The Sensex dropped by 422 points on Wednesday even as the Nifty settled exactly at its resistance level of 11,200. This fall just a day ahead of the F&O expiry for the month of July shows some unwinding pressure on long positions. There was long unwinding in Reliance as longs unwound positions ahead of the expiry in the cash and the F&O segment.

There was also some unwinding of speculative positions ahead of the new margin policy to be implemented from August 2020 onwards. RIL also corrected sharply by 4% on the back of a slew of rating downgrades by big institutional brokers like CLSA and Edelweiss. Also, traders felt that at $200 billion market cap, most of the positives were in the price.

While RIL falling 4% was a key dampener of the market, there was also an element of uncertainty over the Fed policy statement expected later. Fed is expected to keep the status quo on rates but could still promise substantial liquidity support. The Fed move is likely to have a distinct impact on the RBI policy moves.