Benchmarks fail to hold opening gains; trade in red in early deals

Indian equity benchmarks made slightly positive start following the broadly encouraging cues from global markets overnight. But, markets failed to hold on the gains and slipped below neutral lines and are trading in red in early deals. IT and TECK counters remained the main laggard for the domestic indices. Investors remained on sidelines ahead of US Fed’s FOMC meeting outcome and India’s WPI or wholesale inflation for May to be out later in the day. Though, downside remained capped amid foreign fund inflows. According to the provisional data available on the NSE, foreign institutional investors (FII) purchased shares worth net Rs 1,677.60 crore on June 13. Broader indices -- BSE mid & small cap -- are outperforming larger peers with decent gains.

On the global front, Asian markets are trading mixed as traders reacted to data showing a slowdown in US consumer price inflation, which raised hopes the US Fed will pause rate increases when it announces its monetary policy decision later in the day. The surprise rate cut by the People's Bank of China is also aiding market sentiment. Back home, in stock specific development, Anupam Rasayan rose after the company signed a letter of intent worth $265 million with a Japanese specialty chemical firm.

The BSE Sensex is currently trading at 63065.05, down by 78.11 points or 0.12% after trading in a range of 63014.19 and 63242.72. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.08%, while Small cap index was up by 0.25%.

The top gaining sectoral indices on the BSE were Metal up by 1.52%, Telecom up by 0.85%, Oil & Gas up by 0.29%, FMCG up by 0.28% and Utilities up by 0.27%, while IT down by 0.56%, TECK down by 0.53%, Realty down by 0.39%, Bankex down by 0.26% and Capital Goods down by 0.19% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 1.62%, Power Grid up by 0.97%, Tata Motors up by 0.91%, ITC up by 0.44% and Nestle up by 0.37%. On the flip side, Bharti Airtel down by 1.17%, Indusind Bank down by 1.09%, Bajaj Finserv down by 0.88%, Infosys down by 0.77% and Axis Bank down by 0.71% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) Governor Shaktikanta Das has said the disinflation process in India will be slow. He said ‘As per our current assessment, the disinflation process is likely to be slow and protracted with convergence to the inflation target of 4 per cent being achieved over the medium-term’. In remarks that came a day after official data suggested a cool-down in headline inflation to 4.25 per cent for May, Das said there have been signs of some softening in inflation in recent months, with the consumer price inflation coming down from the 7.8 per cent peak in April 2022.

He said the RBI’s inflation projection for the current financial year 2023-24 is lower at 5.1 per cent, but reminded that the number will still be above the 4 per cent target. The rate-setting panel has eschewed from providing any future guidance on the timing and level of the terminal rate recognising that explicit guidance in a rate tightening cycle is inherently fraught with risks. He said the RBI is mandated to maintain price stability while keeping in mind the objective of growth, and added that the central bank cannot be oblivious to growth concerns, given the high population and the necessity to reap the demographic dividend.

He noted that the RBI prioritised growth during the pandemic years even as inflation remained above the target but within the tolerance band. The Monetary Policy Committee prioritised growth over inflation at the height of the pandemic during 2020 and 2021, given the frail economic conditions and notwithstanding intermittent inflationary pressures from supply shocks. He further said in FY24, the RBI is estimating real GDP growth to come at 6.5 per cent and India will remain among the fastest-growing large economies in 2023 in all likelihood.

He welcomed the government’s continued thrust on capital expenditure, which is creating additional capacity and nurturing the much-awaited revival in the corporate investment cycle. He said the RBI has taken a slew of measures on the regulatory and supervisory front as well. These include a supervisory strategy which has seen a unification of supervisory architecture, ownership-agnostic and risk-focused supervision and a shift from episodic to continuous supervision. He noted without interfering with business decision-making at banks, the RBI has done a deep dive into the business models of banks and other lending entities and closely monitors their asset-liability mismatches and funding stability.

The CNX Nifty is currently trading at 18701.60, down by 14.55 points or 0.08% after trading in a range of 18690.00 and 18753.80. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were JSW Steel up by 2.36%, Tata Consumer Products up by 2.11%, Tata Steel up by 1.57%, Hindalco up by 1.34% and Power Grid up by 1.01%. On the flip side, Bharti Airtel down by 1.18%, Indusind Bank down by 1.07%, Hero MotoCorp down by 0.82%, Bajaj Finserv down by 0.78% and Infosys down by 0.75% were the top losers.

Asian markets are trading mixed; Nikkei 225 surged 395.93 points or 1.2% to 33,414.58, Straits Times rose 24.19 points or 0.76% to 3,213.59, Taiwan Weighted added 8.91 points or 0.05% to 17,225.51 and Shanghai Composite was up by 7.91 points or 0.24% to 3,241.58. On the other hand, Jakarta Composite fell 35.35 points or 0.53% to 6,683.66, KOSPI lost 13.95 points or 0.53% to 2,624.00 and Hang Seng was down by 10.3 points or 0.05% to 19,511.12.