Stock indices dipped further on Wednesday as the hope for further rate cut vanishes in the current year, with the forecast of an insufficient monsoon, which is likely to trigger inflationary pressures coupled with rising oil prices.
The rupee dipped to 63.90 per U.S. dollar compared to 63.82 in the previous trading day on Tuesday.
BSE Sensex closed below the 27000-mark with a loss of 351.18 points or 1.29 per cent at 26837.20. It touched an intra-day low of 26698.26.
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“This is an over-reaction to the monsoon forecasts. It is too early to be panic,” said G. Chokkalingam, Founder, Equinomics Research & Advisory Pvt Ltd.
According to him, the Met Department’s revised forecast of 88 per cent is equal to last year’s forecast. IMD revised its monsoon forecast on Tuesday to 88 per cent compared to its earlier forecast of 93 per cent. “However last three years, the error was around 6 per cent,” he added. On the NSE, the 50-share Nifty closed at 8135.10 with a loss of 101.35 points or 1.23 per cent.
Among the broader indices BSE 100 was down by 1.37 per cent and BSE 200 lost 1.36 per cent.
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Mid-cap and small-cap stocks lost 1.38 per cent and 1.98 per cent respectively.
In the short-term, with no visible triggers in sight, market may continue to remain volatile within a range, said Hitesh Agrawal - Head Research, Reliance Securities. However, “we see this as a consolidation phase for the market before the next leg of the bull-run gets under-way.”