Domestic indices trade flat in early deals; RBI policy outcome eyed

Indian equity benchmarks made positive start on Friday but soon trimmed gains amid mixed global cues. Markets are trading flat in early deals ahead of the RBI’s crucial monetary policy announcement later in the day. The markets are keenly watching the Reserve Bank of India's (RBI) inflation and growth projections in the wake of the continued increase in oil and commodity prices. There are expectations that the central bank to keep the key rates unchanged.  Some cautiousness came in as the finance ministry said the current elevated level of international crude price, should it persist for a long time, may come in the way of India achieving a real economic growth rate of 8%-plus in FY23 and pose upside risks to inflation as well. Though, downside remained capped as former RBI Governor Bimal Jalan said the Indian economy is in good shape as the country’s GDP growth rate and foreign exchange reserve are high. Traders took note of the finance ministry’s statement that the union government is exploring all viable options to procure crude oil at affordable rates.

Most of the Asian markets are trading lower as investors fret about the war in Ukraine, Covid-19 lockdowns in China and the Fed's plan for aggressive policy tightening. Shanghai reported more than 21,000 daily cases, casting doubt on President Xi Jinping's stringent zero-tolerance strategy. Back home, insurance industry stocks were in focus as the insurance regulator, IRDA, wants removal of the minimum entry capital requirement of Rs 100 crore for setting up an insurance business in a bid to facilitate the entry of multiple players such as standalone micro insurers and niche players. In scrip specific development, Hester Biosciences traded higher as it received approval for grant of Rs 60 crore from Biotechnology Industry Research Assistance Council (BIRAC).

The BSE Sensex is currently trading at 59013.37, down by 21.58 points or 0.04% after trading in a range of 58977.83 and 59297.46. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.60%, while Small cap index was up by 0.69%.

The top gaining sectoral indices on the BSE were Power up by 1.08%, Utilities up by 0.99%, Telecom up by 0.95%, Consumer Durables up by 0.86%, Energy up by 0.84%, while Healthcare down by 0.21%, Realty down by 0.09%, Bankex down by 0.04% were the only losing indices on BSE.

The top gainers on the Sensex were Titan Company up by 1.16%, Tata Steel up by 1.07%, Reliance Industries up by 0.69%, Dr. Reddy's Lab up by 0.51% and Wipro up by 0.45%. On the flip side, HDFC down by 0.75%, HDFC Bank down by 0.71%, Tech Mahindra down by 0.68%, TCS down by 0.62% and Sun Pharma down by 0.60% were the top losers.

Meanwhile, expressing optimism over state of Indian economy, former RBI Governor Bimal Jalan has said that the country’s economy is in good shape as India’s GDP growth rate and foreign exchange reserve are high. Notwithstanding economic uncertainties triggered by the Russia-Ukraine war that is also impacting the global supply chain, Jalan said it is not going to affect India’s economic performance. He added that India’s current macroeconomic situation is quite positive in the sense that the rate of growth is high. India’s foreign exchange reserve is also very high.

However, the former RBI governor has stressed that unemployment is high, which is a matter of concern. As the Russia-Ukraine crisis is concerned, he said obviously, it will have an impact all over the world. He said but so far India is concerned, its relationship with Russia was quite good but exports-imports was not very much, and added that it was less than 2 per cent. While observing that development in Ukraine is a matter of concern, he said it is not going to affect India’s economic performance.

Jalan noted that high inflation is a problem. Retail inflation hit an eight-month high of 6.07 per cent in February, remaining above the RBI’s comfort level for the second month in a row, while wholesale price-based inflation soared to 13.11 per cent on account of the hardening of crude oil and non-food item prices. Regarding high petrol and diesel prices, he said the government has already cut some taxes on petrol and diesel. He said ‘And some more taxes if they can reduce, (then) that is desirable’.

The CNX Nifty is currently trading at 17649.95, up by 10.40 points or 0.06% after trading in a range of 17632.95 and 17723.60. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Coal India up by 1.97%, Titan Company up by 1.45%, BPCL up by 1.09%, Hindalco up by 1.00% and Tata Steel up by 0.99%. On the flip side, Cipla down by 2.30%, Eicher Motors down by 0.72%, HDFC down by 0.71%, HDFC Bank down by 0.70% and Tech Mahindra down by 0.70% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 declined 24.69 points or 0.09% to 26,863.88, Straits Times lost 27.98 points or 0.82% to 3,376.25, Hang Seng slipped 127.91 points or 0.59% to 21,681.07, KOSPI fell 2.49 points or 0.09% to 2,693.37 and Shanghai Composite was down by 1.88 points or 0.06% to 3,234.82. On the other hand, Taiwan Weighted rose 81.01 points or 0.47% to 17,259.64 and Jakarta Composite was up by 57.52 points or 0.81% to 7,184.89.