Benchmark indices end marginally lower post RBI policy

Benchmark indices ended marginally lower on Friday, dragged by financials and FMCG.

Market fluctuated between gains and losses in the first half as the RBI Monetary Policy Committee decided to maintain status quo on key policy rates. Indices traded lower in the second half, extending losses amid selling pressure.

The BSE Sensex closed at 52,100.05, down 132.38 points or 0.25 per cent. It hit an intraday high of 52,389.02, just 200 points away from its all-time high of 52,516.76. It hit an intraday low of 51,952.70.

The Nifty 50 which recorded a fresh all-time high of 15,733.60 during the morning session closed at 15,670.25, down 20.10 points or 0.13 per cent. It hit an intraday low of 15,622.35.

The breadth of the market remained positive with 1,878 stocks advancing, 1,294 declining and 151 remaining unchanged on the BSE. As many as 528 securities hit the upper circuit and 182 the lower circuit; 407 hit their 52-week high while 30 touched a 52-week low.

Binod Modi, Head Strategy at Reliance Securities said, “Benchmark Nifty corrected marginally led by contraction in financials, especially in banks. Further, weak global cues also weighed on sentiments. Notably, a moderate increase in inflation forecast by the RBI in its policy meeting outcome today led G-sec yields increasing by about 3 bps, which resulted in profit booking in banks.”

Negative global cues and rising inflationary pressures also worried investors. The Indian rupee depreciated to end lower at 73 per US dollar.

Tata Motors, Grasim, Coal India, Bajaj Finserv and ONGC were the top gainers on the Nifty 50 while Nestle India, State Bank of India, Hindalco, Axis Bank and HDFC Bank were the top laggards.

RBI policy

RBI has announced its decision to keep the policy repo rate unchanged at 4 per cent while the reverse repo rate is at 3.35 per cent.

It has also decided to open an “On-tap Liquidity Window for Contact-intensive Sectors” aggregating ₹15,000 crore till March 31, 2022. These sectors include hotels and restaurants, tourism, rent-a-car service providers.

Anagha Deodhar – Chief Economist, ICICI Securities, on the RBI Monetary policy said, “ As expected, the MPC voted unanimously to keep repo rate unchanged and the stance of monetary policy ‘accommodative as long as necessary’. The decision to hold rates came on the back of a difficult backdrop of slowing growth are rising inflation.”

“The MPC upped inflation forecast for better part of FY22 by 20-30 bps and lowered GDP growth forecast sharply to 9.5 per cent, mainly due to lower-than-expected growth in H1FY22. This shows that the committee’s priority is supporting growth recovery. The RBI also announced on-tap liquidity window of ₹15,000 crore for contact-intensive sectors, additional liquidity facility of ₹16,000 crore to SIDBI and enhanced the threshold for resolution. Moreover, it announced purchase of government securities worth ₹1.2 lakh crore under GSAP 2.0 in Q2FY22. All these measures together are likely to keep financial conditions in the economy benign and support recovery,” added Deodhar.

Metals, auto shine

On the sectoral front, metals, auto and realty stocks gained while financials dragged. FMCG stocks were also under pressure.

Nifty Metal closed 1.35 per cent higher while Nifty Auto was up 0.83 per cent. Nifty Realty was up 0.48 per cent.

Meanwhile, Nifty Bank was down 1 per cent while Nifty Financial Services was down 0.22 per cent. Nifty Private Bank and Nifty PSU Bank were down 0.81 per cent and 0.16 per cent, respectively. Nifty FMCG was down 0.36 per cent.

Broader indices

Broader indices outperformed the benchmarks. Nifty Midcap 50 was up 0.91 per cent while Nifty Smallcap 50 was up 0.41 per cent. The S&P BSE Midcap was up 0.63 per cent while the S&P BSE Smallcap was up 0.78 per cent.

Notably, the volatility index rose 1.23 per cent to 15.94.

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