Nifty declined 139 points today; '25 bps RBI rate cut already factored, market was expecting more'

Domestic stock markets slipped around 1 per cent despite RBI rate cut announcement on Friday. The BSE Sensex lost 434 points or 1.14 per cent to close at 37,673.31, while the Nifty 50 plunged below 11,200. The markets on Friday extended losses for the straight fifth day, despite the apex bank announced a 0.25% rate cut in its repo rate. The central bank has also reduced the GDP growth forecast to 6.1 per cent for the financial year 2019-20 (FY20), thereby raising concerns over slowing economic growth hitting investor sentiment.

Siddharth Khemka – Head, Retail Research, Motilal Oswal Financial Services Limited explained how things went today by saying, “Market continued with its downward movement for the fifth session in a row, amidst weak global cues and economic growth concerns, despite 25bps rate cut by RBI. It was the fifth rate cut in the row. Nifty declined 139 points (1.2%) to close at 11174 while Bank Nifty lost nearly 700 points (2.5%). All the sectors, except IT, ended lower for the day."
 
Khemka added, "25bps rate cut by RBI was already factored in but market was expecting higher cut given the crisis in banking/ NBFC sector and weak macro data points. Further RBI also revised its growth forecast for this year down to 6.1% from 6.9%, which aggravated the concerns for slowdown and led to sell-off in markets. However, RBI maintained its accommodative stance and said it would keep that position as long as it is necessary to revive economic growth. On the global front, markets would watch out for US job report that would determine the Fed’s next move."

Going forward, he said, "Technically, Nifty formed a Bearish Candle on daily and weekly scale as sustained selling pressure was seen at higher levels and also broken its 200 DEMA to closed below 11200 levels. Resistance are gradually shifting lower and now till it holds below 11250 zones it could extend its weakness towards 11110 then 11050 levels while on the upside hurdle is seen at 11250 then 11330 zones”.