NEW DELHI: The S&P BSE Sensex recouped some of its morning losses of over 300 points in the afternoon trade on Tuesday, while the 50-share Nifty index was still trading below its key psychological support level of 5800.
The Indian markets saw a knee-jerk reaction after the Reserve Bank of India (RBI) said it has limited headroom for further easing despite its pro-growth stance.
The hawkish commentary by the RBI spooked investors, say analysts.
The political uncertainty also spooked investor sentiment and the Sensex slipped below its psychological support level of 19000 in intraday trade as the DMK pulled out of the ruling UPA coalition.
However, the market recovered sharply from intra-day lows on expectations that a political solution will be reached soon.
"There is no crisis," said the Finance Minister in response to the DMK pulling out of the government on its stance on Sri Lanka. The finance minister assured investors that stability of the government is not an issue and "we are consulting political parties on Tamil resolution."
At 01:10 pm, the 50-share Nifty index was at 5,750.15, down 85.10 points or 1.4 per cent. It touched a high of 5,863.60 and a low of 5,724.30 in trade today.
The BSE S&P Sensex was at 19,033.04, down 260.16 points or 1.30 per cent. It touched a high of 19,378.61 and a low of 18,939.47 in trade today.
The BSE Midcap Index was down 1.3 per cent and the BSE Smallcap Index slipped 1.1 per cent.
Among the sectoral indices, the BSE Realty Index was down 2.6 per cent, followed by the BSE Capital Goods Index which was trading 2.4 per cent lower, the BSE Metal Index slipped 2.4 per cent and the BSE Banking Index was down 2.1 per cent lower.
AMIT KUMAR SINGH
PGDM 2ND SEM
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