Sensex, Nifty linger under selling pressure during early noon deals

Indian equity benchmarks were lingering under selling pressure during early afternoon deals, impacted by mixed cues from other Asian markets along with heavy losses in FMCG and Banking sectors after India's central bank decided to leave its benchmark interest rates unchanged. The Monetary Policy Committee of the Reserve Bank of India, headed by Governor Shaktikanta Das, voted 5-1 to hold the repo rate at 6.50 percent. The RBI has lifted the key rate by 250 basis points since May 2022 to put a lid on inflation. There was some cautiousness among traders, as the Department of Financial Services (DFS) secretary Vivek Joshi said that India’s bad bank or the National Asset Reconstruction Company (NARCL) has not made much progress but aims to take on Rs 2 lakh crore of banks’ stressed or non-performing assets (NPAs) by the end of FY25.

On the global front, Asian markets were trading mixed, after a measure of public opinion about the Japanese economy weakened in January to the lowest level in one year, while outlook strengthened. The survey data from the Cabinet Office showed that the current conditions index of the Economy Watchers' Survey, which measures the present situation of the economy, dropped to 50.2 in January from 51.8 in December. Nonetheless, a reading above 50 indicates optimism.

The BSE Sensex is currently trading at 71619.05, down by 532.95 points or 0.74% after trading in a range of 71405.38 and 72473.42. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.62%, while Small cap index was up by 0.01%.

The top gaining sectoral indices on the BSE were PSU up by 2.02%, Utilities up by 1.32%, Power up by 1.00%, Telecom up by 0.89% and Oil & Gas up by 0.69%, while FMCG down by 1.47%, Bankex down by 0.96%, Auto down by 0.62%, Basic Materials down by 0.56% and Consumer Durables down by 0.33% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 5.21%, SBI up by 4.09%, HCL Tech. up by 1.12%, TCS up by 0.94% and NTPC up by 0.33%. On the flip side, Axis Bank down by 2.60%, Nestle down by 2.58%, ICICI Bank down by 2.40%, ITC down by 2.23% and Maruti Suzuki down by 2.06% were the top losers.

Meanwhile, the Reserve Bank of India’s (RBI’s) Monetary Policy Committee (MPC) has decided to Keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50 per cent. The standing deposit facility (SDF) rate remains unchanged at 6.25 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 per cent. The MPC also decided to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth. These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth. 

On the inflation front, the MPC highlighted that from its October 2023 trough of 4.9 per cent, CPI inflation increased successively in the next two months to 5.7 per cent by December. Food inflation, primarily y-o-y vegetable price increases, drove the pick-up in headline inflation, even as deflation in fuel deepened. Core inflation (CPI inflation excluding food and fuel) softened to a four-year low of 3.8 per cent in December. CPI inflation is projected at 5.4 per cent for 2023-24 with Q4 at 5.0 per cent. Assuming a normal monsoon next year, CPI inflation for 2024-25 is projected at 4.5 per cent with Q1 at 5.0 per cent; Q2 at 4.0 per cent; Q3 at 4.6 per cent; and Q4 at 4.7 per cent. 

On the economic growth front, recovery in rabi sowing, sustained profitability in manufacturing and underlying resilience of services should support economic activity in 2024-25. Among the key drivers on demand side, household consumption is expected to improve, while prospects of fixed investment remain bright owing to upturn in the private capex cycle, improved business sentiments, healthy balance sheets of banks and corporates; and governments continued thrust on capital expenditure. Improving outlook for global trade and rising integration in global supply chain will support net external demand. Headwinds from geopolitical tensions, volatility in international financial markets and geo-economic fragmentation, however, pose risks to the outlook. Taking all these factors into consideration, real GDP growth for 2024-25 is projected at 7.0 per cent with Q1 at 7.2 per cent; Q2 at 6.8 per cent; Q3 at 7.0 per cent; and Q4 at 6.9 per cent.

The CNX Nifty is currently trading at 21783.35, down by 147.15 points or 0.67% after trading in a range of 21709.55 and 22011.05. There were 14 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were Power Grid up by 5.56%, SBI up by 4.01%, BPCL up by 3.60%, Hindalco up by 2.28% and Coal India up by 1.55%. On the flip side, Britannia down by 3.47%, Tata Consumer Products down by 3.10%, Nestle down by 2.60%, Axis Bank down by 2.53% and ICICI Bank down by 2.28% were the top losers.

Asian markets were trading mixed; Shanghai Composite strengthened 23.47 points or 0.83% to 2,853.17, KOSPI increased 10.74 points or 0.41% to 2,620.32 and Nikkei 225 surged 743.36 points or 2.02% to 36,863.28, while Hang Seng declined 232.63 points or 1.45% to 15,849.26 and Straits Times fell 11.44 points or 0.36% to 3,144.71.