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Traders short-sell rate sensitive stocks

The share price of HDFC and HDFC Bank fell 0.87% at Rs 749 and 1.03% at Rs 633 respectively

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Palak Shah Mumbai

Short selling was high in interest rate-sensitive stocks today after the Reserve Bank of India's (RBI's) decided to keep key lending rates unchanged.

Against an anticipation that key policy rates -- repo and reverse repo -- will be cut, the RBI  just lowered cash reserve ration (CRR) by 25 basis points to 4.25%. This gave traders an opportunity to short sell some of the top banking, real-estate and select motor company stocks. The benchmark index BSE Sensex fell 1.1% or 204 points at 18,430 and S&P CNX Nifty was down 1.19% or 67 points at 5,597. 

Share price of State Bank of India (SBI), the largest government promoted bank, fell 4.43% to close at Rs 2,074 on BSE. The stock had opened at Rs 2,172 and touched a intra-day low of Rs 2,065 as traders went on a selling spree in the derivative segment. Similar was the case with ICICI Bank, largest private bank country, which fell 2.21% to close at Rs 1,044. The ICICI Bank share had opened at Rs 1,071 on BSE.  The BSE Banking index slipped by 1.4%.

 

The share price of HDFC and HDFC Bank fell 0.87% at Rs 749 and 1.03% at Rs 633 respectively.

Today's market behaviour is a knee jerk reaction to RBI's action of no rate cut, said Kishor Ostwal, managing director of CNI Global Research.

"RBI has already hinted to cut rates in December, which will augur well for market rally going forward. Nifty has tested important support of 5620 and now we can see 5700 very soon."

Among motor company stocks, the share price of Tata Motors fell the most. The stock price fell 3.52% to close at Rs 247. HeroMoto Corp. fell 1.77% to close at Rs 1,871.  Bajaj Auto was down 0.5% at Rs 1,797. The BSE Auto index was down 1.37%.

The BSE Realty Index was the top loser among the BSE sectoral indices. The index fell 2.28%. Share price Prestige Estate fell 4.95% to close at Rs 148.9. HDIL was down 4.91% at Rs 92.95. DB Realty fell 3.72% at Rs 93.3 and DLF was down 2.21% at Rs 199. 

Dinesh Thakkar, chairman and managing director of Mumbai based Angel Broking said, "Markets are likely to be slightly disappointed since they were largely factoring in a reduction in CRR and the Reserve Bank has delivered on those lines, so there are no positive surprises. By maintaining the repo rate, the Reserve Bank has reiterated its stance on inflation management since upside risks to inflation continue to persist. I believe that high food prices, the pass through effect of fuel price hikes and sticky core inflation are likely to keep inflation elevated until December and I maintain our expectation of a 25 - 50 bps rate cut towards the end of fiscal year.

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First Published: Oct 30 2012 | 7:18 PM IST

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