New Delhi, OCT 05 : The market plunged on heavy selling in banking and FMCG stocks despite a 25 basis points (bps) cut in the key policy rate by the RBI which also slashed the growth outlook for this fiscal.
After opening about 300 points higher, the benchmark indices gave up all the gains to turn negative shortly after the policy announcement by the Reserve Bank of India (RBI).
According to experts, Friday’s market fall was mainly because of RBI slashing FY20’s GDP growth target to 6.1 per cent from its earlier forecast of 6.90 per cent on the back of weakening domestic demand conditions.
Advance vs Decline ratio remained at 1:2. Technically, on weekly basis by closing below the level of 11180 Nifty is heading for minimum 11050 and maximum could be 10900. On the higher side, Nifty would face hurdles at 11260, which is resistance of 200 days SMA, commonly followed by major participants of the market.
Market View
“Despite RBIs and Govt’s synchronized effort to offset a slowdown in the economy, investors have taken a pessimistic view due to continued downward revision in GDP estimate and new stress in the banking system. The Govt’s measures do have the potential to enhance consumption and spur investment but lag in transmission of cumulative rate cuts is adding a layer of complexity in the recovery,” said Vinod Nair, Head Of Research at Geojit Financial Services.
