Domestic markets trade flat in early deals ahead of RBI policy statement

Indian equity benchmarks made positive start following gains in global markets. Soon, markets trimmed their gains and traded flat in early deals. Buying in Metal, Power and Utilities were aiding the sentiments, whereas selling in Telecom, Consumer discretionary and FMCG weighted down on the markets. Investors are eyeing the RBI MPC outcome to take cues on repo rate. Reserve Bank Governor Shaktikanta Das headed six-member Monetary Policy Committee (MPC) is scheduled to announce the policy resolution today. It is widely anticipated that the MPC is likely to maintain the status quo on the benchmark interest rate or repo rate. Some support came in as Union Minister of State for Commerce and Industry Som Parkash said India has received Foreign Direct Investment (FDI) inflows worth $339.55 billion in the last five years. There has been a continuous increase in the inflow of FDI in recent years. Traders took note of Finance Minister Nirmala Sitharaman’s statement that the projected fiscal deficit of 6.9 per cent for the current financial year is a responsible target as the government has tried to ensure a balance between keeping up expenditure and being fiscally prudent.

On the global front, most of the Asian markets traded higher following the broadly positive cues overnight from Wall Street, as technology stocks mirrored their peers on tech-heavy Nasdaq and traders reacted to some upbeat corporate earnings news. Traders are a bit cautious as they await the U.S. inflation data later in the day. Meanwhile, producer prices in Japan were up 8.6 percent on year in January, the Bank of Japan said on Thursday - exceeding expectations for 8.2 percent and up from 8.5 percent in December. Back home, infrastructure industry stocks were in focus as Union minister Nitin Gadkari said the Road Transport and Highways Ministry has sanctioned highway projects of about Rs 3,36,661 crore during the three years to 2020-21. In scrip specific development, NDTV traded higher as its consolidated net profit surged 31.6 per cent to Rs 29.87 crore in Q3FY22 as against Rs 22.69 crore in Q3FY21.

The BSE Sensex is currently trading at 58460.09, down by 5.88 points or 0.01% after trading in a range of 58392.97 and 58810.53. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 0.15%, while Small cap index was down by 0.27%.

The top gaining sectoral indices on the BSE were Metal up by 1.07%, Power up by 0.77%, Utilities up by 0.70%, PSU up by 0.59%, Basic Materials up by 0.47%, while Telecom down by 0.77%, Consumer discretionary down by 0.58%, FMCG down by 0.58%, Consumer Durables down by 0.54%, Capital Goods down by 0.42% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid Corp up by 2.80%, Tata Steel up by 1.26%, Infosys up by 0.89%, NTPC up by 0.74% and Kotak Mahindra Bank up by 0.43%. On the flip side, Asian Paints down by 1.38%, Maruti Suzuki down by 1.36%, Bajaj Finserv down by 1.31%, Bharti Airtel down by 0.88% and Mahindra & Mahindra down by 0.85% were the top losers.

Meanwhile, Finance Minister Nirmala Sitharaman has said the projected fiscal deficit of 6.9 per cent for the current financial year is a ‘responsible’ target as the government has tried to ensure a balance between keeping up expenditure and being fiscally prudent. The minister also said the Rs 1 lakh crore loan for states will help in speeding up infrastructure development and capital expenditure. In her Budget speech on February 1, Sitharaman had said the revised fiscal deficit in the current financial year is estimated at 6.9 per cent of GDP as against 6.8 per cent of GDP projected in the budget estimates.

Sitharaman said ‘I don’t want anyone to think this (fiscal deficit estimate) is unusual. The pandemic was unusual and therefore 6.9 per cent is a responsible fiscal deficit. That is the kind of fiscal deficit … we have tried to do balancing between keeping up spending and being fiscally prudent’. Regarding giving Rs 1 lakh crore loan to states, she said the amount is being given to states because ‘we want to speed up infrastructure (development) and capital expenditure’. The amount is over and above what the states have been given under their borrowing limits and so it is not going to affect their borrowing limits.

She added when the states are being given the money it is more with the intention for several projects which they would want to complete. They can use this amount in total. She said ‘I thought it was the way in which we are supportive of the states, therefore we have given it. So, one it does not affect the FRBM, two, it does not give you (states) any interest burden, and three, you can use it for any project you want to do’. The Fiscal Responsibility and Budget Management (FRBM) Act provides for ensuring fiscal discipline.

The CNX Nifty is currently trading at 17460.45, down by 3.35 points or 0.02% after trading in a range of 17445.35 and 17554.10. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Power Grid up by 2.79%, ONGC up by 2.78%, JSW Steel up by 1.35%, Tata Steel up by 1.30% and Tata Motors up by 1.00%. On the flip side, Coal India down by 1.72%, Asian Paints down by 1.53%, BPCL down by 1.44%, SBI Life Insurance down by 1.39% and HDFC Life Insurance down by 1.32% were the top losers.

Asian markets are trading mostly higher; Nikkei 225 rose 77.80 points or 0.28% to 27,657.67, Straits Times added 2.33 points or 0.07% to 3,422.37, Taiwan Weighted advanced 88.98 points or 0.49% to 18,240.74, KOSPI gained 2.49 points or 0.09% to 2,771.34 and Jakarta Composite was up by 16.02 points or 0.23% to 6,850.63. On the other hand, Hang Seng fell 117.46 points or 0.47% to 24,712.53 and Shanghai Composite was down by 3.49 points or 0.10% to 3,476.46.