Indian benchmark indices closed in the red after digesting RBI's policy rate action and growth outlook cut yesterday and ahead of the United Kingdom elections, the European Central Bank's policy meeting and ex-FBI Director James Comey's congressional testimony.
The BSE Midcap and Smallcap indices was up 0.2-0.3 percent, while the BSE Sensex Next index closed 0.07 percent, well above its traditional benchmark. "Volatility will remain high, as indices are trading at record high and hence, traders should remain cautious and selective in stock picking", Jayant Manglik, President, Retail Distribution, Religare Securities said.
The BSE Sensex on Wednesday closed about 81 points higher at 31,271.28 after the Reserve Bank maintained status quo on policy rates, resulting in gains for rate-sensitive sectors like banking, realty and auto. However, the largest real estate firm by market value, DLF, fell 0.43 per cent and ended the session at Rs 174.60 on the BSE. Bharat Forge was the biggest gainer, the stock rose by 3.78 per cent and ended the session at Rs 1,210.30. The policy will support banks to lend more due to the advantage of 50 bps cut in SLR. Later, on profit booking, it slipped to touch a low 31,172.98 before ending 80.72 points, or 0.26 per cent, higher at 31,271.28. The Hang Seng index rose 0.3 percent, to 26,063.06, while the China Enterprises Index gained 0.4 percent, to 10,649.90 points, the report added.
"The RBI used a less hawkish tone while leaving interest rates unchanged at its policy meeting, as inflation is running well below forecasts and the economy has slowed more than expected".
The market sentiment took a short-term reversal in the absence of any meaningful fresh domestic triggers and also concerns of stretched valuation. Similarly, the broader NSE 50-share Nifty also followed the suit, opening at a new high of 9,704.25 and gained further ground to hit a new high of 9,709.30.