Home / Markets / Stock Markets /  Markets dive after RBI's 35 bps rate hike; Sensex slips for 4th day in row; FMCG stocks shine

Despite RBI's rate hike of 35 basis points on expected lines, the markets continued to dip on Wednesday with Sensex falling for the fourth day in a row. Nifty 50 erased its 18,600 mark. A broad-based selloff was recorded across indices. The downside in markets comes due to their premium valuation, while investors also turned cautious as RBI's fight for taming multi-year high inflation is not over as they continued on their stance. Also, weak global cues further added to their woes. However, FMCG stocks outperformed broader markets. On the contrary, the rupee ended marginally higher against the US dollar.

Sensex dipped by 215.68 points or 0.34% to end at 62,410.68. Nifty 50 closed at 18,560.50 lower by 82.25 points or 0.44%. The 30-scrip benchmark has tumbled for the fourth consecutive day, while the 50-scrip index extended its fall for the second straight day. India's volatility index was marginally up.

FMCG stocks were the top gainer on Wednesday on both BSE and NSE. The Nifty FMCG ended higher by 436.75 points or 0.96%, while BSE FMCG surged by 143.17 points or 0.87%. PSU Banks and capital goods stocks also witnessed some upside. However, consumer durables, metal, IT, and healthcare stocks were the worst hit.

Stocks like Asian Paint, Hindustan Unilever, L&T, Axis Bank, and ITC were top bulls, while NTPC, Bajaj Finserv, IndusInd Bank, Tata Steel, and heavyweight Reliance Industries were top bears.

Ajit Mishra, VP - Technical Research, Religare Broking said, "Markets traded lackluster for yet another session and lost over half a percent. After the initial uptick, the Nifty index inched lower and oscillated in a narrow band till the end and finally settled at 18,560.50 levels. A mixed trend across sectors kept the traders busy wherein buying in the FMCG majors capped the downside. The broader indices traded in sync with the benchmark and lost nearly half a percent each."

Also, Deepak Jasani, Head of Retail Research, HDFC Securities said, "Nifty closed lower for the second consecutive session on Dec 07 after RBI monetary policy committee's decision to hike interest rates by 35 bps to 6.25%. Nifty after rising in the first hour of trade, fell making lower tops lower bottoms through the day. It closed 0.44% or 82.25 points lower at 18560.5. Broad market indices fell in line with the Nifty even as advance-decline ratio ended at 0.65:1."

Jasani added, "World stocks eased on Wednesday after a chorus of Wall Street bankers warned about a likely recession ahead, tempering optimism about China's major shift in its tough zero-COVID policy. Poor China trade data for November also did not help matters."

At the interbank forex market, rupee snapped its three-day losing streak to end slightly higher at 82.47 against the dollar compared to the previous day's print of 82.6150.

RBI raised key rate by 35 basis points to 6.25% in December policy, while maintaining its hawkish stance to tame inflation.

Vinod Nair, Head of Research at Geojit Financial said, "As the economy deals with the global headwinds, the RBI has become more realistic, lowering the FY23 GDP growth forecast from 7% to 6.8%. The focus remains on fighting inflation which will lead to increase in interest rates in future. Along with a global slowdown, corporate earnings forecast for H2FY23 & FY24 can downgrade. The market is currently trading at premium valuations, a slowing earnings growth will impact market sentiment."

Further, Jasani said, "Nifty is now headed towards 18442 in the near term. On upmoves, 18591 could offer resistance."

In Rupak De, Senior Technical Analyst at LKP Securities view, "Nifty remained under the grip of the bears as investors booked profits post the rate hike by the RBI governor. The index slipped below its recent consolidation on the hourly chart, suggesting a waning bullishness. The momentum oscillator is in a bearish crossover. The trend is likely to remain negative going forward; support on the lower end is pegged at 18,500/18,350. On the higher end, resistance is visible at 18,670/18,750."

Meanwhile, Religare Broking's expert added that markets have been gradually drifting lower however rotational buying in index majors across sectors is capping the damage. He said, "Feeble global cues might continue to put pressure but we expect Nifty to hold the 18,300-18,400 zone. In the current scenario, traders should focus on trade management and prefer sectors that are showing resilience for fresh buying."


Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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