Mumbai: Benchmark indices nosedived in the last hour of trade on Wednesday after touching record highs earlier in the day spurred by the 25 basis point repo rate cut.
The 30-share BSE Sensex shed 213 points to close at 29380.73, after hitting a new high of 30024.74 intraday. The 50-share NSE Nifty fell 73.60 points to close at 8922.65, after making a new peak of 9119.20.
Market players attributed the sudden crash to technical factors, saying investors would have been tempted to book profits after the steep rise over the last one week.
"The market is set for a steep correction, which could last a month or month and a half," said Jai Bala of cashthechaos.com, adding that the bull market was still intact. The broader markets saw major fall compared to benchmarks, the BSE Midcap and Smallcap indices were down more than a per cent.
Declining shares outnumbered advancing ones by a ratio of 1894 to 1009 on the Bombay Stock Exchange. Shares soared earlier in the session after the RBI announced a 25 basis points reduction in the benchmark repo rate before the market opened for trading.
The current repo rate stood at 7.5 per cent against 7.75 per cent earlier while the central bank kept the cash reserve ratio at 4 per cent. RBI governor Raghuram Rajan said the move was prompted by the recent fall in consumer inflation, recorded at 5.1 per cent in January, as well as the recent Union Budget, which had "structural reforms embedded in it" -- even though it extended the timeline to bring down the central government's fiscal deficit to 3 per cent from two years to three.
Late sell-off in banks, metals, oil & gas, power and IT shares dragged the market down, while FMCG, pharma and realty shares held ground. Sesa Sterlite, Hindalco Industries, Axis Bank, Tata Power and State Bank of India were the prominent losers, down 3-4 per cent. HDFC Bank, Reliance Industries and TCS lost more than 1.5 per cent.
However, Sun Pharma bucked the trend and maintained its strong upmove since morning. The stock gained 6.62 per cent after its subsidiary Sun Pharma Advanced Research Company (SPARC) received US FDA approval for Elepsia XR extended release tablets, an anti-epileptic drug. SPARC was up 4.55 per cent.
ITC and Bharti Airtel gained 0.6-0.9 per cent. Meanwhile, second round of coal auctions has been underway with 14 mines up for grabs. Usha Martin won the Brinda & Sasai block in Jharkhand for Rs 1,804 per tonne. The stock shot up 20 per cent intraday, especially after this news but late sell-off dragged the stock to close flat.
Lok Sabha also passed the Coal Mines Special Provisions bill. All eyes are now on the bill's passage in the upper house. Spectrum auction also began on Wednesday with eight players battling it out for airwaves. Auctions believed to be make or break for business continuity for Vodafone, Idea Cellular and Bharti Airtel.
In the broader space, Eicher Motors gained 1 per cent after showing a 5 per cent recovery from day's low. Volvo offloaded stake in the company through block deals. About 12.8 lakh shares (or 4.7 per cent equity) changed hands in three large block deals on the NSE and BSE in the price range of Rs 15,111-15,300/share.
NBCC gained 7.6 per cent as the state-owned construction company says it will build India's first sub smart city on 30 hactare in East Delhi and will build India's tallest sky scraper of 100 storeys in 3 years.
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