Both Sensex and Nifty had risen nearly 3 per cent in the previous four sessions on Budget announcements, which were mostly viewed positively by market participants.
In early trade, the Sensex had hit the 30,000 for first time by gaining over 400 points and the Nifty touched a life high of 9,119 after the RBI chief Raghuram Rajan in a surprise move decided to cut repo rate by 25 basis points.
The repo rate cut came just days after Finance Minister Arun Jaitley’s Union Budget announcement. In his Budget, Mr Jaitley had loosened the reins on public spending to drive growth, but promised lower-than-expected borrowing despite raising the fiscal deficit target.
Commenting on today’s fall, Rahul Shah, vice president (equity advisory group) at Motilal Oswal Securities said a rate cut was already factored in by the markets. “A rate cut post budget was mostly expected, but the timing of rate cut came as a surprise, which is why markets opened higher, but now markets have digested that fact and we are seeing some profit booking,” he said.
Besides, technically 9,000 on Nifty was looking as a heavy congestion level and it was difficult for Nifty to sustain at that level, he added.
Banking stocks led the decline with banking index Bank Nifty falling 1.5 per cent. Strong selling pressure was also seen in IT, metal and energy stocks.
Among banking stocks, SBI, PNB, Bank of Baroda and IndusInd Bank fell nearly 3 per cent. Metal stocks Sesa Sterlite and NMDC slumped over 4 per cent.
The Sensex closed 213 points lower at 29,381, after hitting 29,289 at day’s low. The 50-share Nifty fell 74 points to end at 8,922 levels.