Markets end near day's low, rate sensitives slide

Markets extended losses in afternoon session and ended near day's low due to losses in rate sensitive shares ahead of the credit policy on Thursday.

The S&P CNX Nifty opened in the red and was dragged due to selling pressure in banking and realty shares as 25 basis point rate hike is expected during the monetary policy on Thursday.

Nifty closed near day's low at 5,448 - down 53 points. The Sensex ended at 18,132 -- down 176 points.

Investors have turned to the sidelines because of the expected rate hike and quarterly advance tax numbers.

AK Prabhakar, Senior Vice President Equity Research from Anand Rathi said till August markets may remain range bound to negative with occasional pull-back.

Inflation for May was reported at 9.1%, gross domestic product for fourth quarter came in at 7.8% and industrial production index based on the new series released last week for April slowed to 6.3% against 8.8% a month ago.

Abheek Barua, Chief Economist, HDFC Bank said that domestic growth is not exactly collapsing in line with the soft landing that is necessary to rein in demand-side inflationary pressures.

"RBI is likely to hike its repo rate by 25 bps and is likely to follow up with two more rate hikes of 25 bps each in August and September before pressing the pause button," added Barua.

Global stocks also slipped after

Euro zone ministers failed on Tuesday to reach an agreement on how private holders of Greek debt should share the costs of a new bailout.

Hang Seng shed 0.7% to 22,339. Shanghai Composite was down 1% at 2,705. However, Nikkei advanced 0.3% to 9,574.

Investors cashed out of banking shares as consecutive rate hikes will weigh on credit growth and compress net interest margins.

Among the top losers, State Bank of India declined 2.5%, Axis Bank slipped 2.7% and ICICI Bank was down1.8%.

Realty shares were among the top losers from the sectoral pack.

The BSE Realty index declined 1.6%. Anish Damania, business head -- Institutional Sales from Emkay said there it is unlikely that realty shares would outperform as many of the companies were still sitting on huge pile of debt and sales also dipped in the past quarter.

BSE FMCG index emerged as a defensive bet and was the only sector which managed to end in the green, up 0.1%. Dabur India advanced 3.5%, Marico was up 3.3% and Hindustan Unilever gained 0.5%.

Among the losers were DLF, down 3.2%, Wipro slipped 2.8% and State Bank of India was down 2.3%. Top gainers on the Sensex were Reliance Infra, up 1.5%, Tata Motors climbed 1% and Hindustan Unilever added 0.5%.

From the broader markets, the midcap and the smallcap indices were down 0.6% each.

BSE market breadth was negative. Out of 2,954 stocks traded, 1,641 stocks declined while 1,200 stocks advanced.