.
But an hour later at around noon, the mood was still sombre but much better before the RBI credit policy was announced. Metal stocks staged a strong come back with four of the six top performing stocks coming from the metal pack.
Jindal Steel came back strongly, gaining 2.73 per cent at Rs 314, Sterlite Industries jumped 1.94 per cent to Rs 97.15, Tata Steel was trading at Rs 309.25, a gain of 1.58 per cent and Hindalco was up by 1.46 per cent at Rs 97.25.
Engineering giant L&T, from being a big loser earlier, bounced back strongly to be the third biggest gainer, up by 1.67 per cent at Rs 1,578. NTPC was still in the green up by 1.44 per cent at Rs 162.50.
Others like RIL, Bharti Airtel, Sun Pharma and Infosys, which had been dislodged from their earlier position among the gainers, were still trading in the green.
In the losers’ list also, most of them maintained their earlier place, though the positions were shifted. SBI, from the biggest loser in terms of percentage, was dislodged by Bajaj Auto as the biggest loser down by 1.98 per cent at Rs 1,822.85.
SBI lost 1.97 per cent to quote at Rs 2,254, Tata Motors was down by 1.57 per cent at Rs 291.80, ICICI Bank lost 1.43 per cent to trade at Rs 1,155.05 and HDFC was down by 0.93 per cent at Rs 856.05.
But what was surprising was that ITC, which is now more an FMCG stock than a pure tobacco play, figured among the biggest losers, down by 0.88 per cent at Rs 330.50.
But by then, the BSE Sensex had covered much of its loss, trading at 19,723, a loss of just about 12 points. That was some recovery — by about 150 points in a span of one hour!
Back to square one
But by the end of the day, the market was back to square one, shedding the benefits of recovery it made by noon from the earlier losses, with the Sensex closing with a loss of 160.13 points at 19,575.64.
Banking and auto stocks were among the worst-hit Sensex stocks with SBI losing Rs 82.80 to close at Rs 2,216.55 and ICICI Bank down by Rs 41.80 at Rs 1,130. Bajaj Auto and Tata Motors took a knock with Bajaj Auto down by Rs 47.65 at Rs 1,812 and Tata Motors losing Rs 11.15 at Rs 285.30.
Strong show
Metal stocks put up a strong show with the top three gainers being metal counters. Jindal Steel was up by Rs 12.90 at Rs 318.55, Hindalco gained Rs 2.20 at Rs 98.05 and Tata Steel closed higher by Rs 6.75 at Rs 311.20. Sterlite Industries completed the metal rally gaining Rs 1.30 to close at Rs 96.60.
Sun Pharma and L&T continued their robust show at the close. While Sun Pharma was up by Rs 17.75 at Rs 984.25, L&T gained Rs 16.85 to end the day at Rs 1,569.
The RBI Governor’s press conference even as the market was nearing its close would have tempered the expectations of any rush to cut interest rates, which probably explained the reverse-bounce back of the markets.