MUMBAI: Benchmarks ended in the negative terrain for second straight session, ahead of the July series F&O expiry, as rate hike by the Reserve Bank of India and concerns of US debt default spooked sentiments.
The market, surprised by higher-than-expected interest rates hike by 50 bps, has been under pressure following the central bank's hawkish stance aimed at controlling inflation. According to analysts though the economic growth rate will be hurt in the near-term and rate sensitive sectors will be the worst hit.
"We expect short term interest rates are likely to increase post the 50bps rate hike. Rate sensitive sector such as automobile, real estate and banking will be under pressure in near term.
However, we are positive on banks and automobiles on long term on the back of rising consumption and infrastructure led investment story. We believe quality liability franchise banks will be able to manage spread and margins better than wholesale funded entities in a rising interest rate environment. Hence, we are positive on superior franchise banks likeAxis Bank,ICICI Bank,HDFC Bank,Bank of Baroda andPunjab National Bank with medium term perspective.
However, higher inflation, rising interest rates, further rate hike possibility and asset quality concerns in rising interest environment will mount pressure on banking stocks in near term," said KR Choksey report.
Bombay Stock Exchange'sSens*x closed at 18432.25, down 85.97 points or 0.46 per cent. The 30-share index touched intraday low of 18358.76 and high of 18578.55.
National Stock Exchange'sNifty ended at 5546.80, down 28.05 points or 0.50 per cent. The broader index touched a high of 5591.70 and low of 5521.50 in trade today.
"July Series expiry is expected to be above 5500. Rollover in individual stocks have been not at par with the average and hence it may lead to some sharp volatility in the last half-an-hour of trade tomorrow," said Savio Shetty, derivative analyst, Prabhudas Lilladher
BSE Midcap Index was up 0.23 per cent and BSE Smallcap Index edged 0.03 per cent up.
Amongst sectoral indices BSE Capital Goods Index was down 1.86 per cent, BSE Power Index declined 1.51 per cent, BSE Bankex moved 1.04 per cent lower and BSE Realty Index declined 0.98 per cent.
BHEL (-4.33%), Punjab National Bank (-4.09%),Jaiprakash Associates (-3.41%),Hindalco Industries (-3.18%) andSiemens (-2.56%) were amongst the top Nifty losers.
Maruti (3.32%), Sesa Goa (3.22%),DLF (1.54%),Reliance Communications (1.28%) and Bharti Airtel (1.22%) were the major gainers.
"We are bullish on Reliance Communications, Idea Cellular andLIC Housing Finance and bearish onIndian Bank, BHEL and Punjab National Bank," Shetty added.
Market breadth was negative on the NSE with 1629 declines against 1471 advances.
Nifty ends below 5550; bhel, pnb, hindalco down
CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
27 July 2011
CAclubindia
