Bourses close in red ahead of RBI policy outcome

Falling for the third day in a row, Indian equity benchmarks ended sharply lower on Tuesday on the back of selling across counters as caution set in among investors ahead of RBI’s monetary policy decision due on June 8. The RBI’s Monetary Policy Committee is expected another round of hike in benchmark interest rates to contain inflation that continues to remain above the central bank’s upper tolerance level. Markets made a gap-down opening and traded in red throughout the session, as traders remained cautious with ratings and research firm Acuite Ratings & Research’s report that the expectation of the expansion of the current account deficit is not just driven by elevated global commodity prices, but is also linked to the unlocking of the economy reviving pent-up demand and improved vaccination cover aiding an organic recovery in the economy.

Sentiments remained weak in late afternoon deals, as exchange data showed Foreign Institutional Investors (FII) continued to be net sellers of domestic stocks on Monday. FIIs pulled out Rs 2,397 crore from domestic stocks. Besides, weakness in global markets on inflationary concerns weighted on the domestic investors. Traders failed to get any sense of relief with Finance minister Nirmala Sitharaman’s statement that the country's growth will be driven by fiscal spending. She said BRICS should continue to serve as a platform to engage in dialogues and facilitate exchange of experiences, concerns and ideas for rebuilding a sustainable and inclusive growth trajectory. Traders also paid no heed towards Minister of State for Commerce and Industry Anupriya Patel’s statement that free trade agreements (FTAs) with the UAE and Australia will help promote exports of goods such as garments, engineering products, handicrafts, textiles, and agri processed items.

On the global front, Asian markets ended mixed on Tuesday amid rising prospects of the Federal Reserve resorting to aggressive policy tightening to combat rising inflation. Traders remain cautious ahead of this week's key inflation report from the U.S. which will offer cues on the interest rate outlook. European markets were trading mostly in red, as market participants await a European Central Bank (ECB) policy meeting on Thursday for confirmation whether the central bank will raise rates at the July 21 policy meeting. Underlining investor concerns about slowing economic growth, data showed earlier in the day that German factory orders fell for a third month in a row in April, driven by weakened demand and heightened uncertainty due to the Russian-Ukraine conflict.

Back home, auto stocks were in focus after dealers’ body FADA saw growth in retail sales of passenger vehicles were in May, but a de-growth was witnessed in sales of two-wheelers and commercial vehicles as they remained below pre-Covid levels of May 2019. Infrastructure industry’s stocks were in watch as Union Road Transport and Highways Minister Nitin Gadkari said his target is to construct 60 kilometres of highway per day. India's national highway construction slowed to 28.64 km a day in 2021-22 due to COVID-19 pandemic related disruptions and a longer-than-usual monsoon in some parts of the country.

Finally, the BSE Sensex fell 567.98 points or 1.02% to 55,107.34 and the CNX Nifty was down by 153.20 points or 0.92% to 16,416.35.   

The BSE Sensex touched high and low of 55,387.77 and 54,882.41, respectively. There were 5 stocks advancing against 25 stocks declining on the index. 

The broader indices ended in red; the BSE Mid cap index fell 0.77%, while Small cap index was down by 0.67%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.19%, Energy up by 1.05%, Utilities up by 0.87%, Power up by 0.77% and PSU up by 0.64%, while Consumer Durables down by 2.71%, Realty down by 1.57%, Capital Goods down by 1.53%, IT down by 1.42% and FMCG down by 1.42% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 1.35%, Maruti Suzuki up by 1.30%, Mahindra & Mahindra up by 0.50%, Bharti Airtel up by 0.37% and Reliance Industries up by 0.20%. On the flip side, Titan Company down by 4.48%, Dr. Reddy's Lab down by 3.87%, Larsen & Toubro down by 3.00%, Hindustan Unilever down by 2.98% and Asian Paints down by 2.61% were the top losers.

Meanwhile, expressing optimism over India’s economic growth, Finance minister Nirmala Sitharaman has said that the country's growth will be driven by fiscal spending. She said BRICS should continue to serve as a platform to engage in dialogues and facilitate exchange of experiences, concerns and ideas for rebuilding a sustainable and inclusive growth trajectory.

About India's growth outlook, she said the economic growth will continue to be supported by fiscal spending along with an investment push, imparting momentum to the economy based on the idea of growth at macro level complemented by all-inclusive welfare at micro level.

The government has proposed to significantly step up the public investment by raising capital expenditure by 35.4 per cent to Rs 7.5 lakh crore or 2.9 per cent of the GDP in the current financial year

The CNX Nifty traded in a range of 16,487.25 and 16,347.10. There were 14 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were ONGC up by 4.84%, NTPC up by 1.48%, Coal India up by 1.36%, Maruti Suzuki up by 1.35% and Hero MotoCorp up by 1.00%. On the flip side, Titan Co down by 4.48%, UPL down by 4.40%, Dr. Reddy's Lab down by 3.85%, Britannia Industries down by 3.16% and Larsen & Toubro down by 3.07% were the top losers.

European markets were trading mostly in red; France’s CAC decreased 45.17 points or 0.69% to 6,503.61 and Germany’s DAX decreased 128.13 points or 0.87% to 14,525.68, while UK’s FTSE 100 increased 2.30 points or 0.03% to 7,610.52.

Asian markets ended mixed on Tuesday on anxiety about interest rate hikes and a possible economic slowdown in the world’s largest economy. Last week’s US jobs report raised expectations of continued tightening by the US Federal Reserve. Investors are also awaiting Friday’s US consumer price index (CPI) for clues on the interest rate hike path. Meanwhile, the European Central Bank will hand down its policy decision this Thursday, joining global peers to cool off high inflation. Chinese shares gained as easing of more Covid-19 related restrictions in Shanghai and other major cities. Japanese shares rose as a weakening yen boosted export stocks. Bank of Japan Governor Haruhiko Kuroda said a weak yen is beneficial for Japan’s economy if the currency’s moves are not too sharp.