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Market Report

Wednesday, 04-Mar-2015

NSE

  • The S&P BSE Sensex plunged over 730 points from all-time high of 30,024.74 in trade today. This, despite a surprise rate cut by the Reserve Bank of India. The Sensex ended the day at 29,380.73, down 213.00 points, or -0.72 per cent. The Nifty closed the day at 8,922.65, down 73.6 points, or -0.82 per cent. The benchmark index surged to record 9119.20 earlier in trade today.

  • The market likes to surprise everybody and it did so today. After hitting an all-time high after following an unexpected repo rate cut by the Reserve Bank of India, the benchmarks came tumbling down. Ironically, the sectors that were likely to benefit from rate cuts were among the top losers by the end of session. The BSE Bankex plunged 405.27 points to end 1.77 per cent lower.

  • Reacting to the market momentum, analysts are not concerned and say its normal correction or usual profit taking at higher levels. The long term trend still remains intact and investors should not get too much worried about these corrections, instead look for opportunities to buy quality stocks at lower levels.

  • Point to note was the huge volumes today, and the big increase in foreign investment following the RBI rate cut. This flow of money gave the initial uprise and the sustained holding till after mid-day. It was the retail sector booking profits late in the day. See our 'Market Statistics' page.

  • No easy comeback; Nifty to test 8,500-8,600 levels before regaining ground, says Ashwani Gujral. I was not surprised with a rate cut, but with the market's reaction to it. This kind of vicious reaction almost makes it feel like a rate hike, not a rate cut. Even as news flow was positive and the indices were at key levels, the market has retreated like it did when Nifty was at 8,500 levels. The chances are higher that the Nifty will test 8,500-8,600 before we are able to rebuild strength. 9,000 level is out of the picture for now. We would wait to see what kind of buying comes in when this correction stops. Nifty needs to get back above 9,100 for this negativity to fade away, he says.

  • Start exiting positions, have negative bias if Nifty breaches 8,900, says Mitesh Thacker. Fact is, that we have had a gap up opening today, which was filled immediately. A filling up of gap typically suggests that the market is being exhausted. There are signals that short-term top has been made. A confirmation that breakdown will happen once we start getting below 8,900. At that time, it might be a good idea to have some kind of negatively-biased strategies, he says.

NIFTY 3-Month

(Data/Charts courtesy NSEI/Yahoo!/iCharts/The Economic Times)