Benchmarks trade flat ahead of RBI’s policy announcement

Indian equity benchmarks have made a cautious start and are trading near their neutral lines in early deals on Wednesday, as traders remained on sidelines ahead of Reserve Bank of India’s (RBI) monetary policy statement, slated to be announced later in the day. The central bank is expected to cut repo rate by 25 basis points on falling inflation and the government's fiscal prudence in Budget. Overall sentiments remained up-beat as some support came with a private report stating that the global economic order is expected to shift from advanced to emerging economies over the next few decades and by 2040 India could edge past the US to become the world's second largest economy in purchasing power parity (PPP) terms.

On the global front, Asian markets were trading mostly in red at this point of time with some indices witnessing cut of around half a percent in the early deals. The Japanese market too was trading lower after the yen reversed an early decline after the nation’s central bank offered to buy bonds for the third time in a week. The US markets made a modestly higher close in last session despite coming  well off their best levels of the day, the Nasdaq still reached a new record closing high in a positive reaction to the batch of largely upbeat quarterly results. Back home, the market breadth indicating the overall health of the market was strong, with 1,368 shares gaining and 780 shares declining, while a total of 104 shares were unchanged.

The BSE Sensex is currently trading at 28329.67, down by 5.49 points or 0.02% after trading in a range of 28305.91 and 28391.64. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.51%, while Small cap index was up by 0.32%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 3.06%, Metal up by 0.80%, Realty up by 0.68%, Auto up by 0.67% and Oil & Gas up by 0.56%, while FMCG down by 0.46% and Bankex was down by 0.24% were the only losing indices on BSE.

The top gainers on the Sensex were Cipla up by 1.50%, GAIL India up by 1.27%, Wipro up by 1.20%, Mahindra & Mahindra up by 1.10% and Tata Steel was up by 0.99%. On the flip side, ITC down by 1.14%, Axis Bank down by 1.00%, Dr. Reddy’s Lab down by 0.81%, ICICI Bank down by 0.61% and HDFC was down by 0.58% were the top losers.

Meanwhile, appreciating the central bank’s role in the wake of demonetisation and global phenomena such as Brexit and the US elections, NITI Aayog Vice Chairman Arvind Panagariya has said the Reserve Bank of India (RBI) played an admirable role in bringing incredible stability to the rupee. He added that those who have been critical of demonetisation don't understand what a gigantic task it was to remonetise the economy.

Panagariya said that a much bigger shock was administered in November last year both due to demonetisation and more importantly due to the events in the US which led to capital leaving virtually all emerging markets. He said the rupee in spite of all these remained incredibly stable and the credit for it goes to the RBI. He also said that one only heard about the demonetisation story during this period but nobody noticed this fact that the RBI played an admirable role in ensuring that the rupee did not become incredibly unstable.

He further said that demonetisation sent a very strong signal that the days when the Central Government was complacent are over. If you misbehave, it will be seen that you pay for it. He stressed that the government's policy was to combat black money and demonetisation had to be the part of the overall strategy. He added that exchange rate stability has been achieved despite the massive pressures in the wake of Brexit as well as US president Donald Trump's election victory.

The CNX Nifty is currently trading at 8769.90, up by 1.60 points or 0.02% after trading in a range of 8765.85 and 8780.30. There were 34 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 1.89%, Hindalco up by 1.86%, Ambuja Cement up by 1.53%, Cipla up by 1.50% and GAIL India was up by 1.35%. On the flip side, ITC down by 1.19%, Axis Bank down by 1.16%, Dr. Reddy’s Lab down by 0.96%, Aurobindo Pharma down by 0.89% and Indusind Bank was down by 0.71% were the top losers.

Asian markets were trading mostly in red; Jakarta Composite decreased 23.89 points or 0.44% to 5,357.59, Hang Seng slipped 21.28 points or 0.09% to 23,310.29, KOSPI Index declined 13.15 points or 0.63% to 2,062.06, Shanghai Composite fell 10.16 points or 0.32% to 3,142.93, Taiwan Weighted shed 5.19 points or 0.05% to 9,549.37 and FTSE Bursa Malaysia KLCI was down by 1.2 points or 0.07% to 1,687.64.

On the flip side, Nikkei 225 was up by 22.93 points or 0.12% to 18,933.71.