makin97 NSETIPS @ RAKESH MAKIN: MARKET ENDED 16.06.2011 THURSDAY

WERE TODAY'S GAINERS

MARKET ENDED 16.06.2010 THURSDAY

SENSEX 17985.88 -146.36

NIFTY 5396.75 -50.75

NASDAQ 2639.31 +07.85

UPDATEDTIME 09.28 PM 16 JUNE 2011

Benchmarks reacted sharply to the interest rate hike by the Reserve Bank of India and ended below psychological levels. According to analysts, absence of foreign institutional investors, weak global cues and hawkish stand by the Reserve Bank of India to contain inflation is likely to put pressure on the indices in near future.

The Reserve Bank of India hiked interest rates key rates by 25 basis points in the mid-year policy review. The central bank has hiked repo rate to 7.5 per cent and reverse repo rate to 6.5 per cent. It will continue to persist with anti-inflationary stand.

The RBI policy statement does not provide any major respite on the future interest rates movements. Among other things, it Indicates that a) growth remains still strong - meaning that, it is not concerned about growth, b) pricing power still remains strong and hence, there is inflationary pressure still in the economy, c) the revisions in inflations are high - meaning that, inflation can remain high and d) fuel price hikes have not yet come - meaning that, once again inflation can be high.

These statements indicate that RBI is concerned about inflation and not growth. However, RBI also added that the global growth scenario can have an impact on us - meaning that it can have a negative impact on growth.

All these lead to one conclusion that, RBI may continue hiking rates in future. So, the upward bias in interest rates remains.

From the market's perspective, today's hike is in line with expectations and hence, the market has not reacted violently. However, the fact that RBI is still not concerned about growth, indicates that, interest rate hikes may be larger than expected.

Bombay Stock Exchange's Sensex ended at 17985.88, down 146.36 points or 0.81 per cent. The 30-share index hit a high of 18155.10 and low of 17958.94 intraday.

National Stock Exchange's Nifty closed at 5396.75, down 50.75 points or 0.93 per cent. The broader index touched a high of 5447.50 and low of 5398.60 in trade today.

BSE Midcap Index was down 0.71 per cent and BSE Smallcap Index moved 0.54 per cent lower.

All the sectoral indices ended in the red. BSE IT Index was down 1.66 per cent, BSE Capital Goods Index slipped 1.35 per cent and BSE Metal Index declined 1.17 per cent.

Ambuja Cements (-5.42%), IDFC (-4.12%), ACC (-3.49%), TCS (-2.89%), SAIL (-2.78%) and Reliance Industries (-1.61%) were the major Nifty losers.

Shares of Ambuja Cements slipped lower after reports that the Serious Fraud Investigation Office is investigating allegations of cartelisation against cement majors UltraTech Cement, Ambuja Cements and ACC.

HSBC has downgraded Indian energy major Reliance Industries to "neutral" from "overweight" and cut the price target to Rs 1,040 from Rs 1,084, citing media reports of federal investigation agency's probe into possible dealing between Indian energy companies and the oil ministry.

Public sector Steel Authority of India's follow-on public offer may be deferred till the end of 2011 in view of the choppy markets.

Reliance Infrastructure (1.93%), BPCL (1.61%), Reliance Capital (1.55%), SBI (1.26%) and Hindustan Unilever (1.25%) were amongst the top gainers.

Market breadth was neqative on the NSE with 1759 losers against 1127 gainers.