Domestic indices trade flat in early deals ahead of RBI monetary policy meeting

Indian equity benchmarks made cautious start on Tuesday after two-session of continues gains amid mixed cues from global markets. Overnight rise in crude oil prices also impacted the market sentiments. Now, domestic indices are trading flat in early deals as buying in Realty, Consumer Durables and Auto stocks aided the markets, whereas selling in IT, TECK and Metal counters limit the upside. Some cautiousness came in amid foreign fund outflows. Provisional data from the National Stock Exchange showed that foreign institutional investors (FIIs) sold shares worth Rs 700.98 crore on June 5. Meanwhile, the Monetary Policy Committee (MPC) of the Reserve Bank of India begins its bimonthly meeting today i.e. June 6. There are expectations that the interest rate will remain unchanged.   

On the global front, Asian markets are trading higher despite the broadly negative cues from Wall Street overnight. Traders looked ahead to next week's US Federal Reserve meeting, where the Fed is widely expected to pause its recent series of interest rate hikes. South Korea market is closed for Memorial Day holiday. On the sectoral front, port sector stocks are buzzing with Indian Ports Association (IPA) stating that cargo traffic handled by major ports in the country witnessed an annual rise of 3.2 per cent to 68.06 million tons (MT) in May this year. In stock specific development, JK Cement traded higher on plan to acquire Toshali Cements for Rs 157 crore.

The BSE Sensex is currently trading at 62783.85, down by 3.62 points or 0.01% after trading in a range of 62714.86 and 62851.55. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.11%, while Small cap index was up by 0.42%.

The top gaining sectoral indices on the BSE were Realty up by 0.76%, Consumer Durables up by 0.69%, Auto up by 0.52%, Industrials up by 0.42% and Capital Goods up by 0.30%, while IT down by 1.24%, TECK down by 1.05% and Metal down by 0.13% were the few losing indices on BSE.

The top gainers on the Sensex were Ultratech Cement up by 1.97%, Titan Company up by 1.18%, Kotak Mahindra Bank up by 1.14%, Asian Paints up by 1.13% and Axis Bank up by 1.02%. On the flip side, Tech Mahindra down by 1.93%, Infosys down by 1.41%, HCL Technologies down by 1.23%, Wipro down by 0.84% and TCS down by 0.68% were the top losers.

Meanwhile, just few days ahead of the outcome of Reserve Bank of India’s (RBI’s) monetary policy meeting, SBI Research in a report said that the RBI is likely to again pause the repo rate, the rate at which the central bank lends money to banks, in its bi-monthly monetary policy. It added that the monetary policy committee will go for a ‘prolonged pause’. A monetary policy committee headed by RBI governor Shaktikanta Das will hold a three-day-long meeting with its decision be announced on June 8. 

Besides putting a brake on the interest, the report said the RBI is likely to downgrade inflation projections for 2023-24. It said there is also a possibility of a GDP growth upgrade. As per the report, retail inflation is projected to moderate to 5.2 per cent for 2023-24 in India as estimated by RBI in its April monetary policy meeting; with Q1 at 5.1 per cent; Q2 at 5.4 per cent; Q3 at 5.4 per cent; and Q4 at 5.2 per cent. GDP growth for 2023-24 is projected to be at 6.5 per cent and the SBI Research's expectations for an upgrade may have been prompted by more than estimated GDP growth India registered in 2022-23.

As per the provisional estimates released by the National Statistical Office (NSO) recently, real GDP growth for 2022-23 stood at 7.2 per cent, higher than the 7 per cent projected. In the last policy meeting in April, RBI monetary policy committee unanimously kept the repo rate unchanged at 6.50 per cent. Repo rates are already up 250 basis points from the lows of May 2022 and a full 135 basis points higher than the pre-pandemic repo rate of 5.15 per cent. Barring the April pause, the RBI raised the repo rate by 250 basis points cumulatively to 6.5 per cent since May 2022 in the fight against inflation.

The CNX Nifty is currently trading at 18598.25, up by 4.40 points or 0.02% after trading in a range of 18581.70 and 18618.05. There were 31 stocks advancing against 18 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Ultratech Cement up by 1.82%, Grasim Industries up by 1.21%, Titan Company up by 1.17%, Kotak Mahindra Bank up by 1.11% and Asian Paints up by 1.10%. On the flip side, Tech Mahindra down by 1.91%, Infosys down by 1.38%, HCL Technologies down by 1.31%, Wipro down by 0.84% and TCS down by 0.64% were the top losers.

Asian markets are trading higher; Nikkei 225 surged 206.4 points or 0.64% to 32,423.83, Hang Seng advanced 98.34 points or 0.51% to 19,206.84, Jakarta Composite increased 34.78 points or 0.52% to 6,668.22, Taiwan Weighted rose 29.08 points or 0.17% to 16,743.51, Shanghai Composite added 1.54 points or 0.05% to 3,233.98 and Straits Times was up by 0.43 points or 0.01% to 3,189.44.