Markets stage recovery in late morning deals

Cutting their losses, Indian equity benchmarks staged recovery in late morning session but Sensex and Nifty were trading mixed, on the back of negative cues from other Asian markets. Traders were cautious, as a senior RBI official witting on the rate-setting panel said that the Monetary Policy Committee (MPC) should not continue with unconventional measures now, and it is possible to have lower liquidity levels while continuing with the growth-enhancing accommodative stance. However, losses got cut, after Union Commerce and Industry Minister Piyush Goyal said India is working on 'Aatmanirbhar Bharat' just like the United States embarked on a 'Build Back Better' framework.

On the global front, Asian markets were trading mostly in red, even after consumer confidence in South Korea picked up steam in November, the latest survey from the Bank of Korea showed on Tuesday with a sentiment index score of 107.6 - up from 106.8 in October. Consumer sentiment regarding current living standards was unchanged at 92, while the outlook was one point lower than in the previous month at 97.

The BSE Sensex is currently trading at 58420.51, down by 45.38 points or 0.08% after trading in a range of 57718.34 and 58472.36. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.32%, while Small cap index was up by 1.29%.

The top gaining sectoral indices on the BSE were Metal up by 3.55%, Realty up by 2.09%, Utilities up by 1.99%, Basic Materials up by 1.96% and PSU up by 1.67%, while IT down by 0.28%, Energy down by 0.26%, TECK down by 0.12% and Bankex down by 0.02% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 3.42%, Power Grid up by 2.93%, Sun Pharma up by 1.43%, Bharti Airtel up by 1.22% and Nestle up by 1.19%. On the flip side, Indusind Bank down by 2.19%, Asian Paints down by 1.63%, Infosys down by 1.29%, Reliance Industries down by 0.66% and ICICI Bank down by 0.64% were the top losers.

Meanwhile, The RBI's Executive Director Mridul Saggar has said that the Monetary Policy Committee (MPC) should not continue with unconventional measures now, and it is possible to have lower liquidity levels while continuing with the growth-enhancing accommodative stance.  He said as the growth normalises, it makes policy sense to lower the liquidity levels to some extent, and added that the negative real interest rates are impacting the retired people.

RBI's Executive Director said there is heightened interest over when the RBI and the MPC start reversing the unconventional policy measures taken immediately after the onset of the pandemic to help the economy. He note d that For the last few policy reviews, the MPC has voted for a status quo on rates but at the last meeting, fpelled out its desire to lower the excess liquidity in the system and took some measures which set off speculation of when does the central bank start the process of normalisation.

Saggar further said the RBI pumped Rs 13.6 trillion of excess liquidity since March 2020 through its various measures which equals 6.3 per cent of GDP. He stressed that it did not go all out in pumping funds like Brazil. Going all out would have led to concerns on financial stability. He also said inflation is unlikely to breach the 6 per cent tolerance band set by the government for the RBI as part of the inflation-targeting framework, even though there has been some firming in the last two data points. He said ‘if the recovery sets in, then obviously, we need to be data-dependent and see if we can move inflation back towards the target.’

The CNX Nifty is currently trading at 17437.45, up by 20.90 points or 0.12% after trading in a range of 17216.10 and 17449.00. There were 37 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were JSW Steel up by 4.67%, Coal India up by 3.55%, Tata Steel up by 3.36%, Power Grid up by 2.81% and Hindalco up by 2.22%. On the flip side, Indusind Bank down by 2.18%, Asian Paints down by 1.64%, Infosys down by 1.29%, Reliance Industries down by 0.73% and ICICI Bank down by 0.59% were the top losers.

Asian markets were trading mostly in red; Straits Times fell 3.72 points or 0.11% to 3,233.36, Hang Seng lost 245.40 points or 0.98% to 24,705.94, Taiwan Weighted declined 80.38 points or 0.45% to 17,723.16, KOSPI slipped 13.93 points or 0.46% to 2,999.32 and Jakarta Composite weakened 34.89 points or 0.52% to 6,688.50, while Shanghai Composite was up by 15.45 points or 0.43% to 3,597.53.