Indices trade slightly higher ahead of RBI policy decision

Indian equity benchmarks made positive start on Thursday but traders reluctant to make any significant moves ahead of the Reserve Bank of India's (RBI) monetary policy outcome later in the day. There are expectations that the six-member Monetary Policy Committee (MPC) of the RBI is likely to keep the policy repo rate unchanged. This was the second bi-monthly monetary policy meeting of FY24 which began on June 6. Markets are trading slightly higher in early deals as buying in Utilities, Power and Metal stocks aided the sentiments, whereas selling in Realty, IT and TECK counters limit the upside. Foreign fund inflows also supported the market sentiments. Provisional data from the National Stock Exchange showed that foreign institutional investors (FIIs) bought shares worth Rs 1,382.57 crore on June 7.

On the global front, most of the Asian markets are trading lower, following the mostly negative cues from global markets overnight, as traders are nervous over the outlook for interest rates as the Bank of Canada once again raised interest rates after leaving rates unchanged for two straight meetings. Besides, Japan's gross domestic product expanded a seasonally adjusted 0.7 percent on quarter in the first three months of 2023. Back home, in stock specific development, Zydus Lifesciences surged after US health regulator gave final approval to Tadalafil tablets.

The BSE Sensex is currently trading at 63194.96, up by 52.00 points or 0.08% after trading in a range of 63111.63 and 63228.60. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.16%, while Small cap index was up by 0.31%.

The top gaining sectoral indices on the BSE were Utilities up by 1.81%, Power up by 1.40%, Metal up by 0.94%, Telecom up by 0.64% and PSU up by 0.52%, while Realty down by 0.52%, IT down by 0.36%, TECK down by 0.25%, Oil & Gas down by 0.13% and Healthcare down by 0.13% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 2.79%, Power Grid up by 1.99%, Tata Motors up by 0.99%, Tata Steel up by 0.76% and Ultratech Cement up by 0.70%. On the flip side, Kotak Mahindra Bank down by 1.63%, Sun Pharma down by 0.77%, Wipro down by 0.74%, TCS down by 0.73% and HCL Technologies down by 0.61% were the top losers.

Meanwhile, the Organization for Economic Co-operation and Development (OECD) in its latest Economic Outlook has projected India’s growth at 6% for FY 2023-24. It said weak global demand and the effect of monetary policy tightening to manage inflationary pressures will constrain the economy in FY 2023-24. It also said Moderating inflation and monetary policy easing in the second half of 2024 will help discretionary household spending regain momentum. This, along with improved global conditions, will help economic activity to accelerate, with growth of 7% in real GDP in FY 2024-25.

In India, the fiscal position is projected to improve, helped by greater tax compliance, fewer subsidies and ongoing privatisation of state-owned enterprises. This should be coupled with steps to strengthen revenue mobilisation, further improve public financial management and enhance expenditure efficiency. The report said with slower growth, inflation expectations, housing prices and wages will progressively moderate, helping headline inflation converge towards 4.5%. This will allow interest rates to be lowered from mid-2024. The trade restrictions (including export bans on various rice varieties) imposed in 2022 to fight inflation are assumed to be withdrawn. The current account deficit will narrow, reflecting abating import price pressures.

The report also said despite an impressive growth and development record, daunting challenges remain. Creating good jobs is the most promising pathway to reduce poverty, which is particularly high in the female population. Increasing investment in education and vocational training, and updating labour laws, would help to achieve this objective. India is particularly vulnerable to extreme heatwaves and must make progress in mobilising resources for investment in the green economy.

The CNX Nifty is currently trading at 18740.85, up by 14.45 points or 0.08% after trading in a range of 18723.40 and 18752.20. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were NTPC up by 3.07%, JSW Steel up by 2.38%, Power Grid up by 1.84%, Hero MotoCorp up by 1.37% and ONGC up by 1.33%. On the flip side, Kotak Mahindra Bank down by 1.78%, BPCL down by 1.28%, Eicher Motors down by 1.24%, Apollo Hospital down by 0.81% and Sun Pharma down by 0.81% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 slipped 311.67 points or 0.99% to 31,602.07, Taiwan Weighted lost 144.6 points or 0.86% to 16,777.88, Hang Seng declined 118.23 points or 0.62% to 19,133.77, KOSPI dropped 11.94 points or 0.46% to 2,603.66, Straits Times fell 6.41 points or 0.2% to 3,173.17 and Shanghai Composite weakened 3.8 points or 0.12% to 3,193.96, while Jakarta Composite was up by 1.68 points or 0.03% to 6,621.44.