RBI's presser takes steam off rally; Sensex closes in red

The Reserve Bank's portrayal of the grim economic picture of the economy took the steam off from the initial steam in the markets.

Despite an early morning rally of over 5% across indices, the markets started wiping off all the gains as soon as the RBI governor Shaktikanta Das portrayed a grim picture of the economy on Friday.

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This kind of uncertain outlook has never been seen before, he said, sending the shockwaves across the markets. Immediately after the RBI presser, the 30-share benchmark BSE Sensex fell 1,780 points from the days high.

However, the late afternoon buying by the domestic funds provided some support to the markets. Sensex closed down 131.18 points (0.44%) at 29,815.59, despite testing 30,000-mark in the morning hour of trade.

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Overall market breadth was slightly negative with 1,161 declines, against 1,147 advances.

The situation was a bit better on the broader index 50-share NSE Nifty which closed. Despite heavy buying in the morning the index barely managed to keep in the green, closing at 8,660.25, up 18.80 points (0.22%).

Among sectoral indices, Nifty Auto crashed the most by 2.42%, while Nifty Bank surged the most by 1.81%.

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Despite the heavy correction in the markets, experts have advised investors to select the stocks carefully.

"While valuations have now become reasonable and in some stocks attractive as well, investors should select stocks that have the balance sheet strength to sustain the severe near-term economic pain. Upside/downside in the markets would depend upon the duration of the ongoing nation-wide shutdown,” said Sanjeev Zarbade, VP PCG Research, Kotak Securities.