Nifty closes below 4850; realty, metal, power, telecom dip
19 Feb 2010
The benchmark Sensex closed 136 points lower on the back of sell-off in metal, power, realty, telecom, cement and select auto stocks and in heavyweights like Reliance Industries, SBI, ICICI Bank and TCS. It was just a reaction to the Fed's surprise move on Thursday; Federal Reserve increased discount rate by 25 bps to 75 bps post closing of US markets.
However, the markets recovered some of losses in the last one hour of trade, especially post recovery in the European markets, as experts say Fed's move is not a tightening move. The Sensex recouped over 110 points and the Nifty nearly 40 points from the day's low. The short covering was another reason that led this small bounce back.
Jim Walker of Asianomics said, "The Fed's latest step is not really a tightening move, it hasn't signalled tightening yet. It is just a signal to the banking system. The Fed wants banks to function on their own now." Shane Oliver, Head-Investment Strategy & Chief Economist, AMP Capital Investors, too sees this step in positive light. According to him, the discount rate was upped as the financial markets have normalised. "The Fed is only raising the discount rate because financial markets have normalised.
European markets were trading flat, at the time of closing of Indian equities. The US index futures were down 0.5% because Fed announcement came after the markets on Thursday. Asian markets also reacted; Hang Seng was down 2.6% and Nikkei was down over 2%. Kospi fell 1.7%. Straits Times closed 0.4% lower. Chinese and Taiwanese markets were shut today.
The 30-share BSE Sensex closed at 16,191.63, down 136.21 points or 0.83% and the 50-share NSE declined 0.88% or 42.85 points to 4,844.90. These indices gained just over 0.2% this week. The broader indices underperformed the benchmark indices; the BSE Midcap Index was down 1.4% and the Smallcap was down 1.6%.
Heavyweight Reliance Industries was loser for the second consecutive day; closed at Rs 983.20, down 1.46%. Among the other oil & gas stocks, BPCL was down 1.36% while ONGC gained 0.57%, which led the support to markets. GAIL and Cairn India were flat.
