Markets wipe out opening gains to trade flat in early deals

Indian equity benchmarks made optimistic start on Tuesday tracking gains in Asian counterparts, following the mixed cues from Wall Street overnight, as fears of a global banking crisis once again eased following the latest developments in the sector and after three regional US Fed bank presidents said the U.S. banking system was not facing a liquidity crisis. Soon, markets wiped out their opening gains and are trading flat in early deals as cautious undertone prevailed after a sharp rise in oil prices overnight and amid caution ahead of F&O expiry. Foreign fund outflows also dented the domestic sentiments. FPIs returned to their old ways by selling shares to the tune of Rs 890 crore on March 27. Traders took note of SBI Research in its latest Ecowrap report stating that the Reserve Bank of India (RBI) is expected to pause their interest rate hike and the current 6.5 per cent repo rate could be the terminal rate for now.

Besides, Commerce Secretary Sunil Barthwal said India will be looking to push the rupee trade agenda in the G-20 meetings it is organising as part of its ongoing presidency of the forum. In stock specific development, Aditya Birla Capital gained amid reports that it would sell entire stake in its insurance broking business.

The BSE Sensex is currently trading at 57684.83, up by 30.97 points or 0.05% after trading in a range of 57670.79 and 57949.45. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.40%, while Small cap index was down by 0.40%.

The few gaining sectoral indices on the BSE were Realty up by 0.27%, Metal up by 0.23%, Bankex up by 0.02%, while Utilities down by 1.45%, Power down by 1.35%, Oil & Gas down by 1.31%, Energy down by 0.70%, Telecom down by 0.60% were the top losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 1.25%, HDFC up by 0.47%, HDFC Bank up by 0.40%, TCS up by 0.32% and ICICI Bank up by 0.28%. On the flip side, Tata Motors down by 0.81%, Bharti Airtel down by 0.77%, Asian Paints down by 0.53%, Tech Mahindra down by 0.52% and Axis Bank down by 0.40% were the top losers.

Meanwhile, SBI Research in its latest Ecowrap report has said that the Reserve Bank of India (RBI) is likely to pause their interest rate hike and the current 6.5 per cent repo rate could be the terminal rate for now. The repo rate is the interest rate at which the RBI lends money to all commercial banks. The next monetary policy meeting is scheduled for the first week of April 2023. Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline. In early 2020 when Covid hit the world, the repo rate was 4 per cent.

The report asserted that the RBI has enough reasons to pause the repo rate hike in the April meeting. It said ‘There are concerns of a material slowdown in the affordable housing loan market and financial stability concerns taking centre stage. While concerns on sticky core inflation is justified, it may be noted that average core inflation is at 5.8 per cent over the last decade and it is almost unlikely that core inflation could decline materially to 5.5 per cent and below as post-pandemic shifts in expenditure on health and education and the sticky component of transport inflation with fuel prices staying at elevated levels will act as the constraint. By this logic, RBI may then have to go for more rounds of rate hikes’.

On India's inflation, the Ecowrap report forecast March and April to be 5.5-5.6 per cent and 4.7-4.8 per cent. It said ‘Thus, the RBI will have a delicate balancing job of either looking forward to the June meeting with clear signs of inflation trending downwards or looking backwards at the Jan and Feb prints in April policy. Thus, it will be a delicate choice (for RBI)’. Not just India, US monetary policy committee too is on an interest hike spree in the fight against inflation. SBI Research said ‘Fed rate hikes could be smaller in magnitude, and one last in May policy of 25 bps’. It added ‘The challenge is now to decouple from Fed. But the good thing is that a dovish Fed means soft dollar and thus lower depreciation risk for the Indian rupee in the short to medium term’.

The CNX Nifty is currently trading at 16984.55, down by 1.15 points or 0.01% after trading in a range of 16978.55 and 17061.75. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 1.51%, Indusind Bank up by 1.20%, Coal India up by 1.03%, UPL up by 0.82% and HDFC Life Insurance up by 0.49%. On the flip side, Adani Ports & SZ down by 3.23%, Adani Enterprises down by 2.52%, BPCL down by 2.19%, Divi's Lab down by 1.31% and Apollo Hospital down by 1.28% were the top losers.

Asian markets are trading mostly in green; Hang Seng advanced 139.76 points or 0.71% to 19,707.45, Jakarta Composite gained 28.64 points or 0.43% to 6,737.57, KOSPI increased 14.86 points or 0.62% to 2,424.08, Straits Times rose 12.5 points or 0.39% to 3,251.53 and Shanghai Composite strengthened 1.57 points or 0.05% to 3,252.97. On the other hand, Taiwan Weighted lost 111.81 points or 0.71% to 15,718.50 and Nikkei 225 was down by 27.06 points or 0.1% to 27,449.81.