Domestic equity markets trade in red after RBI hikes repo rate by 35 bps

Domestic equity markets were trading in red with cut of over quarter a percent in late morning deals, on account of selling in Realty, Consumer Durables  and Utilities stocks. Sentiments were weak after the Reserve Bank of India (RBI) has increased the policy repo rate under the liquidity adjustment facility (LAF) by 35 basis points to 6.25 per cent with immediate.  Meanwhile, It also announced a mild reduction in the GDP growth forecast for the current financial year to 6.8 per cent from 7 per cent earlier. It said that while the growth forecast had been reduced, India would still be among the fastest-growing major economies. A depreciating rupee, which slipped 8 paise to trade at 82.58 against the US dollar, made traders more nervous.

On the global front, Asian markets were mostly trading in red following the broadly negative cues from US overnight, as traders remain concerned about the outlook for interest rates and about how much further the central bank will raise rates ahead of next week's US Fed meeting following recent upbeat economic data. Back home, in stock specific development, HDFC Asset Management Company (AMC) rose after the company informed the stock exchanges that its promoter, abrdn Investment Management, will sell its entire 10.2 per cent stake in the company.

The BSE Sensex is currently trading at 62454.42, down by 171.94 points or 0.27% after trading in a range of 62408.65 and 62759.97. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.38%, while Small cap index down by 0.53%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.08%, FMCG up by 0.51%, Industrials up by 0.49%, Oil & Gas up by 0.19% and Consumer discretionary up by 0.02%, while Realty down by 1.14%, Consumer Durables down by 0.96%, Utilities down by 0.95%, Auto down by 0.69% and Power down by 0.51% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 1.82%, Hindustan Unilever up by 1.08%, Asian Paints up by 0.91%, Infosys up by 0.55% and ITC up by 0.42%. On the flip side, Bajaj Finserv down by 2.06%, NTPC down by 1.77%, Indusind Bank down by 1.40%, Sun Pharma down by 1.21% and Bajaj Finance down by 1.19% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) has increased the policy repo rate under the liquidity adjustment facility (LAF) by 35 basis points to 6.25 per cent with immediate effect. Consequently, the standing deposit facility (SDF) rate stands adjusted to 6.00 per cent and the marginal standing facility (MSF) rate and the Bank Rate to 6.50 per cent.

RBI’s Monetary Policy Committee (MPC) also decided to remain focused on withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth. These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth.

On the price front, inflation is projected at 6.7 per cent in 2022-23, with Q3 at 6.6 per cent and Q4 at 5.9 per cent, and risks evenly balanced. CPI inflation for Q1:2023-24 is projected at 5.0 per cent and for Q2 at 5.4 per cent, on the assumption of a normal monsoon. On the economic growth front, the real GDP growth for 2022-23 is projected at 6.8 per cent with Q3 at 4.4 per cent and Q4 at 4.2 per cent, with risks evenly balanced. Real GDP growth is projected at 7.1 per cent for Q1:2023-24 and at 5.9 per cent for Q2.

The RBI also noted that the global economic outlook is skewed to the downside. Global growth is set to lose momentum as monetary policy actions tighten financial conditions and as consumer confidence weakens with the rising cost of livelihood. Inflation remains elevated and persistent across countries as they grapple with food and energy price shocks and shortages. More recently, however, there are some signs of moderation in price pressures, which have raised expectations of an easing in the pace of monetary tightening.

The CNX Nifty is currently trading at 18583.05, down by 59.70 points or 0.32% after trading in a range of 18564.50 and 18668.30. There were 11 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were BPCL up by 2.05%, Larsen & Toubro up by 1.94%, Hindustan Unilever up by 1.07%, Asian Paints up by 0.87% and Infosys up by 0.50%. On the flip side, Bajaj Finserv down by 2.16%, NTPC down by 1.66%, Tata Motors down by 1.37%, Indusind Bank down by 1.36% and Hero MotoCorp down by 1.32% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 199.47 points or 0.72% to 27,686.40, Taiwan Weighted dropped 98.87 points or 0.67% to 14,630.01, Straits Times trembled 1.28 points or 0.04% to 3,251.09, Shanghai Composite declined 7.93 points or 0.25% to 3,204.60, KOSPI fell 7.34 points or 0.31% to 2,385.82 and Jakarta Composite lost 67.48 points or 0.98% to 6,825.09. However, Hang Seng increased 111.39 points or 0.57% to 19,552.57.