After a cautious and listless start, the market saw some brisk buying in rate sensitives this morning after the Reserve Bank of India cut the Repo and CRR rates by 25 basis points each. However, with investors switching over to the selling mode, choosing to take some profits, the market lost its way again and kept sliding lower as the session progressed and eventually ended the day with notable losses.
A mixed close in the Asian region and a somewhat subdued trend on the European bourses too prompted investors to trim down positions.
The Sensex, which advanced to 20,203.66 in mid-morning trades, ended the session with a loss of 112.45 points or 0.56% at 19,990.90, around 20 points off the day's low.
The Nifty index of the National Stock Exchange closed lower by 24.90 points or 0.41% at 6049.90, more than 60 points off the day's low of 6111.80.
The Reserve Bank of India, which said widening current account deficit is restraining it from resorting to monetary easing, on Tuesday announced a reduction of 25 basis points each in Repo and Cash Reserve Ratio rates. The central bank said the CRR cut will result in an infusion of around Rs 18,000 crore into the banking system. The bank lowered India's growth forecast for 2012-13, to 5.5% from the earlier projection of 5.8%. The apex bank revised downward its inflation projection to 7.5% from an earlier forecast of 6.8%.
Realty stocks, which were among the top gainers at one stage, changed track past noon and ended the day notably lower. Mirroring their decline, the BSE Realty index close 2.2% down. Automobile stocks too gave up their gains and mostly closed weak. Bank stocks retreated as well.
Oil, metal and power stocks were among the other prominent losers. Capital goods, information technology and pharma stocks ended off their highs. Select FMCG stocks posted notable gains. Midcap and smallcap stocks were mostly subdued.
Hindalco, Bajaj Auto, HDFC Bank and Bharti Airtel lost 2.4% - 2.8%. BHEL ended 2.2% down and GAIL India lost nearly 2%.
Reliance Industries, Tata Steel, Tata Motors, Wipro, State Bank of India, Sun Pharmaceutical Industries and Mahindra & Mahindra declined by 1% - 1.8%. Maruti Suzuki, Sterlite Industries, ONGC and Cipla also closed notably lower.
Bank of Baroda, Reliance Infrastructure, ACC, Punjab National Bank, Ranbaxy Laboratories, Ultratech Cement, DLF and BPCL lost 1.3% to 3%.
Axis Bank ended stronger by 4.3% following the launch of the bank's qualified institutional placement issue.
Jaiprakash Associates ended 1.8% up and Coal India moved up 1.7%. ITC, Asian Paints, ICICI Bank, Kotak Bank, Tata Power, Hero Motocorp and Lupin too closed on a firm note.
Amara Raja Batteries, Reliance Capital, L&T Finance, United Phosphorus and Neyveli Lignite Corporation saw some good buying thanks to impressive quarterly results.
Dabur India, Kalpataru Power and Sterlite Industries declined on weak quarterly numbers.