Large private banks led the sell-off, while public sector lenders and information technology stocks bucked the weak trend. NSE’s Nifty fell 212.5 points, or 0.97%, to close at 21,717.9. The BSE Sensex declined 723.5 points, or 1%, to end at 71,428.4.
“The markets corrected after the RBI policy because there are concerns over liquidity drying up,” said Sriram Velayudhan, senior VP, alternative research, IIFL Securities. “There was also some routine profit-booking after the gains seen in the last few days.”
While the market expected the RBI to keep rates steady, it was anticipating it will pump more liquidity into the system. The Nifty Private Bank index dropped 2.6%, while the Nifty PSU Bank index rose 2%. Analysts expect the Nifty to move in a band in the near future.
“In line with market trends of index consolidation, it is expected that the Nifty will continue to trade in a range of 21,100 to 22,100 for the next 1 to 2 months,” said Kapil Shah, technical analyst at Emkay Global.
Velayudhan said the Nifty has been trading in a range of 21,000-21,800 and will continue to do so until some concrete cues emerge which may lead the index to cross 22,200 levels. Shah said Nifty has a key support at 21,670 and resistance at 21,850 and 22,000.
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