Rate cut gives traders reason to book profits in banks

MUMBAI: The market likes to surprise everybody and it did so today. After hitting an all-time high after following an unexpected repo rate cut by the Reserve Bank of India, the benchmarks came tumbling down.

Ironically, the sectors that were likely to benefit from rate cuts were among the top losers by the end of session. The BSE Bankex plunged 405.27 points to end 1.77 per cent lower.

The S&P BSE Bankex surged nearly 12 per cent in past five sessions to touch a high of 23,656 today. Traders were waiting for rate cut and the post event rally provided them an opportunity to sell-on-news, said Prakash Diwan, Director - Altamount Capital Management.

“The key events for market are out of the way. Traders used post rate cut rally as an opportunity to book profits,” he said. Bank of Baroda (3.86 per cent), Bank of India (3.36 per cent), Axis Bank (3.19 per cent), Federal Bank (3.05 per cent) and IndusInd Bank (2.93 per cent) were among the top index losers.

“In today’s session, all the counters where the run-up was unjustified and which had run-up on budget expectations saw a sharp cut. Institutions now have a separate list of stocks to go after depending upon the announcements in the Budget,” Diwan added.

“With no major triggers left, now Q4 earnings will interest the market. Valuations of most stocks look stretched. Q3 earnings were weak and despite it we kept running on expectations of budget and rate,” he added.