A lackluster trade continued to hit Indian equity benchmarks in early afternoon deals, amid the RBI’s 25-basis-point repo rate hike to 5.50% and its shift towards a “calibrated tightening” stance. Traders took a note of reports that India is stepping up efforts to deepen its economic engagement with the United States, with Commerce and Industry Minister Piyush Goyal meeting several senior leaders of leading U.S. companies in New York to discuss opportunities for strengthening India-U.S. trade and to invite top US companies to explore investment opportunities in India.
Both Sensex and Nifty were trading in the red, with the Nifty facing relatively sharper selling pressure than the Sensex. Rising crude oil prices and continued concerns over inflation and global monetary tightening were keeping investors on the sidelines.
On the global front, all Asian markets were trading in red, amid persistent risks to Middle East energy flows after Iran increased the pace of attacks on tankers in the Strait of Hormuz in recent days as well as the conflict between Saudi Arabia and Iran-backed Houthi forces in Yemen.
The BSE Sensex is currently trading at 72867.67, down by 200.14 points or 0.27% after trading in a range of 72520.73 and 73018.82. There were 6 stocks advancing against 24 stocks declining on the index.
The few gaining sectoral indices on the BSE were Telecom up by 1.05%, TECK up by 0.27% and Energy up by 0.04%, while Metal down by 1.95%, Consumer Durables down by 1.68%, Auto down by 1.33%, Realty down by 1.26% and Basic Materials down by 1.23% were the top losing indices on BSE.
The top gainers on the Sensex were Bharti Airtel up by 2.05%, Kotak Mahindra Bank up by 1.94%, Eternal up by 0.99%, ICICI Bank up by 0.76% and Bajaj Finance up by 0.67%. On the flip side, Titan Company down by 3.48%, Asian Paints down by 1.91%, Maruti Suzuki India down by 1.73%, Bharat Electronics down by 1.72% and Tata Steel down by 1.62% were the top losers.
Meanwhile, after nearly three-and-half years, the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) unanimously decided to increase the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points (bps) to 5.50 per cent, in a bid to tame rising inflation amid continuing West Asia crisis. Consequently, the standing deposit facility (SDF) rate stands adjusted at 5.25 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 5.75 per cent. The MPC also decided to change the stance to calibrated tightening.
On the inflation front, the near-term outlook on inflation points towards continued pressures from supply side on account of the deficient monsoon, ongoing El Nino conditions and high energy and other commodity prices, the pass through of which is still continuing. CPI inflation is projected to be 5.2 per cent for 2026-27 from 5.0 per cent projected earlier. With this, Q2 inflation forecast raised to 4.9 per cent from 4.7 per cent; Q3 to 6.0 per cent from 5.9 per cent; and Q4 to 5.7 per cent from 5.5 per cent. Inflation for Q1:2027-28 is projected at 5.6 per cent higher compared to 5.3 per cent projected earlier, with risks being evenly balanced. Core inflation is projected at 4.4 per cent for 2026-27 as against 4.3 per cent projected earlier.
CPI inflation increased to 4.8 per cent in August 2026 from 4.5 per cent in July. While the increase has been predominantly on account of higher inflation in food and fuel groups, core inflation has also picked up indicating some signs of widening price pressures. Food price increases have become broader based along with notable spikes in certain items such as sugar and onion. The uptick in fuel inflation in August largely reflected unfavourable base effects. Core inflation increased to 4.2 per cent and core inflation, excluding precious metals, increased to 2.9 per cent in August. The weighted share of items in headline CPI recording inflation above 4 per cent increased steadily to about 37 per cent in August.
On the economy front, real GDP growth for 2026-27 is projected at 7.1 per cent, which is higher compared to 6.7 per cent projected earlier. With this, Q2 growth project at 7.2 per cent from 6.4 per cent earlier; Q3 at 6.9 per cent from 6.5 per cent earlier; and Q4 growth remained at 6.8 per cent. Real GDP growth for Q1:2027-28 is projected at 7.1 per cent, lower compared to 7.3 per cent projected earlier. Continuing momentum in services and broadly stable employment conditions are likely to support urban demand. Strong capacity utilisation, robust credit flows and the government’s thrust on infrastructure are expected to sustain investment activity. While services exports are expected to remain buoyant, bilateral trade agreements should boost merchandise exports.
The CNX Nifty is currently trading at 22661.65, down by 114.45 points or 0.50% after trading in a range of 22578.25 and 22717.65. There were 12 stocks advancing against 38 stocks declining on the index.
The top gainers on Nifty were Bharti Airtel up by 2.30%, Kotak Mahindra Bank up by 1.92%, BSE up by 1.12%, Eternal up by 0.79% and Coal India up by 0.73%. On the flip side, Titan Company down by 3.81%, Shriram Finance down by 3.11%, Hindalco Industries down by 2.26%, Bajaj Auto down by 2.12% and JSW Steel down by 2.11% were the top losers.
All Asian markets were trading in red; Jakarta Composite plunged 43.98 points or 0.71% to 6,148.95, KOSPI dropped 137.49 points or 2.02% to 6,803.90, Taiwan Weighted lost 16.18 points or 0.03% to 49,806.37, Hang Seng declined 142.56 points or 0.59% to 24,138.00, Nikkei 225 slipped 380.98 points or 0.54% to 70,303.00 and Straits Times fell 88.02 points or 1.54% to 5,613.52.
