Sensex closes 412 pts higher as investors welcome RBI policy stance

Mumbai, April 8 Benchmark indices snapped the three-day losing run to close higher on Friday.

Market opened on a positive note amid positive global cues and remained volatile in the first half. r After trading on a choppy note, indices moved up further during closing hours, witnessing buying momentum across multiple counters. Investor sentiments were boosted after the RBI kept the repo rates unchanged, in line with expectations. 

The BSE Sensex closed at 59,447.18, up 412.23 points or 0.70 per cent. It recorded an intraday high of 59,654.44 and a low of 58,876.36. The Nifty 50 closed at 17,784.35, up 144.80 points or 0.82 per cent. It recorded an intraday high of 17,842.75 and a low of 17,600.55.

Breadth turns positive

The market breadth turned positive with 2,293 stocks advancing on the BSE as against 1,092 that declined, while 124 remained unchanged. Furthermore, 12 stocks hit the upper circuit as compared to the three stocks that were locked in the lower circuit. Besides, 163 stocks touched a 52-week high level and 12 touched a 52-week low.

The volatility index softened 6.89 per cent to 17.69.

Grasim, ITC, SBI Life, JSW Steel and Adani Ports were the top gainers on the Nifty 50 while Cipla, Tech Mahindra, Maruti, NTPC and HCL Tech were the top losers. 

Repo rates untouched

The six-member monetary policy committee (MPC) has unanimously decided to keep the repo rate unchanged at 4 per cent as economic growth is barely above the pre-pandemic level. It also unanimously voted to keep the monetary policy stance accommodative while focussing on withdrawal of accommodation to keep inflation with target.

Naveen Kulkarni, Chief Investment Officer, Axis Securities said, “The markets cheered RBI’s first monetary policy for the calendar year 2022 as it kept key policy rates unchanged and continued with its accommodative stance. RBI’s continuation of policy support is decoupled from the global central banks, which are adopting policy normalization, citing heightened inflationary pressure.”

However, RBI marked down its earlier real GDP growth projection for FY23 to 7.2 per cent from 7.8 per cent, assuming crude oil price at $100 per barrel. The retail inflation projection for FY23 has been raised to 5.7 per cent from the earlier projection of 4.5 per cent, assuming a normal monsoon and an average crude oil price of $100 per barrel.

As part of its plan to normalise the liquidity corridor, RBI will introduce a standing deposit facility at 3.75 per cent. It will be floor of the corridor

“RBI’s priority on the growth front is not unwarranted given that on-ground economic recovery has yet to gather momentum and private consumption lags pre-pandemic levels. We believe over the medium term, policy rates are likely to gradually harden, and markets will continue to gauge the impact of global policy changes. We expect today’s policy action to continue benefiting interest rate sensitive sectors such as housing, real estate, banking,” Kulkarni said.

According to Pankaj Pathak, Fund Manager-Fixed Income, Quantum AMC,” The worry for the equity markets would be the sharp downgrade to GDP forecast, especially the below consensus numbers for Q3 and Q4 FY 22.”

According to Shivam Bajaj, Founder & CEO at Avener Capital, “The MPCs decision to maintain its status quo is in line with expectations. RBI has emphasized on the strong buffers of forex reserves, which may act as a cushion amidst geopolitical tensions and exchange rate volatility”

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As per Bajaj, market reaction on the downward revision in growth rate and an upward revision in inflation rate is to be kept an eye on. 

“It will also be interesting to see how the economy tackles its supply-side constraints to mitigate the inflationary pressures,” said Bajaj. 

Investors will also be focusing on the Q4 earnings season, which will start next week, initiated by the IT & Banking sector, as per analysts. 

IT under pressure

On the sectoral front, all indices except Nifty IT closed in the green. Metals, FMCG, consumer durables and oil & gas gained focus.

Nifty IT closed 0.08 per cent lower. 

Meanwhile, Nifty Metal and Nifty FMCG were up over 2 per cent. Nifty Oil & Gas was up 1.59 per cent while Nifty Consumer Durables was up over 1 per cent.

Broader indices 

Broader indices were in the green.

Nifty Midcap 50 was up 0.09 per cent while Nifty Smallcap 50 was up 0.06 per cent. The S&P BSE Midcap was up 0.93 per cent while the S&P BSE Smallcap was up 0.99 per cent.