Markets trade in red in early deals; all eyes on RBI policy outcome

With a gap-down opening, Indian equity benchmarks have extended their previous session’s losses. However, markets are trading marginally lower in early deals on Thursday. Initial losses came in as the Fed announced a 75-basis-point hike in benchmark interest rates. Meanwhile, traders are eyeing on RBI Monetary Policy Committee meeting. There is expectation that Monetary Policy Committee meeting today to discuss failure to curb inflation. However, down side remained capped as PHD Chamber of Commerce and Industry (PHDCCI) has said that deceleration in the wholesale price index (WPI) inflation will continue and it will have a significant impact on the price corrections in the retail inflation; Consumer Price Index (CPI) inflation is expected to soften below 6 per cent by December 2022. It mentioned calibrated steps by the government and RBI would be crucial to bring down inflation in the targeted trajectory along with maintaining economic growth at around 7 per cent in the current financial year 2022-23.  

On the global front, Asian markets were trading mostly lower on Thursday after the US Federal Reserve laid the groundwork for a protracted tightening campaign that torpedoed market hopes for a pause, sank bonds and lifted the dollar. The US markets ended deeply in red on Wednesday after Federal Reserve Chair Jerome Powell said inflation was still too high and indicated that the central bank has more rate hiking ahead. The Fed implemented another 0.75 percentage point rate increase.

Back home, there were some buzz in fertilisers related stocks as the government approved a subsidy of Rs 51,875 crore for phosphatic and potassic (P&K) fertilisers for second half of 2022-23 as part of efforts to provide affordable soil nutrients to farmers. On the sectoral front, Telecom, Auto, Consumer Durables, FMCG and Industrials witnessed the maximum gain in trade, while IT, TECK, Realty, Metal and Utilities remained the top losers on the BSE sectoral space.

The BSE Sensex is currently trading at 60801.72, down by 104.37 points or 0.17% after trading in a range of 60485.14 and 60802.44. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.24%, while Small cap index up by 0.17%.

The top gaining sectoral indices on the BSE were Telecom up by 0.62%, Auto up by 0.55%, Consumer Durables up by 0.39%, FMCG up by 0.29% and Industrials up by 0.24%, while IT down by 1.22%, TECK down by 0.93%, Realty down by 0.62%, Metal down by 0.54% and Utilities down by 0.48% were the top losing indices on BSE.

The top gainers on the Sensex were Titan Co up by 1.28%, ITC up by 0.80%, Axis Bank up by 0.74%, Bharti Airtel up by 0.52% and Maruti Suzuki up by 0.51%. On the flip side, Tech Mahindra down by 2.06%, Wipro down by 1.71%, Infosys down by 1.41%, TCS down by 1.35% and HDFC down by 0.54% were the top losers.

Meanwhile, PHD Chamber of Commerce and Industry (PHDCCI) has said that deceleration in the wholesale price index (WPI) inflation will continue and it will have a significant impact on the price corrections in the retail inflation; Consumer Price Index (CPI) inflation is expected to soften below 6 per cent by December 2022. It mentioned calibrated steps by the government and RBI would be crucial to bring down inflation in the targeted trajectory along with maintaining economic growth at around 7 per cent in the current financial year 2022-23.

PHDCCI's president -- Saket Dalmia has said that the wholesale price index (WPI) inflation has softened to 10.7 per cent in September 2022 from its peak of 16.2 per cent in June 2022. The president said calibrated efforts undertaken by the government and Reserve Bank of India (RBI) have significantly impacted the escalation in the wholesale prices. Dalmia said though RBI took an aggressive move to tame the inflation and increased the repo rate by 190 bps during the last six months in May 4.4 per cent to 5.9 per cent in October, gross domestic product (GDP) growth rate has also been maintained with a lesser deceleration as compared with many economies.

Besides, PHDCCI said many of the economies were more aggressive while increasing the policy rates such as Canada increase the policy rates by 300 bps, followed by the US by 275 bps, Australia by 250 bps, UK by 175 bps, South Africa by 225 bps and Euro Area by 200 bps. It mentioned Canada had been able to reduce the inflation rate by 120 bps by increasing the repo rate 300 bps. The US is able to reduce the inflation rate from 9.1 per cent to 8.2 per cent by increasing the Federal Reserve rate by 275 bps. South Africa is able to reduce the inflation rate from 7.8 per cent to 7.5 per cent by increasing the policy rate by 225 bps.  Moreover, it stated India is able to reduce the inflation rate from 7.8 per cent to 7.4 per cent by increasing the policy rate by 190 bps.

The CNX Nifty is currently trading at 18037.60, down by 45.25 points or 0.25% after trading in a range of 17959.20 and 18038.30. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Bajaj Auto up by 1.63%, Titan Co up by 1.20%, ITC up by 0.83%, UPL up by 0.81% and Adani Enterprises up by 0.79%. On the flip side, Tech Mahindra down by 2.07%, Hindalco down by 1.97%, Wipro down by 1.70%, Infosys down by 1.54% and TCS down by 1.33% were the top losers.

Asian markets were trading mostly in red; Taiwan Weighted dropped 148.10 points or 1.13% to 12,952.07, Hang Seng decreased 520.54 points or 3.29% to 15,306.63, KOSPI fell 14.93 points or 0.64% to 2,321.94, Straits Times trembled 42.73 points or 1.36% to 3,098.40 and Shanghai Composite declined 18.94 points or 0.63% to 2,984.43. However, Jakarta Composite soared 9.97 points or 0.14% to 7,025.66.