Sensex, Nifty trade firm in early deals on strong global cues

Indian equity benchmarks made an optimistic start on Monday, following the broadly positive cues from Wall Street on Friday and firm trade in Asian counterparts in early deals, amid easing trade war tensions after leaders of the U.S. and China agreed to further talks aimed at reaching a deal. Slightly stronger than expected U.S. job growth in May also helped offset concerns about the strength of the economy following some recent downbeat data. Sensex and Nifty are trading firm in early deals supported by buying in all the sector indices led by IT, Capital Goods and Industrials. Some support came with report that the proposed trade agreement between India and the US would provide greater market access for goods by reducing tariffs, cutting trade barriers, and improving supply chain integration. In stock specific development, Reliance Infrastructure jumped on reports it would focus on aircraft upgrade programs in the coming years.

The BSE Sensex is currently trading at 82543.10, up by 354.11 points or 0.43% after trading in a range of 82434.77 and 82669.00. There were 22 stocks advancing against 8 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.77%, while Small cap index was up by 0.92%.

The top gaining sectoral indices on the BSE were IT up by 1.15%, Capital Goods up by 0.92%, Industrials up by 0.90%, PSU up by 0.79%, Bankex up by 0.78%, while there was no loser on the BSE sectoral front.

The top gainers on the Sensex were Kotak Mahindra Bank up by 2.81%, Bajaj Finance up by 1.73%, Tata Motors up by 1.55%, Axis Bank up by 1.53% and Larsen & Toubro up by 1.39%. On the flip side, ICICI Bank down by 0.74%, Bharti Airtel down by 0.63%, Titan Company down by 0.26%, Asian Paints down by 0.24% and Tata Steel down by 0.16% were the top losers.

Meanwhile, Reserve Bank of India (RBI) Governor Sanjay Malhotra has said the future monetary policy actions will be decided by the trajectory of growth and inflation. He noted that if the RBI's expectation of 6.5 per cent real Gross Domestic Product (GDP) growth and inflation cooling to 3.7 per cent in FY26 plays out, there is ‘little space’ for interest rate cut. He also spelled out that the aspirational growth rate for India is 7-8 per cent per annum. He said the monetary policy will surely help accelerate the credit growth and help in the broader economic growth.

Malhotra said there is a need for the transmission to get faster in the economy, underlining that the process has been better this time than in the past instances. He said as against two rate cuts of 0.25 per cent each, the bank deposit rates have come down by 0.27 per cent, outstanding credit by 0.17 per cent. He however conceded that the growth rate of fresh loans is a little slow at 0.06 per cent. He said one of the motives of frontloading the rate cuts and coupling it with a CRR reduction is to hasten the transmission.

He said there was no voting on the stance, but the matter was discussed over the three days of deliberations and all the six members of the rate setting panel were for it. He said the reason for changing the stance to 'neutral' now is because it was felt that there is no further room to cut rates, and the same had to be conveyed to all stakeholders and provide a certainty. He added ‘Certainty will strengthen the economy’.

On the CRR cut, he said past experience suggests that ‘we do not need the liquidity buffer at 4 per cent and 3 per cent in the current circumstances is comfortable’. He said the call rate is going to stay at 5.25 per cent and will go down if the RBI undertakes Variable Rate Reverse Repo rate (VRRR) auctions. Meanwhile, the six-member monetary policy committee voted 5:1 in favour of a surprising 50 basis points cut in repo rate. It also announced a 1 percentage point decrease in cash reserve ratio. He also announced a shift in the stance of the monetary policy from 'accommodative' to 'neutral'.

The CNX Nifty is currently trading at 25107.00, up by 103.95 points or 0.42% after trading in a range of 25077.15 and 25160.10. There were 36 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were Kotak Mahindra Bank up by 2.74%, JIO Financial Services up by 2.45%, Shriram Finance up by 2.24%, Tata Motors up by 1.94% and Axis Bank up by 1.88%. On the flip side, HDFC Life Insurance down by 1.07%, ICICI Bank down by 0.88%, SBI Life Insurance down by 0.88%, Bharti Airtel down by 0.76% and Apollo Hospital Enterprises down by 0.62% were the top losers.

Asian markets are trading higher; Nikkei 225 surged 410 points or 1.07% to 38,151.61, Hang Seng jumped 230.87 points or 0.96% to 24,023.41, Taiwan Weighted rose 157.42 points or 0.72% to 21,818.08, KOSPI increased 45.05 points or 1.58% to 2,857.10, Shanghai Composite strengthened 7.9 points or 0.23% to 3,393.26 and Straits Times was up by 4.87 points or 0.12% to 3,939.16.