Bourses trade deep in red as RBI raises repo rate by 40 bps to 4.40%

Indian equity markets traded deep in red in late afternoon session, as Reserve Bank of India (RBI) has increased the policy repo rate under the liquidity adjustment facility (LAF) by 40 basis points to 4.40 per cent with immediate effect. Consequently, the standing deposit facility (SDF) rate stands adjusted to 4.15 per cent and the marginal standing facility (MSF) rate and the Bank Rate to 4.65 per cent. Besides, Reserve Bank of India (RBI) said that core inflation is likely to remain elevated in the coming months, reflecting high domestic pump prices and pressures from prices of essential medicines. Renewed lockdowns and supply chain disruptions due to resurgence of COVID-19 infections in major economies could sustain higher logistics costs for longer. All these factors impart significant upside risks to the inflation trajectory set out in the April statement of the MPC. The broader indices, the BSE Mid cap index and Small cap index were also trading with the cut of above a percent. On the BSE sectoral front, Consumer Durables, Healthcare and Consumer Discretionary counters were on the priority list of the sellers, while PSU was only gainer. 

On the global front, Asian markets were trading mostly in red and European markets were trading lower as global investors await a crucial monetary policy decision from the U.S. Federal Reserve.

The BSE Sensex is currently trading at 55,853.43, down by 1122.56 points or 1.97% after trading in a range of 55915.35 and 57184.21. There were 5 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 1.64%, while Small cap index was down by 1.03%.

The only gaining sectoral indices on the BSE was PSU was up by 0.04%, while Consumer Durables down by 2.97%, Healthcare down by 2.26%, Consumer Discretionary down by 2.16%, Realty down by 1.88% and Auto was down by 1.80% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 2.59%, Kotak Mahindra Bank up by 1.71%, NTPC up by 1.24%, Infosys up by 0.62% and Wipro up by 0.12%. On the flip side, Bajaj Finserv down by 3.65%, Titan Company down by 3.43%, Bajaj Finance down by 3.09%, Hindustan Unilever down by 2.98% and Reliance Industries down by 2.68% were the top losers.

Meanwhile, credit rating agency, India Ratings and Research (Ind-Ra) in its latest report ‘FY23 Construction Outlook’ has revised the construction sector outlook to neutral for FY23 from improving for FY22 and also maintained a stable rating Outlook on its rated construction companies for FY23, except for the ones facing specific state governments with a weak fiscal profile.

As per the report, the neutral sector outlook reflects the expectation of a continued uptick in business activities for engineering, procurement and construction (EPC) players, which are likely to have registered 19% yoy revenue growth because of order execution in FY22 post registering two consecutive years of a revenue decline owing to the COVID-19 pandemic and unseasonal high rainfalls.

Supported by the rich budgetary allocations made by the central government for FY22 and a recovery seen in the capex activities of most state governments towards economic activities, order inflows in most subsectors have seen a significant upswing during FY22 with tendering activity gaining momentum. The capex activities of most state governments towards economic activities had remain muted in FY20 and FY21 owing to the slowdown in economic activity and due to the impact of pandemic (State Budgets FY23).

The CNX Nifty is currently trading at 16,722.60, down by 250.50 points or 1.47% after trading in a range of 16751.35 and 17132.85. There were 9 stocks advancing against 41 stocks declining on the index.

The top gainers on Nifty were Britannia up by 4.10%, ONGC up by 3.42%, Power Grid up by 2.50%, Kotak Mahindra Bank up by 1.73% and NTPC up by 1.05%. On the flip side, Apollo Hospital down by 5.63%, Adani Ports down by 4.01%, Bajaj Finserv down by 3.43%, Titan Company down by 3.38% and Bajaj Auto down by 3.34% were the top losers.

Asian markets were trading mostly in red, Hang Seng decreased 232.37 points or 1.1% to 20,869.52, Straits Times trembled 13.84 points or 0.41% to 3,343.06 and KOSPI was down by 2.89 points or 0.11% to 2,677.57. On the flip side, Taiwan Weighted was up by 66.93 points or 0.41% to 16,565.83.

European markets were trading lower, UK’s FTSE 100 decreased 29.31 points or 0.39% to 7,532.02, France’s CAC decreased 17.97 points or 0.28% to 6,458.21 and Germany’s DAX was down by 36.20 points or 0.26% to 14,003.27.