Key gauges continue to trade in green

Indian equity benchmarks trimmed some gains but continued to trade higher in morning deals, led by gains in Capital Goods, Oil & Gas and PSU stocks. Traders took support with Financial Services Secretary M Nagaraju’s statement that budget proposals for income tax cuts and other tax changes will help banks to mobilise Rs 40,000-45,000 crore additional deposits. Some support also came as Crisil’s report stated that the Indian economy is likely to grow at 6.5% in financial year 2025-26 (FY26), marginally higher than ongoing fiscal year which is estimated to grow at 6.4%. Crisil's outlook highlighted that while government spending will continue to support economic growth, the overall fiscal impulse will reduce as fiscal consolidation progresses. Another significant factor is the private investment which need to pick pace. However, gains remain capped as some concern came with exchange data showing that on February 3, the foreign institutional investors (FIIs) remained net sellers for the 23rd session, as they offloaded equities worth Rs 3,958 crore. On the global front, Asian markets are trading mostly in green as the Trump administration in the US agreed to halt tariffs on Canada and Mexico, and China response to the hike has been deemed muted for now, easing trade war concerns. 

The BSE Sensex is currently trading at 77667.02, up by 480.28 points or 0.62% after trading in a range of 77516.99 and 77951.81. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.90%, while Small cap index was up by 0.80%.

The top gaining sectoral indices on the BSE were Capital Goods up by 2.19%, Oil & Gas up by 1.83%, PSU up by 1.68%, Industrials up by 1.64% and Metal up by 1.62%, while FMCG down by 0.56%, Consumer Durables down by 0.13%, Consumer Discretionary down by 0.10% and Telecom down by 0.02% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 2.71%, Larsen & Toubro up by 2.56%, Indusind Bank up by 2.20%, ICICI Bank up by 1.89% and Axis Bank up by 1.77%. On the flip side, Zomato down by 1.97%, Power Grid Corporation down by 1.34%, Bajaj Finance down by 1.23%, Bharti Airtel down by 1.16% and Hindustan Unilever down by 1.16% were the top losers.

Meanwhile, the State Bank of India (SBI) in its latest report has said that the Reserve Bank of India (RBI) may start using the Cash Reserve Ratio (CRR) more as a regulatory intervention tool rather than just a liquidity management tool in the future. It highlighted the urgent need for the central bank to revisit its existing liquidity management framework.

Currently, the RBI uses various measures to manage liquidity in the banking system, such as Open Market Operations (OMO), CRR, and the repo rate. However, it suggested that the CRR should be seen as a countercyclical liquidity buffer rather than a liquidity adjustment tool. This means the central bank could use CRR to control liquidity in the economy depending on the financial situation, rather than adjusting it frequently to manage day-to-day liquidity needs. 

It also suggested that the RBI should replace the Weighted Average Call Rate (WACR) as the main policy rate. WACR is the interest rate at which banks borrow and lend money in the overnight market. It said that WACR does not fully serve its purpose as a policy tool and should be reviewed. According to the report, the ownership of government securities (G-Secs) is expected to remain unchanged in FY26. However, there could still be an OMO gap of around Rs 1.7 trillion. This indicates that the RBI might need to introduce more liquidity measures on a sustained basis to ensure smooth functioning of the banking system.

The CNX Nifty is currently trading at 23489.15, up by 128.10 points or 0.55% after trading in a range of 23479.45 and 23582.00. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 2.93%, ONGC up by 2.79%, Tata Motors up by 2.55%, Bharat Electronics up by 2.48% and Larsen & Toubro up by 2.30%. On the flip side, Trent down by 5.45%, Power Grid Corporation down by 1.39%, Bajaj Finance down by 1.27%, Tata Consumer Product down by 1.22% and Hindustan Unilever down by 1.21% were the top losers. 

Asian markets are trading mostly in green; Nikkei 225 surged 81.21 points or 0.21% to 38,601.30, Taiwan Weighted added 195.18 points or 0.86% to 22,889.89, Hang Seng advanced 404.88 points or 1.96% to 20,622.14, KOSPI increased 21.58 points or 0.88% to 2,475.53 and Jakarta Composite gained 70.38 points or 1% to 7,100.44.

On the flip side, Straits Times fell 6.04 points or 0.16% to 3,820.43.