Market breadth negative, ICICI and HDFC Bank fall 3 per cent.
Dalal Street closed marginally lower at the end of a volatile day of trade. The Sensex recovered from its early-morning bruises to end 69.91 points lower at 16,283.49 and the Nifty fell 20.55 points to close the day at 4,826.15.
Markets opened in the red after yesterday’s steep fall and in the backdrop of weakness on Asian bourses. The Sensex was down more than 200 points in the first hour of trade.
Markets rebounded into the positive territory in mid-morning as investors resorted to bargain-hunting. Heavyweights such as Reliance and L&T led the way. The IT pack did not disappoint either.
Markets had shed around 3 per cent yesterday on fears that India was heading towards a higher interest rate regime and a rise in inflation.
The bounce-back was, however, shortlived. Markets slipped into the red again in the afternoon, but managed to close well off their intra-day lows.
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Banking stocks continued to fall for the second day in a row on the back of tightening of NPA (non-performing asset) norms. Metal stocks fell again due to continuing weakness on the London Metal Exchange.
Auto and power stocks were the other laggards. Realty stocks, however, rebounded after their recent weakness.
ICICI Bank and HDFC Bank fell 3 per cent to Rs 810 and Rs 1,619, respectively. Maruti Suzuki slumped 4.5 per cent to Rs 1,415. Tata Steel and HDFC shed 3.5 per cent and closed at Rs 483 and Rs 2,667, respectively.
Tata Motors and Reliance moved up 2.5 per cent to Rs 562 and Rs 2,036, respectively. Larsen & Toubro advanced 2 per cent to Rs 1,588. Bharti Airtel gained 3.5 per cent to Rs 317 and Wipro added 3 per cent to Rs 623.
The market breadth was fairly negative. Out of 2,756 stocks traded on the BSE, there were 1,628 declines and 1,057 advances.
Siddharth Bhamre, head, Investment Advisory and Derivatives, Angel Broking, said, “There has been a significant addition in short positions without a jump in implied volatility. This could trigger a short-covering rally and 4,780/4,800 levels are likely to hold. It is, therefore, advisable to cover one’s short positions around these levels and even go long, albeit selectively.”