Markets trade tad higher in early deals ahead of RBI’s monetary policy outcome

Indian equity benchmarks made optimistic start on Thursday tracking overnight gains on Wall Street. Markets are trading higher with marginal gains in early deals as the market participants awaits the Reserve Bank of India's (RBI) monetary policy outcome later in the day. Most market participants expect that the RBI MPC will hold the key interest rate steady at 6.5 per cent. There are expectations that the rates to remain unchanged until at least July as India's CPI remain closer to the upper price band of 6 per cent. Some support came in as responding to concerns about inflation, Finance Minister Nirmala Sitharaman underscored a reduction in core inflation, which decreased from 5.1 percent in April 2023 to 3.8 percent in December 2023, signaling improved economic resilience. However, markets trimmed some of their opening gains amid higher US bonds yields and surge in oil prices. Also, foreign fund outflows dented sentiments. Foreign institutional investors (FIIs) net sold shares worth Rs 1,691.02 crore on February 7, provisional data from the NSE showed. 

On the global front, Asian markets are trading mixed after Chinese consumer price index inflation grew less than expected in January as the new year holiday spurred limited increases in spending, while a sustained contraction in factory gate inflation eased slightly. Meanwhile, the Ministry of Finance said Japan posted a seasonally adjusted current account surplus of 744.3 billion yen in December. Moreover, Indonesia is closed for Ascension of the Prophet Muhammad day and Taiwan remains closed for the Lunar New Year holidays.

Back home, rate-sensitive stocks in real-estate, banks, financials and auto are in focus. In stock specific development, Paytm snapped its two-day gains and fell after reports said CDSL is inspecting Paytm Money's KYC process norms. On the other hand, Welspun Enterprises rallied on order win worth Rs 4,128 crore.

The BSE Sensex is currently trading at 72257.72, up by 105.72 points or 0.15% after trading in a range of 72223.33 and 72473.42. 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 0.94%, while Small cap index was up by 0.27%.

The top gaining sectoral indices on the BSE were Utilities up by 1.81%, PSU up by 1.63%, Power up by 1.52%, Oil & Gas up by 0.84% and Energy up by 0.72%, while FMCG down by 0.59%, Realty down by 0.52%, Auto down by 0.05% were the few losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 7.03%, SBI up by 1.81%, HCL Technologies up by 1.67%, Indusind Bank up by 1.40% and TCS up by 1.20%. On the flip side, ITC down by 1.60%, Maruti Suzuki down by 1.42%, Nestle down by 0.99%, Ultratech Cement down by 0.77% and Bajaj Finance down by 0.68% were the top losers.

Meanwhile, Finance Minister Nirmala Sitharaman has emphasized key financial indicators and government initiatives aimed at bolstering economic growth and fiscal stability. Sitharaman’s remarks shed light on various aspects of the budget, including inflation, capital expenditure, and allocations for Jammu and Kashmir. Addressing concerns regarding inflation, she underscored a reduction in core inflation, which decreased from 5.1 percent in April 2023 to 3.8 percent in December 2023, signaling improved economic resilience. She added retail Inflation has declined from an average of 6.8 per cent in April-December 2022 to 5.5 per cent in the corresponding period of 2023. The retail inflation is now stable and within the notified tolerance band of 2-6 per cent.

In terms of capital expenditure for 2024-25, she said ‘For capital expenditure for 2024-25 we have kept and outlay of Rs 11,11,111 crore which is about 17 per cent higher than the RE of 2023-24 and this outlay is higher than the projected GDP growth rate of 10.5 per cent. So even faster and higher than the GDP growth rate we have accommodated for capital expenditure’. The Minister added ‘the fiscal deficit glide path which we had submitted before the house and got approved, 5.8 per cent is what we have provided for this year, and in the forthcoming year we are predicting that it will be 5.1 per cent, actually 5.9 is what we have expected to reach and 5.2 is what we have expected to reach the next year but we have been fairly a lot more prudent’. This outlay, she noted, exceeded the projected GDP growth rate of 10.5 percent, reflecting the government’s prioritization of infrastructure development and economic expansion. She also outlined the fiscal deficit glide path, projecting a reduction to 5.1 percent in the forthcoming year, underscoring prudent fiscal management practices.

Sitharaman said ‘Transfers to jammu Kashmir gets Rs 3 thousand crore for meeting the additional expenditure towards central assistance to Union Territory of Jammu and Kashmir for bridging the resource gap”. Minister added ‘Jammu and Kashmir is seeking a vote on accounts for Rs 59,364 crore which is only for part year because the whole year’s BE is Rs 1,18,728 crore, this covers the revenue expenditure of Rs 40 thousand crore and capital expenditure Rs 19,283 crore. So the central government will provide the government of Jammu and Kashmir Rs 41,751 crore in 2023-24 and Rs 37,278 crore in 2024-25 as assistance to the Union Territory. This is their interim Budget’.

The CNX Nifty is currently trading at 21962.55, up by 32.05 points or 0.15% after trading in a range of 21953.05 and 22011.05. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Power Grid up by 7.05%, BPCL up by 2.96%, Hindalco up by 2.34%, HCL Tech. up by 1.96% and SBI up by 1.90%. On the flip side, ITC down by 1.60%, Maruti Suzuki down by 1.56%, Britannia Industries down by 1.52%, Nestle down by 1.50% and Tata Consumer Products down by 1.32% were the top losers.

Asian markets are trading mixed; Nikkei 225 surged 659 points or 1.82% to 36,778.92, Shanghai Composite rose 32.61 points or 1.14% to 2,862.31 and KOSPI was up by 11.87 points or 0.45% to 2,621.45. On the other hand, Hang Seng declined 135.67 points or 0.84% to 15,946.22 and Straits Times was down by 8.16 points or 0.26% to 3,147.99.